Power Futarchy

A simple way to apply futarchy to for-profit firms is profit-futarchy: make markets that estimate total firm market value given key firm choices, like who is CEO, what are key acquisitions, or what are key firm policies. Then do what such markets advise. But a big problem with this approach is that top people, like the CEO, often do not see their personal success as maxed by firm success. For example, they tend to be wary of losing control over key firm choices, even if that would make such choices more profitable.So CEOs block the application of futarchy to firms. You might think that investors could just force CEOs to use futarchy, if that would max investor gains. But investors also can’t seem to prevent the adoption of poison pills, which also cut investor gains. It seems we must accept that top managers have power sufficient to induce firm outcomes that don’t max profits. Investors do not in fact fully control firms.Okay, then what if we flip this script, and set decision markets…