Robin Hanson Unfazed By ‘Small Number Of Unusual Incidents’; Pioneer Says Prediction Market Policy Should Be Based On Overall Rates Of ‘Harm’

Alt: Prediction Market Theorist Robin Hanson Says Policy On Industry Should Not Be Made Based On ‘Small Number Of Unusual Incidents’

Economist Robin Hanson accused critics and the media of exaggerating “imperfections” in prediction markets and holding them to “unusual standards” compared to other sectors.

Things Blown Out Of Proportion?

Hanson, known for his pioneering work in the field of prediction markets, told Benzinga that a small number of events have been reported out of proportion to their actual importance.

“I do not recommend that you choose general policy based on a small number of unusual incidents,” said Hanson, who serves as the Associate Professor of Economics at George Mason University. “I think you should look at the overall rates of various kinds of harm, and adjust policy according to the overall rates.”

The Big Debate

Prediction markets are under growing scrutiny. Large, suspiciously well-timed bets on military operations in Iran and Venezuela have raised major red flags.

Last month, a U.S. soldier was charged with allegedly using classified information to profit on a Polymarket bet linked to the capture of Venezuela’s ousted leader, Nicolás Maduro.

Some truly bizarre incidents have also raised eyebrows. A trader reportedly used a hair dryer to manipulate a temperature sensor at Paris’ Charles de Gaulle Airport to win a Polymarket bet.

But Hanson believes these incidents are not restricted to prediction markets.

“Sometimes people are willing to change the world in order to win. That’s also true in journalism, where people often change the world in order to try to get favorable coverage by journalists,” he argued.

Is Congress Being Unfair?

These scandals and investigations have triggered a Congressional backlash against prediction markets.

In April, the Senate unanimously adopted a resolution banning Senators, officers, and staff from engaging in prediction markets. Bipartisan legislation has also been introduced to extend the ban across the entire executive branch.

Interestingly, the resolution was introduced by Sen. Bernie Moreno (R-Ohio), who also supports a ban on congressional stock trading.

“I think quite often when there’s something new that people don’t like, they hold it to unusual standards compared to other things that exist,” Hanson stated.

He added that “imperfection” in a new thing is used as a rationale to block it by people “who are invested in an old thing.”