Effect on Stock Market

745243_u_s__supreme_court_2.jpgWhen one thinks of the stock market, their head becomes filled with corporations, interest rates and rises and falls in the economy. A new phenomenon sweeping throughout the Internet, however, is bringing a new meaning to “playing the stock market”. These new markets, coined “prediction markets” allow users to buy stock pertaining to whether future real world events will occur or not.
For example, a current hot market in the legal “subsection” is whether the Supreme Court will rule individual mandate to be unconstitutional before December 31st, 2012 at midnight. Predictions run at $5.00, and from current buying and selling of these stocks, a 50% chance of this happening has been generated. Thus, the people purchasing and selling these shares are creating the probability of the event occurring. Other hot topics include the potential leader of Libya at the end of the year and who will win this season’s “American Idol”.
This system obviously will not directly effect whether individual mandating will be ruled unconstitutional, but it shows how the general public feels about the situation. Furthermore, since real money is being put down, these predictions represent an accurate portrayal of people’s true feelings. This is simply because people would rather make money than lose it, and will seriously consider the possibility of an event actually occurring before purchasing “stocks” in it.
How does this pertain to the everyday practice of a lawyer? Well it does not really now but this concept is still in its infant stages. Give it a few more years and who knows what kinds of real world questions people will be able to buy stocks in. All types of public cases brought to trial may be open to trading in this prediction market, and the probability statistics generated by buying and selling tendencies would prove to be very useful for each side to gauge where they stand in a given argument. Going further, these probabilities may demonstrate to lawyers how people feel about certain issues that they may encounter with clients, allowing them to shape their approach accordingly. Law Firms would most certainly see these probabilities as somewhat legitimate, as they reflect the view of the public, which is exactly the role a jury has in the court of law. This may sound slightly far-fetched and even ambiguous, but crazier things have certainly happened. After all, don’t we all sit around sometimes and wonder where this increasingly interconnected world is taking us?
Contributed by Merrick Pastore