Prediction markets and the LHC

We're nearing a new era in particle physics, when the Large Hadron Collider (LHC) at CERN begins operation, and hopefully we'll finally discover the mechanism by which spontaneous symmetry breaking occurs in the electroweak theory. The vacuum state of our universe chooses a direction in the SU(2) x U(1) gauge space, thereby making the W and Z bosons heavy, and giving masses to spin-1/2 particles like the electron. We've been waiting for decades now to understand the detailed dynamics by which this occurs. Had the US SuperCollider project not been terminated in the early 1990's, we would have known the answer back in the 20th century. Now our hopes rest on a less powerful machine in Geneva.

In an earlier post I noted the inability of "experts" in certain fields (economics, political science, foreign affairs) to predict the future. They barely outperform monkeys throwing darts, and do not outperform well-informed lay people in their predictions. Can particle theorists do better? Over the years, theorists have expended an incredible number of high IQ person-hours investigating certain models of electroweak symmetry breaking (ranging from supersymmetry, to strong QCD-like interactions, to extra dimensions, etc.). These are more or less mutually exclusive possibilities, so it will turn out that much (if not most) of the time spent will have been completely wasted once the dust settles and the data tells us how Nature really works. (You might argue that time spent on exploring a speculative particle physics model is not wasted, even if the model fails to describe reality, and I might accept that point of view for the 10 or 100 best papers written on a particular model or idea, but not for the 1000th!)

I propose that we set up a prediction market where theorists can put their money (inevitably, small sums :-) where their mouths are. In a prediction market one trades outcome contracts which pay off a fixed amount (say, one dollar) in the event that the outcome matches reality (Kerry wins 2004 election, superpartner to gluon discovered with mass less than 100 GeV, etc.). If the set of contracts is exhaustive -- constructed to cover all possibilities (in our case, there may have to be a "none of the above" contract), the prices of each contract will reflect the probability that the community collectively assigns to a given outcome. It would be very interesting to see if this market does a good job of predicting the future, or if proud particle theorists are just as subject to the madness of crowds as stock and real estate speculators.

We might get the Iowa Electronic Markets to help us with this.