Adam Siegel (of Inkling) interviews their #1 event derivative trader:
7) What is one feature Inkling doesn’t have you would like to see?
Hmmm…. A good exchange rate to US dollars? (Ha ha ha). I’d like to see a tighter system for market cash-out. I dig the user-made-market thing, but it gets old real fast when the manager doesn’t cash out a market for a week or more after it’s closed. On a similar note, I’d love to see people think through their closing times a little better. If the time of an event being predicted is known, the market should probably close just before that event starts, or part way through. A month earlier is usually pointless, and a day later after the basketball game or whatever is over is just free money for sleazy after-the-fact traitors like m… er… nice weather recently, isn’t it?
Public DYI prediction markets can work well only if we trust the people who will expire them. One suggestion would be to create a reputation system for the Inkling event derivative managers.
Previous: Adam Siegel interviews first “Million Inkle Traderâ€. – by Mike Giberson (who did cut out the most interesting part in his interview )
Hey, Chris, you are right on this point.
I left it out because it is worth thinking more about and somewhere in the back of my mind (=idea graveyard) I had the idea I would write this up separately.
DIY prediction markets suffer quality issues both on the front end (contract definition) and the back end (expiration and close out).
On contract definition, for example, the Tour de France market on Inkling only listed 20 (out of 120+) participants, and didn’t include a “rest of field” category, and didn’t explain what would happen if someone other than one of the 20 listed outcomes actually won. (One of the listed 20 did win.)
On close out, one issue is abandonment – I have unresolved holdings in a 2006/7 English Premier League market when the league finished months ago. Another issue is contract resolution – me and nearly everyone else invested in last fall’s “October surprise” market were surprised by the resolution. (http://home.inklingmarkets.com/market/show/2245) The “No October surprise” outcome was trading at 97.0, but the market was resolved in favor of the “Other” outcome, which was then trading at 0.9.
There has been some discussion of these issues on the Inkling forums, but not much in the way of detailed advice. Of course, in a DIY world, can’t guarantee that the DIY-er will (1) read detailed advice, or (2) use it.
Public DIY prediction markets need a reputation system for their managers. Like at eBay.