Ban Life Insurance! Ban Undertakers!
Ban Six Feet Under!
WE CAN'T LET ANYBODY MAKE A PROFIT ON DEATH!
Seriously, some of the reactions to the proposal to allow bets on terrorist attacks are a bit hysterical. It's possible that someone might order a terrorist attack and bet on it as a criminal activity, but that's no different from similar possibilities in life insurance. The intent of such markets is to take decision-making out of the hands of a small group of people who might be fooling themselves and let outsiders judge what makes sense. Some of the arguments that are supposed to be against the program are actually a defense of it. For example:
Investors have proven that they're good at forcasting stuff in general
No, they haven't. Statistics show that most 'top level' investors, ie fund managers, are thrown right back into the middle of the crowd within two years. In other words, the stock market is a big fat gamble, where some may do _slightly_ better than others.
The idea of this is to reward unconventional methodologies, not results. In that, it's a sound idea-- but unfortunately, human actions are involved in both the 'demand' and 'supply' portion of the curve (the latter proving this as a meta market), so it won't really work unless it is kept secret, but that is gone now...
Markets are not identical with “top investors.” If the top investors could beat the market, it would more sense to hand the decisions over to them rather than to the market.
The best argument against the Defense Department doing this is that private enterprise is already doing it.
Just a few days after the Berkeley psychologists (I thought I was through with them but I was wrong) tried claiming that conservatives are close-minded, we have an example of how leftists react to ambiguity, uncertainty, and new ideas with far more “fear and aggression” than typical conservatives. I wonder if that was the hidden agenda …
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