Firstly, one of my law professor friends worried that a prediction market would create an unseemly incentive for researchers to hide their discoveries, rather than to promulgate them. He reasoned that a discoverer of new and material information would want to play the market rather than tip her hand. I replied along these lines:
Rather than non-disclosure, I think we would see this pattern: Trade first and then talk. Suppose, for instance, that you have developed a proof of Goldbach's conjecture. See, e.g., the GBch claim currently traded on the Foresight Exchange. You load up on the GBch claim, currently trading at $.42/share, and then release your findings. The price soars and you sell at a profit.
Yeah, you might try a head-fake, first, to drive down the price. But how are you going to fool the market? And, anyhow, once you start buying the price is going to rise, anyhow. So a profit-maximizer will want to get it up sooner rather than later, to cash in. Time value of money and all that.
Admittedly, though, I cooked up that reply off the top of my head. I am not aware of any more complete and careful reply to my correspondent's good question.
Secondly, a few people questioned my use of "prediction exchange" for "prediction market in claims about the sciences and useful arts." One person thought my label too indistinct; another argued that an "exchange" is a collection of markets. I replied, (again paraphrasing):
I agree that "prediction exchange" is not ideal. I've not yet found an alternative term I'm really happy with, though. Tacking "science" or "technology" or "useful art" to "market" or "exchange" strikes me as too narrow. "Sciences and useful arts exchange" would work, but . . . ugh. So I satisfied myself, for the purposes of this paper, with trying to give "prediction exchange" and "prediction market" distinct and clear meanings within the paper's bounds. But, agreed, it would be far better to come up with some label that works more generally.
What about "Science and Technology Exchange?" It's wordy, but I could use an acronym—"STEx" maybe. Or "SciEx." I don't guess "SEx" would be very appropriate, though it would certainly get me a lot of SSRN downloads.
That terminological problem really bugs me. I get pretty worked up about the rhetorical uses of names in any event. Here, it seems both especially important and especially difficult to get the name right. On top of all else, I'm in that post partum stage, after having loosed a writing on the world, where I find myself particularly susceptible to niggling doubts. I wonder, "Did I blither where I should have raved?"