Decision Market
Using bets to decide what to do.
#Plain-English Definition
A Decision Market is a specialized prediction market designed to help an organization make a choice. It usually asks a conditional question:
"If we do X, what will the outcome be?" vs "If we do Y, what will the outcome be?"
#Example: Corporate Strategy
A company wants to know if they should fire their CEO. They launch two markets:
- "What will our stock price be in 1 year IF we fire the CEO?"
- "What will our stock price be in 1 year IF we keep the CEO?"
If Market 1 trades at $150 and Market 2 trades at $100, the market is saying the company is worth 50% more without the current CEO. The board can then use this "market advice" to make the decision.
#Futarchy
This concept is the foundation of Futarchy ("Vote on values, bet on beliefs"). In a Futarchy, the government would automatically implement whichever policy the market predicts will have the best result.
#Key Takeaways
- Decision markets turn forecasts into actionable advice.
- They rely on Conditional Markets (If P, then Q).
- They are used by companies (like Google and Microsoft internally) and DAOs to guide strategy.