Depending of the size of the group, there is a very catastrophic possible side-effect from such a system : we have to decide one of the two techniques to use to solve a problem, I make the prediction technique A will not work, but the others disagree and finally the group decides to chose technique A. What is my interest now ? To ensure the group will fail, so my prediction will be true.
A very fundamental aspect of group decision is to ensure the "dissidents" will still do their best to ensure the group success. Prediction markets may work when you can't really change the outcome of the prediction (when you predict what others will do), but not for (relatively small) group decision when you'll be part of the process that will finally succeed or fail.
Robin Hanson has said that prediction markets have historically been extremely resilient against manipulation attempts. Historical markets are mostly those where the "bettors on beliefs" do not have a personal stake in the success of "technique A," like a group member would--so it seems like this futarchist method is overall better than historical group decision-making methods, even if there are some perverse incentive problems.
So here's the problem: Given a well-defined group charter, how should groups make decisions? You have an issue, you've talked it over, and now it's time for the group to take action. Different members have different opinions, because they're not perfect reasoners and because their interests don't reliably align with those of the group. What do you do? Historical solutions include direct democracy, representative democracy, various hierarchies, dictatorships, oligarchies, consensus...But what's the shoes-with-toes solution? How do they do it in Weirdtopia? What is the universally correct method that could be implemented by organizations, corporations, and governments alike?
This Tuesday, I posted an idea. I came up with it about ten, maybe fifteen years ago, decided it was awesome and revolutionary, and spent a few years doing some extremely ineffectual advocacy for it. I've pushed for it in various contexts on and off since then, but I'd basically shelved it until I had a better platform to talk about it. And recently I realized, belatedly, that Less Wrong is probably the perfect audience. You're going to be open to it, and you'll be able to competently critique it. And maybe some of you will use it.
I posted this tease first because the idea is a solution to a problem you may not have thought for five minutes about. I want to give you the opportunity to come up with other solutions, or discuss how to rigorously evaluate ideas. Also, I'm really curious to see whether anybody independently reinvents mine. Over the years, I've had the experience several times of reading someone else's work and thinking they're about to start pitching my idea. But they never do. It all gives me complicated feelings.
Please discuss in the comments. Remember, we're aggregating the opinions, the judgment, of the group members, not their personal preferences. So answers like “iterated runoff voting,” “bargaining theory X,” or “coherent extrapolated volition” are not in themselves what I'm looking for. If you happen to know what my idea is, or manage to find it by google-stalking me, please don't give it away yet.