Friday, January 7, 2011

Kant on Betting and Prediction Markets

Immanuel Kant suggests we put up or shut up:
The usual touchstone of whether what someone asserts is mere persuasion or at least a subjective conviction, i.e., firm belief, is betting. Often someone pronounces his propositions with such confident and inflexible defiance that he seems to have entirely laid aside all concern for error. A bet disconcerts him. Sometimes he reveals that he is persuaded enough for one ducat but not for ten. For he would happily bet one, but at ten he suddenly becomes aware of what he had not previously noticed, namely that it is quite possible that he has erred. - Critique of Pure Reason, (A824/B852)

And where exactly would Kant take his stand?
If it were possible to settle by any sort of experience whether there are inhabitants of at least some of the planets that we see, I might well bet everything that I have on it. Hence I say that it is not merely an opinion but a strong belief (on the correctness of which I would wager many advantages in life) that there are also inhabitants of other worlds. -Critique of Pure Reason, (A825/B853)


  1. Brilliantly spotted. Thanks for pointing that out.

  2. A very important point also dear to the hearts of many economists: talk is cheap; put up or shut up. e.g all you Americans who claim to believe in the oncoming Rapture: why do you still have life-insurance and pensions?

    Economists are always complaining about the potential for hypocrisy built into democratic politics, where people can afford to waste their votes expressing their views about how they would like the world to be (such as the values they themselves would like to have: American 'family-values' conservatives have far more illegitimate births and divorces than liberal voters) rather furthering their actual interests. E.g. ideologically driven opposition to global climate change. The problem is that the warm feeling of self-expression accrues directly to oneself, while the consequences of otherworldly foolishness is spread among everyone. The new trend for prediction markets, whether for terrorism or global climate change, can complement normal democratic systems since by aligning individual choices and consequences much more closely, it can reveal what people's actual factual beliefs are (which may surprise even them).

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