Law in Contemporary Society

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JuliaS-FirstPaper 9 - 11 Feb 2008 - Main.AdamCarlis
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Law by Consensus

Markets as Judges/Juries

Imagine if, instead of juries, we create a prediction market for trial verdicts. We post a transcript of the trial online and allow people to buy shares of the outcome they think is correct. We announce the date that the market will expire, and on that date we enter whatever verdict has a higher value in the market. As an investor, you have a financial interest in accurately predicting what other people will think the verdict should be. The market mechanism here performs essentially the exact same function as the "reasonable man" standard we employ in much of our legal decision-making, by incentivizing investors to figure out how the average person will interpret the case. By extension, it creates an incentive for investors to advocate for their position - the more people who agree with you, the more your shares are worth. Imagine if the prediction market had a talk page associated with it, giving investors the opportunity to argue for their positions on the case. The market could potentially fulfill the role of attorneys as well as juries by providing financial incentive for effective advocacy.
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  • What are the class implications of something like this? If you are accused, you better hope you know some rich folks willing to buy some innocent shares! By the way, Prof. Dorf has an interesting blog post on this topic. You can find it at http://michaeldorf.org/2008_01_01_archive.html about 3/4 of the way down the page. --Main.AdamCarlis 11 February 2008
 

Shantih, shantih, shantih.

In a certain sense, prediction markets for judicial decisions seem absurd. It almost seems to mock the legal system, robbing it of its pomp and solemnity. Imagine if we opened markets for sentencing in capital punishment cases - how morbid and perverse! The notion of betting on whether someone lives or dies is offensive to our moral sensibilities. How could we make a game out of such a grave matter? The idea of prediction markets as juries is even more ludicrous. We have modeled our system around the notion that the mob must be contained – certainly we cannot hand over our most sacred legal function to market speculators. It’s offensive to our notions of justice and demeaning to the value of our judicial verdicts.


Revision 9r9 - 11 Feb 2008 - 19:11:13 - AdamCarlis
Revision 8r8 - 11 Feb 2008 - 17:55:25 - JuliaS
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