OK, so I’m a little slow … and Mike’s gonna give me the big eyeroll I deserve when I say this … it wasn’t until I saw the title of this Burgh Diaspora post (I’m a definitive member of the Pittsburgher diaspora) that I consciously thought about this question: do prediction markets discover and aggregate tacit knowledge?
I’m not sure they do. Tacit knowledge is stuff we don’t know that we know, or that we can’t recall having learned; it’s just there. But how much of that is really what prediction markets are getting at?
I think it’s pretty apparent that prediction markets are institutions that enable agents to discover and aggregate diffuse private knowledge. But do you decide on where to put your money in prediction markets based on your tacit knowledge? And are the kinds of questions that are amenable to prediction markets those in which tacit knowledge is relevant and/or useful?