Comments on: InTrade expired the Larry Craig prediction market too early. http://www.midasoracle.org/2007/09/05/intrade-expired-the-larry-craig-prediction-market-too-early/ Prediction Markets, etc. Thu, 02 Feb 2012 23:13:18 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Chris. F. Masse http://www.midasoracle.org/2007/09/05/intrade-expired-the-larry-craig-prediction-market-too-early/#comment-16161 Chris. F. Masse Thu, 06 Sep 2007 05:53:23 +0000 http://www.midasoracle.org/2007/09/05/intrade-expired-the-larry-craig-prediction-market-too-early/#comment-16161 I agree with your comment. No need to rush to expire a resignation event derivative when the events outside are still in flux. http://www.nytimes.com/2007/09/06/us/06craig.html?ex=1346731200&en=edcd9ee3d09c664c&ei=5088&partner=rssnyt&emc=rss http://www.nytimes.com/2007/09/06/us/06plead.html?ex=1346731200&en=81480a8dc46e4daf&ei=5088&partner=rssnyt&emc=rss I agree with your comment. No need to rush to expire a resignation event derivative when the events outside are still in flux.
http://www.nytimes.com/2007/09/06/us/06craig.html?ex=1346731200&en=edcd9ee3d09c664c&ei=5088&partner=rssnyt&emc=rss
http://www.nytimes.com/2007/09/06/us/06plead.html?ex=1346731200&en=81480a8dc46e4daf&ei=5088&partner=rssnyt&emc=rss

]]> By: Michael Giberson http://www.midasoracle.org/2007/09/05/intrade-expired-the-larry-craig-prediction-market-too-early/#comment-16160 Michael Giberson Thu, 06 Sep 2007 03:18:52 +0000 http://www.midasoracle.org/2007/09/05/intrade-expired-the-larry-craig-prediction-market-too-early/#comment-16160 Uggh. The Inkling market on the Craig resignation was closed out today, and settled at a price equivalent to a predicted last day in office of September 1. Obviously wrong, given that it is now September 5 and Craig is still in office. Wrong even if you assume that Craig will leave office on September 30 as he previously announced that he world. But there is no need to close the market, much less settle contracts, given that the resignation remains incomplete. Uggh. The Inkling market on the Craig resignation was closed out today, and settled at a price equivalent to a predicted last day in office of September 1.

Obviously wrong, given that it is now September 5 and Craig is still in office. Wrong even if you assume that Craig will leave office on September 30 as he previously announced that he world.

But there is no need to close the market, much less settle contracts, given that the resignation remains incomplete.

]]> By: Chris. F. Masse http://www.midasoracle.org/2007/09/05/intrade-expired-the-larry-craig-prediction-market-too-early/#comment-16159 Chris. F. Masse Wed, 05 Sep 2007 16:57:45 +0000 http://www.midasoracle.org/2007/09/05/intrade-expired-the-larry-craig-prediction-market-too-early/#comment-16159 "Definition/interpretation/expiration — all critical issues for news event markets." I agree too that, in this case, InTrade jumped the gun. So it is not a problem of contract statement formulation, it's a problem regarding the interpretation of external information used for expiry. US Senator Larry Craig simply said, "I'm thinking about resigning on September 30". He did not say, "I'm resigning, effective September 30." There is a huge difference between the two kinds of statement. And this difference (and InTrade's error) pops up today because Larry Craig is exercising his constitutional right to change his intent. His intent was to resign. = His intent is to stay in office, conditional to his winning a legal battle before September 30. “Definition/interpretation/expiration — all critical issues for news event markets.”

I agree too that, in this case, InTrade jumped the gun. So it is not a problem of contract statement formulation, it’s a problem regarding the interpretation of external information used for expiry.

US Senator Larry Craig simply said, “I’m thinking about resigning on September 30″. He did not say, “I’m resigning, effective September 30.” There is a huge difference between the two kinds of statement. And this difference (and InTrade’s error) pops up today because Larry Craig is exercising his constitutional right to change his intent.

His intent was to resign. = His intent is to stay in office, conditional to his winning a legal battle before September 30.

]]> By: Chris. F. Masse http://www.midasoracle.org/2007/09/05/intrade-expired-the-larry-craig-prediction-market-too-early/#comment-16158 Chris. F. Masse Wed, 05 Sep 2007 15:06:01 +0000 http://www.midasoracle.org/2007/09/05/intrade-expired-the-larry-craig-prediction-market-too-early/#comment-16158 The real issue is not much that InTrade makes a mistake (we all do), but whether it acknowledges its mistake and compensates the victims. (In the North Korea Missile scandal, InTrade did not behave well in this perspective, according to my reading of the situation.) The real issue is not much that InTrade makes a mistake (we all do), but whether it acknowledges its mistake and compensates the victims. (In the North Korea Missile scandal, InTrade did not behave well in this perspective, according to my reading of the situation.)

]]> By: Michael Giberson http://www.midasoracle.org/2007/09/05/intrade-expired-the-larry-craig-prediction-market-too-early/#comment-16157 Michael Giberson Wed, 05 Sep 2007 14:50:27 +0000 http://www.midasoracle.org/2007/09/05/intrade-expired-the-larry-craig-prediction-market-too-early/#comment-16157 The <a href="http://home.inklingmarkets.com/trades/new/23871">Inkling market on the Craig resignation</a> has had some similar problems, though there the (volunteer/hobbyist) market manager only closed the market early (after the Craig announcement on September 1), and did not yet pay out. Still possible to simply re-open the market. Definition/interpretation/expiration -- all critical issues for news event markets. Often much harder than you might think to define a good contract in advance that covers all the possible shades of gray in real world outcomes. (For example, a recent Inkling market asked "Will Michael Vick accept a plea bargain by Friday, August 17?" Some news reports indicated that Vick decided to take the deal on Friday, but delayed public announcement until Monday. Suddenly the issue becomes "what does it mean to 'accept a plea'?" Did "accept" happen when Vick decided to accept, when Vick physically signed a deal, when his attorney filed the paper with the courts, when the PR people announced that he had accepted the deal, or when the court accepted the filed deal?" Etc. ) The Craig resignation contract presents some similar issues, though the professionals should be aware of the potential problems and a bit more thoughtful in execution. Judging from the quoted material from the contract, I'd agree that InTrade jumped the gun. While traders no doubt would like completed contracts settled at the earliest possible point, it is in no one's interest to settle contracts wrongly. The Inkling market on the Craig resignation has had some similar problems, though there the (volunteer/hobbyist) market manager only closed the market early (after the Craig announcement on September 1), and did not yet pay out.

Still possible to simply re-open the market.

Definition/interpretation/expiration — all critical issues for news event markets.

Often much harder than you might think to define a good contract in advance that covers all the possible shades of gray in real world outcomes.

(For example, a recent Inkling market asked “Will Michael Vick accept a plea bargain by Friday, August 17?” Some news reports indicated that Vick decided to take the deal on Friday, but delayed public announcement until Monday. Suddenly the issue becomes “what does it mean to ‘accept a plea’?” Did “accept” happen when Vick decided to accept, when Vick physically signed a deal, when his attorney filed the paper with the courts, when the PR people announced that he had accepted the deal, or when the court accepted the filed deal?” Etc. )

The Craig resignation contract presents some similar issues, though the professionals should be aware of the potential problems and a bit more thoughtful in execution. Judging from the quoted material from the contract, I’d agree that InTrade jumped the gun. While traders no doubt would like completed contracts settled at the earliest possible point, it is in no one’s interest to settle contracts wrongly.

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