I think Robin’s being too hard on himself.

Chris F. Masse April 18th, 2007

That’s what I was told by someone who knows him [Robin Hanson] for more than just years.

So I figured out I should write up a little something, especially since I saw this morning that my previous blog post (Is GMU professor Robin Hanson an inventor, an innovator, or… a complete loser??) was yesterday’s most downloaded stories.

#1. Robin Hanson has very high expectations. (More on this in a moment.)

#2. Robin Hanson is a truthful person.

Mix the two elements together and you get a “bombastic statement” ( ), which surprised many people.

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Robin Hanson’s statement (yesterday):

I’ll take credit for creating some ideas the world has found useful, but I have completely failed both the market test and the academic test. That is, I can’t convince any business to let me join them to deliver my ideas at scale, and I can’t convince any top journal to publish my ideas.

The comment was made on this Mike Linksvayer’s blog post.

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Robin Hanson’s Big Idea on Prediction Markets:

- “Decision Markets” (PDF): A set of decisions (in the form of conditional prediction markets) is traded. The decision that gets selected in the end by this complex market mechanism is the one that the organization (a corporation, a democracy) applies to itself.

- I am not an academic expert, but I think that his “decision markets” and “futarchy” papers have not been accepted by top academic journals.

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Chris Masse’s Take on Decision Markets:

- Intrinsically, it’s all logical and a great idea.

- The problem is that there is no need for the decision markets. The executives and politicians like to make decisions themselves. With all due respect to my readers, I’ll have a graphic metaphor. Trying to sell the concept of decision markets to executives and politicians is like trying to sell very sophisticated, mechanized, high-performance dildos to young men; there is no need for that in the market. For some mysterious reason, the young men insist on performing “that”… using their own instrument.

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Robin Hanson, in the prediction markets timeline:

a) Robin Hanson set up and run a rudimentary prediction exchange (a market board, PPT file) in January 24, 1989. The outcome to predict was the name of the winner of a Poker party.

b) Until evidence of the contrary, it seems that Robin Hanson was the first to set up and run a corporate prediction exchange —at Xanadu, Inc., in April 1989. See: A 1990 Corporate Prediction Market + Anonymity is important for employees trading on internal prediction markets.

Robin Hanson: “I started a market at Xanadu on cold fusion in April 1989. In May 1990, I started a market there on whether their product would be delivered before Deng died.”

c) Until evidence of the contrary, it seems that Robin Hanson was the first to set up and run a bunch of imagination-based prediction markets (what Chris Masse class the “X Universes”) —See the Murder Mystery Evening described by Barney Pell —circa June 8, 1989. Here’s Robin Hanson’s design of a non-electronic, rudimentary prediction exchange: Market Board - PPT file.

d) Until evidence of the contrary, it seems that Robin Hanson was the first to write a paper on prediction markets created and existing primarily because of the information in their prices (as opposed to markets created primarily for speculation and hedging).

Could Gambling Save Science? - (Reply to Comments) - by Robin Hanson - 1990-07-00
Market-Based Foresight: a Proposal - by Robin Hanson - 1990-10-30
Idea Futures: Encouraging an Honest Consensus - (PDF) - by Robin Hanson - 1992-11-00

e) Robin Hanson godfathered the Foresight Exchange (created in 1994) and NewsFutures (created in 2000).

f) Robin Hanson invented the (debatable) concept of decision markets (PDF) —a decision-aid tool and/or decision-making tool (one application: firing CEOs).

g) Robin Hanson invented a new market design, the Market Scoring Rules, a mix between CDA and Scoring Rules —now in use at Inkling Markets, Washington Stock Exchange, and MicroSoft Research.

h) For more information, see Robin Hanson’s classification of markets.