“futarchy's market structure creates selection bias that collapses welfare into a narrow optimum”
This is the most formal treatment of futarchy's microstructural challenges to date, modeling how selection bias and equilibrium multiplicity emerge from the joint information structure of action and outcome beliefs. The paper's central insight — that on-chain wallet transparency creates a cross-market welfare channel with a narrow interior optimum — has direct implications for how conditional prediction markets should be designed on blockchain venues.
Extensive technical background assumed