Hanson’s writing never disappoints, even when he’s claiming that medicine is useless (the statistical argument is strong).
On the other hand Cowen is one of my most eagerly read bloggers (and semi-frequent provider of fodder for my comments), but sometimes Cowen says the darndest things, like this from the post linked above:
The very reason we resort to a firm, rather than the market, is to build consensus and morale, not to forecast the truth.
Consensus I’ll buy, as shorthand for lower in-firm transaction costs. Morale? He’s got to be kidding (note that the only instance of “morale” in the Wikipedia article on theory of the firm is immediately followed by “-damaging”).
Prediction markets would tend to break down firms, but of course they still can flourish in Arrow-Hahn-Debreu space.
My guess is that in the short term adoption of prediction markets will favor firms that have access to specialists needed by early adopters to succeed and layers of management that can be made redundant without immediately threatening the authority of the top, i.e., large firms.
I have no idea what Arrow-Hahn-Debreu space is, other than that it has something to do with competitive equilibrium. If I had to take a wild ignorant guess at the import of “but of course…” I would say it is arguably a tautology.