Speaking of Definitions ….
Alex Kirtland November 24th, 2006
One useful way to define a set of things that you’re interested in, as opposed to a set of similar things that you are not interested in, is to create a list of relevant attributes of those things and all possible values for each attribute.
So, we could have attribute 1 with values 1, 2, n; attribute 2 with values 1, 2, n; and so on.
So, if Robin is interested in defining a set of markets that he is interested in, he only has to pick appropriate values for each attribute and then call them prediction markets.
Logical, right?
The nice thing about this approach — creating a controlled vocabulary — is that it easily lends itself to the creation of taxonomies (in other words, this is not an either or exercise). And not just one, all powerful, be all and end all taxonomy, but a faceted classification scheme which allows you to organize things from multiple points of view.
This way, if someone is interested in organizing all markets by what the underlying is, it’s not a problem, nor incompatible with someone who wants to organize all markets by whether they use play money or not.
But part of the problem that people are having is that markets is a complicated concept. It’s actually made up of many sub-concepts, such as Traders, Exchanges, Brokerages, Clearing Houses, Trading Systems, and so on.
Each of these sub-concepts easily lends itself to it’s own list of attributes. For example, Traders have attributes of motivation, and type (institutional, retail, etc.) and these attributes and values can be independent from the attributes of a Brokerage.
To deal with this type of situation library scientists have created something called an ontology. An ontology essentially defines the relationships between related concepts, and each concept has its own controlled vocabulary. This allows us to define structured relationships between different objects in the set.
But what if Robin is only interested in just stating what he’s interested in and screw everything else. An ontology can be a bit like using the space shuttle to move you across the street. It’s hard to create, and it’s really only useful for really complicated problems (like organizing all of Cisco’s products).
That’s why when creating a taxonomy (or definitions of groups of things, if you prefer), it’s usually best to try and understand what’s the end goal of all this activity. Then you can make your subsequent activities as robust or simple as you prefer.
That said, though, given the amount of interest in studying markets, creating a market ontology may not necessarily be a waste of time. At the very least it would obviate the need for these sorts of conversations. (Of course, then everyone would be arguing over what are the right attributes and values for which concepts … but that would be a far more productive conversation than just arguing over whether the IEM is an entertainment, educational, or predictive market.)
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Of course, then everyone would be arguing over what are the right attributes and values for which concepts … but that would be a far more productive conversation than just arguing over whether the IEM is an entertainment, educational, or predictive market.
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I don’t disagree with that.
Excellent blog post, by the way. Interesting. Makes me think a lot.
Insofar as I’m “anti-taxonomy”, of course having more names is generally a good thing, but taxonomies aren’t particularly useful for capturing process.
Yes, true enough, but an ontology (as opposed to a taxonomy) is specifically a way to capture the relationships between different concepts. In other words, an ontology would capture a process.
If you include descriptions of process as part of a classification scheme, then yes your classification scheme will describe process.
Now, a biological taxonomy at least partially describes the process of evolution.. but again I’m not sure what one is supposed to do with PM definitions aside from trying to influence public opinion, law and regulatory decisions to let - if not all - at least our favorite flowers bloom.
Those are worthy goals, but is crafting definitions one’s best use of time in that case? (It could be. I’m making a relative claim, not an absolute one.)
Great post, Alex.