Lynne Kiesling
Thanks to Tyler Cowen for this post about betting on physics research. I love the quote he pulled, and that the researcher is willing to go 6-1 on the Higgs particle. I’ve long thought that Robin Hanson was right, and that people putting money on things (i.e., walking the talk) would enhance our ability to focus on things that have higher ex ante probabilities of being correct.
Of course, there are always Type I and Type II error to contend with, so it’s more about getting a better read on the probability distribution than anything else.
Is that not one of the geniuses of capitalism? As resources are allocated to those willing to give up the most for the good, enterprises are not undertaken unless someone is willing to put something at risk. Using the pharmaceutical industry as an example, research projects showing more promise of success (most often meaning future revenue streams which would come from significance in the marketplace) receive higher levels of funding while less promising projects either have finances cut or eliminated. Seems like another place the markets can claim victory.