Prediction Markets for Promoting the Progress of Science and the Useful Arts
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PREDICTION MARKETS FOR PROMOTING THE
PROGRESS OF SCIENCE AND THE USEFUL ARTS
Tom W. Bell*
INTRODUCTION
The U.S. Constitution authorizes federal lawmakers' [t]o promote the
Progress of Science and useful Arts.'2 In pursuit of that good, lawmakers
have created federal copyrights3 and patents.4 But those intellectual proper-
ties for the most part stimulate only superficial research in, and develop-
ment of, the sciences and useful arts; copyrights and patents largely fail to
inspire fundamental progress.5 We thus face an undersupply of basic and
useful ideas, principles, systems, concepts, discoveries, and facts. Fortu-
nately, we might cure that failure with a new type of market: an exchange
in skilled predictions about the sciences and useful arts.6 Unfortunately,
state and federal laws threaten any such exchange-here called a scientific
prediction exchange or SPEx-with potential bans and fines.' This arti-
cle discusses the benefits of scientific prediction exchanges and how to
reduce the legal costs, qua legal risks, of setting up, running, or trading on
such markets.8
* I thank Jason Kilborn, Michael Abramowicz, Robin Hanson, Henry Noyes, Jason Ruspini,
Chris Hibbert, Ronald Chichester, Thomas Smith, Kurt Eggert, Frank Pascale, Richard Stem, and Chris
F. Masse for comments, Greg Newman for both comments and research assistance, and Chapman
University School of Law for supporting my work on this article with a summer research stipend. Copy-
right 2006, Tom W. Bell.
1 I do not say merely Congress by design, on grounds that the Constitution empowers the
President to veto routine legislation. U.S. CONST. art I, § 7, cl. 2. Only an act that wins two-thirds of the
votes in Congress can overcome that executive hurdle. Id. The Constitution thus provides that Congress
and the President generally share federal lawmaking powers and duties.
2 U.S. CONST. art. I, § 8, cl. 8.
3 See generally Copyright Act of 1976, 17 U.S.C.A. §§ 101-1332 (2005).
4 See generally Patent Act, 35 U.S.C.A. §§ 1-376 (2002).
5 See infra Part I.
6 See infra Part I.
7 See infra Part I.C.
8 See infra Part HI.B-C. Among the many potential legal remedies, the most effective would
guarantee the free exchange of prediction certificates. See infra Part llI.B.3(a).](ViewImageLocal?handle=hein.journals/gmlr14&div=8&collection=&method=preview&ext=.png&size=3)
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