Interview with the 2002 Laureates in Economics, Daniel Kahneman and Vernon L. Smith, December 12, 2002. Interviewers are Professor Karl-Gustaf Loefgren and Dr Anne-Sophie Crepin.

Prediction markets are markets for contracts that yield payments based on the outcome of an uncertain future event, such as a presidential election. Using these markets as forecasting tools could substantially improve decision making in the private and public sectors. We argue that U.S....