Big Ideas: The Market's Last Frontier

Information markets are markets for contracts that yield payments based on the outcome of an uncertain future event, such as a presidential election. They can provide real-time information on the likely benefits and costs of different kinds of policies and projects. We argue that information markets combined with pay-for-performance contracts have the potential to revolutionize the way the government, the non-profit world, and the private sector do business. Moving to a performance-based policy paradigm could have great benefits for consumers and the economy. In addition to providing economic benefits, this approach could also promote greater accountability and transparency in the development of policy.