Predictify sparks a prediction market controversy at Freakonomics.

“Smack Fogarty”:

Jed and EJSS, a prediction market consultant, and the CEO of a struggling prediction market company, make valid points, but WHO CARES? The general public certainly doesn’t. You can continue to quibble all you want and ride the high horse, but if Predictify works, it works, and that’s all anyone cares about. Let’s at least congratulate them on coming up with a unique model.

My remarks (if I may):

1. “Smack Fogarty” is obviously a competitor of NewsFutures.
2. “Smack Fogarty” is obviously a pseudonym —probably intended to send us the wrong hint as to whom is behind this nasty comment. As for Midas Oracle, I try to register people manually under their true full name, so as to avoid masked vendors bashing each other.
3. NewsFutures is a great, little company selling consultancy services and software for internal prediction markets. I like it for two reasons. Number one, Emile Servan-Schreiber (a.k.a. “EJSS”) is intellectually verbal in the prediction market science. (I couldn’t come up with a smoother sentence. ) Number two, NewsFutures shows its wares; every kind of software they sell can be tested on their public marketplaces. (Inkling Markets is an open company, too.) Contrast that with many vendors and consultants who heavily insist on secrecy.
4. Emile Servan-Schreiber didn’t say that Predictify won’t work. EJSS wants us to use the right vocabulary. When there’s no trading, let’s not talk about “prediction markets”.
5. Other than the remarks above, “Smack Fogarty” is 100% correct that the public don’t give the first fig about the kind of mechanism designs, as long as it works well (in their own, biased assessment).

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APPENDIX: Here’s Jed Christiansen’s comment (mentioned by “Smack Fogarty”)…

I agree with Emile here.

Predictify appears to me to be a more sophisticated polling site. In a market, there is an element of risk and consequent reward. I might be willing to risk $100 on my forecast of the presidential election, but only $10 on my forecast of the World Series. That is taken into account in a prediction market, or market of any type. Most markets allow buying and selling, which could also “lock in” profits based on price movements. While you can change your vote on Predictify, that doesn’t make you any money, real or virtual. You’re just registered as changing your vote. While polling certainly is an information aggregation mechanism, and fits into the “Wisdom of Crowds,” it doesn’t really appear to be a “market.”

UPDATE: “Matt” answers to “Smack”…

I think the “valid points” here are pretty important, because they are actually questioning whether Predictify works or not. There doesn’t seem to be any evidence that it does – that’s the point.

— Posted by Matt