Idea Futures. 

17 January 1998(?)
The Times of India

ROBIN Hanson of Cal Tech, in 1990, proposed an "Idea Futures" market 
structured similarly to commodities futures markets, in which anyone could 
bet on the eventual resolutions of current scientific controversies. Hanson 
methodically details how such a market could be used to resolve major 
scientific questions. 

For example, in 1915 Alfred Wegener proposed his theory of continental 
drift, but his contemporaries considered his theory "impossible". Wegener 
died an intellectual outcast in 1930. Today, of course, this theory is 
accepted scientific consensus, supported by a considerable body of evidence. 

If a market for idea futures had existed in 1915, Wegener could have offered 
odds - say, 1:3, effectively proposing a 25 per cent probability that he was 
correct. His critics would either have had to accept this probability or bet 
against it, driving the odds to, say, 1:100, which would be more 
representative of their "impossible" mentality. As Wegener, and others who 
agreed with him, staked additional bets, the odds would lessen, forcing 
critics again to either bet more money or accept a significant probability 
of continental drift. 

Such a market would encourage more research on the subject, since someone 
could make money by being the first to trade on new relevant information. 
Eventually, of course, a growing body of evidence would vindicate Wegener, 
and the returns from betting - particularly at the earlier "impossible" odds 
- would be quite lucrative for Wegener and/or his offspring. 

Hanson also cites the more recent example of the cold fusion controversy. If 
an Idea Futures market had existed in March 1989, when two scientists 
announced "fusion in a jar," the market could have fully and immediately 
reflected the consensus of the thousands of other scientists around the 
world who argued over the possibility of cold fusion. 

In total, Hanson describes how 30 scientific controversies could be resolved 
and abetted by an efficient market in Idea Futures. He concludes his seminal 
article by suggesting a developmental strategy for such an innovative market. 

In 1993, the Alberta Research Council agreed to fund the development and 
operation of Hanson's proposal. Programmers and systems analysts, under the 
guidance of Hanson and others, designed an "Idea Futures Market," which 
thereafter became operational in the fall of 1994. Two years later, in the 
fall of 1996, the Idea Futures Market was renamed "The Foresight Exchange."