University of Chicago Law Review

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FutureMAP, a project of the Defense Advanced Research Projects Agency (DARPA), was an experiment to determine whether information markets could improve Defense Department decisionmaking. Information markets generate predictions from the prices of securities created for that purpose rather than primarily for investment. In this Article, Professor Abramowicz concludes that information markets could discipline administrative agency predictions, but only if technical hurdles such as the danger of manipulation can be overcome. The objective predictions of well-functioning information markets exhibit many of the same virtues as cost-benefit analysis. Both approaches can help to overcome cognitive errors and thwart interest group manipulation. The two forms of analysis might be combined to produce a "predictive cost-benefit analysis." In such an analysis, an information market would predict the outcome of a retrospective cost-benefit analysis, to be conducted some years after the decision whether to enact a particular policy. Because the prediction does not depend on the identity of current agency officials, they cannot shade the numbers to justify policies that they prefer.