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Markets are hard to beat and even harder to manipulate. On Dec. 11, 2003, InTrade's contract on Saddam Hussein's capture suddenly began to move. "We noticed that that contract started trading from 9 to 30 for no reason," says Mike Knesevitch, communications director. "Something was happening." In fact, someone may well have been trading on inside information. Two days later, Saddam was in custody.

In the near future, prediction and decision markets are likely to extend their reach. At the University of Iowa, which created the Iowa Electronic Markets, researchers are developing a prediction market designed to forecast flu outbreaks, and their counterparts at the University of Miami have organized the Hurricane Futures Market, where you can place bets on where the spit will hit the fan. Corporations so far have tended to focus on relatively low-value projects like predicting the next quarter's sales. Google, for example, has been conducting an internal market to predict project-completion and product-launch dates. But given the market system's track record, corporations are about to move to bet-the-ranch-type decisions. "We're about to have a Cambrian explosion of the technology," says Servan- Schreiber.

For individuals, markets are beginning to offer potentially useful opportunities to hedge risk in their lives. Do you think the real estate market is going to crash and take your house with it? HedgeStreet.com lets you take a position on the median home price in a number of large cities by matching your bet in a "hedgelet" against someone with the opposite opinion. Similarly, you can hedge the price of gasoline, mortgage rates or inflation rates. Wolfers believes that individuals will ultimately be able to use markets to hedge everything, even their own employability.

For government policymakers, the potential of markets to support decision making is "humongous," says Bob Hahn, director of the AEI-Brookings Joint Center for Regulatory Studies. Will cutting taxes raise the GDP? Congress can debate it. But if you establish a market for the question, the answer will likely be superior to whatever one Congress arrives at. You can bet on it.