I just came across a great article by Robin Hanson over at George Mason – which as you know is one of my favorite sources of behavioral economics wisdom – from back in August 2000 (Still good after 12 years!! The very definition of a thought leader!). I am also a big fan of Robin’s blog Overcoming Bias.
The motivation for even considering this idea is that the typical citizen/voter/American is good at understanding and articulating his or her basic values. But not nearly as good at understanding the complexities of policy design and development. I have posted on this at length (for example). So we need to separate these two if we want government to get anything done. Have voters select their candidates based on core values, but create some other mechanism to design the policies. In his Futarchy model, he proposes a prediction market (using the Wisdom of Crowds idea, implemented similarly to the Iowa election market (link), Hollywood Exchange, etc.).
I am not sure if this model would work better than our current one – nothing like this has ever been tried before and there could easily be unforeseen consequences, emergent interactions, or other side effects of complexity. But it is definitely worth considering, developing, and trying out.