Alex Tabarrok on Truth Bounties

Incentives matter. The Truth Bounties venture is a fine example of designing incentives for a badly needed service. Thanks to Alex for this discovery:

The Truth Market is an interesting combination of prediction markets, bounty hunting and crowd funding that aims to separate the wheat from the chaff of truth claims. Here is how it works:

You hear a statement that you think is bogus (or you hear the denial of something that you think is true). You open a challenge in which you offer to pay a truth bounty of $x if someone can prove that the bogus statement is true (or prove false the statement that you think is true). Other people can join your challenge, adding to the bounty. If the total bounty exceed a significant threshold the challenge goes live.

Once a challenge is live, anyone can earn the bounty if their evidence for or against the claim meets the standards of a neutral, professional, scientifically trained group of adjudicators (provided by TruthMarket). If within a given time-frame no one wins the bounty the bounties are returned to the contributors minus 20% which goes to the initial sponsor of the challenge. The initial sponsor can now also trumpet that despite significant cash no one was able to prove the bogus claim (or refute the true claim).

Thus, there are incentives to offer challenges, incentives to answer challenges, and incentives to pay attention to the results. TruthMarket has some serious people on its management team and advisory board. There are already challenges about global warming, cell phones, defensive gun use and other issues.

Will the Truth Market work? In order to work, TruthMarket will need a track record of significant money bounties and adjudicated claims. As of yet, I don’t see many (any? the site is unclear although this is the most important part of the process).

Most important, people have to regard winning a bounty and the failure to win a bounty as informative. My experience, however, is that the people who regard betting as informative are already rational and well-informed about other issues so the bounty isn’t necessary to prosecute the truth claim.

The Amazing Randi’s one million dollar prize for “evidence of any paranormal, supernatural, or occult power or event,” was first offered in 1964 but has never been claimed. In theory, that tells us a lot. In practice, the failure of the prize to be won does not seem to have changed many people’s beliefs.