Robin Hanson channels and extends Thomas Reid:
What can you do about serious skepticism, i.e., the possibility that you might be quite mistaken on a great many of your beliefs? For this, you might want to consider which of your beliefs are the most reliable, in order to try to lean more on those beliefs when fixing the rest of your beliefs. But note that this suggests there is no general answer to what to do about doubt â€“ the answer must depend on what you think are actually your most reliable beliefs.
The sceptic asks me, Why do you believe the existence of the external object which you perceive? This belief, sir, is none of my manufacture; it came from the mint of Nature; it bears her image and superscription; and, if it is not right, the fault is not mine: I even took it upon trust, and without suspicion. Reason, says the sceptic, is the only judge of truth, and you ought to throw off every opinion and every belief that is not grounded on reason. Why, sir, should I believe the faculty of reason more than that of perception?â€”they came both out of the same shop, and were made by the same artist; and if he puts one piece of false ware into my hands, what should hinder him from putting another?
But Hanson goes on:
our most potent beliefs for dealing with doubt are often our beliefs about theÂ correlations betweenÂ errors in other beliefs. This is because having low error correlations can imply that related averages and aggregates are very reliable. For example, if there is little correlation in the errors your eyes make under different conditions in judging brightness, then you need only see the same light source under many conditions to get a reliable estimate of its brightness.
Since beliefs about low error correlations can support such strong beliefs on aggregates, in practice doubt about oneâ€™s beliefs often focuses on doubts about the correlations in oneâ€™s belief errors. If we guess that a certain set of errors have low correlation, but worry that they might really have a high correlation, it is doubts about such hidden correlations that threaten to infect many other beliefs.
Indeed: philosophers don’t just worry that the world might not exist, we also worry that our access to the world may be mediated by biased methods: not just perception itself, but the conceptual apparatus that interprets perceptions and makes them meaningful. If there is an error of some sort in that apparatus, it’s unclear exactly how we could go about correcting it, when our only access to that error is through the biased apparatus. I follow Nelson Goodman and John Rawls in advocating reflective equilibrium for such problems, but this method has its limits. Specifically, it doesn’t tell us how to adjudicate case/rule or percept/concept disagreements when they arise, especially in light of the way that any “Error Theory” will entail particular prior commitments which may themselves be mistaken.
Hanson argues that the correlation problem seems particularly pressing when we describe cognitive and social biases. That is, it’s not clear what we can do if our minds, communities, and institutions tend to mislead us in characteristic ways that we cannot anticipate. Of course, it is clear that doubters should seek better institutions and social processes. But what’s better?
Well, Hanson is an economist and he thinks that markets are better:
If fact, you may end up agreeing with me that our best approach is for would-be doubters to coordinate to support new institutions that better reward correction of error, especially correlated error. Â I refer of course to prediction markets.
Yet most non-economists and some economists don’t find markets to be particularly credible. (Remember: “Markets can remainÂ irrational a lotÂ longer than you and IÂ can remain solvent.”) Since most concerns are related to market manipulation once futarchy is instantiated, is there a way to prove a hypothesis about real prediction markets that doesn’t fall into a pessimist’s version of the “real communism has never been tried” trap?
Prediction markets suffer from the same skeptical concerns that other governance forms suffer: a kind of path-dependence that suggests “you can’t get there from here.” There’s no reason for democratic citizens skeptical of markets to drop their skepticism in the face of facts they cannot adequately evaluate without depending on their own reasoning powers. Cognitive and social biases guarantee that Hanson’s expertise and disciplinary commitments to economics only undermine his capacity to enact his preferred policies. And even he must worry that he has given too much credence to the wrong methods, if he is to be consistent.
In sum: Skeptics can tell a story about the manipulation of prediction markets once they become a tool for governance, which seems to distinguish their concerns from research results for all sub-governance prediction markets. The best evidence for this kind of manipulation isn’t laboratory results but actually existing futures markets. Much popular speculation, for instance, surrounds the capacity of hedge funds or investment banks to manipulate futures to their own gain by bringing outsized portions of capital to bear in extremely complex forms of market manipulation. Given this, why ought we to accept the evidence from small group experiments like those described by Hanson? The real question is how such prediction markets would perform when they actually served a governance function and were subject to the actions of heavily-leveraged firms looking to enact ingenious schemes.
Is there a way to take a bet against prediction markets that isn’t a performative contradiction?