To be respected, a judgment should be respectable. At the minimum, it should be stated.
—
FOREWORD: As I wrote in my previous blog post on the Harry Potter prediction market, I think that NewsFutures did a good job on it, overall.
—
Emile Servan-Schreiber of NewsFutures (a play-money betting exchange) does not answer my criticism. There are two kinds of prediction markets. First, the ones that will be settled by external empires (like in sports or in political elections). The expiry judgment in this case can be elliptic. For more information, we research the original source(s) used for expiry. The second kind of prediction markets are settled via external information interpreted by the exchange managers. The Harry Potter event derivative is in this case. There is no official source of information that will tell you whether Harry Potter dies or not, since the book author and the book publishers insist on secrecy. That is why I wrote that the NewsFutures expiry judgment on the Harry Potter bet should be a little bit elaborated and seconded with factoids.
Via Niall O’Connor, Bloomberg:
[...] “ambiguous ending” to the seventh and final novel about the boy wizard. [...] Three employees at the bookmaker read the novel by J.K. Rowling and failed to agree on the ending of the novel, Adams said. [...]
NewsFutures could have asked three of its traders to read the book, or it could have commissioned a literature professor to deliver a memo. It’s not enough to expire an event derivative of the second kind with a simple log line, like “Harry Potter does indeed survive”. Reading the Bloomberg output above instills doubt in mind on whether the NewsFutures managers did really read the book, or did their research with enough vigor. The comment from Emile-Servan-Schreiber, whose professionalism I respect overall, does not respond to my doubt. Again, what I wanted was a semi elaborate and detailed expiry judgment statement on the Harry Potter bet, similar to the kind of work done by the judges assigned to expire the prediction markets of the Foresight Exchange. We know their names, we know what will be their line of reasoning, we know the facts that they took into account, we know how they came up to their conclusions, and, thus, why they expired the event derivative one way and not the other way. NewsFutures would be well inspired to take after the Foresight Exchange on this issue.
To be respected, a judgment should be respectable. At the minimum, it should be stated.
—
ADDENDUM: Emile Servan-Schreiber’s comment on my previous blog post…
As I answered to Niall earlier through more personal channels, I suspected that William Hill’s decision has more to do with the bad wording of their HP bets than with the clarity of the book’s ending (in which Harry survives). So, I looked around on the web and I found the bets and terms that William Hill proposed:
————————————————
Who Will Pot Potter**4/5 Lord Voldemort
5/2 Professor Snape
6/1 Draco Malfroy
6/1 Ron Weasley
6/1 Harry Potter
14/1 Lucius Malfroy
14/1 Hermione Granger
20/1 Neville Longbottom
20/1 Proffessor Slughorn
25/1 Hagrid
25/1 Cornelius Fudge
33/1 Arthur Weasley
33/1 Dawlish
40/1 Proffesor McGonagall
50/1 Lupin
50/1 Mr Filch
50/1 Dobby
100/1 Ginny Weasley
100/1 Tonks
100/1 Fred/George Weasly
100/1 Uncle Vernon
Other On Request**If Harry Potter survives all bets will be void and stake money will be returned -You cannot lose!
————————————-What happened is that HP survived and WH just had to return all stake money, as the ** terms forces them to do. It really has nothing to do with any ambiguity about HP’s fate.
By the way, anyone who wanted to argue that HP is dead at the end of the book would simply have to reproduce here, at MO, the relevant passages of the book. Any other data or argument is of little value.
