http://www.midasoracle.org/2008/07/09/chris-masse-comment-2/ Prediction Markets, etc. Thu, 02 Feb 2012 23:13:18 +0000 hourly 1 http://wordpress.org/?v=3.3.1 http://www.midasoracle.org/2008/07/09/chris-masse-comment-2/#comment-20304 medemi Thu, 10 Jul 2008 22:19:19 +0000 http://www.midasoracle.org/?p=7478#comment-20304 Lots of possible innovative ways to get these markets going. Remember the value of value, meaning where there is added value there should be room for government subsidy. Imagine the Government doubling an initial $100 deposit. With 500,000 new account holders it will cost you $50,000,000. That's probably a very good investment in fueling a whole new economy, creation of jobs etc. - In order to be able to make money betting you'll have to do your homework. Read articles, look around on the Web etc. Then form an opinion based on the information you collected, and place your bets. It's a fun combination of learning and playing, and so the department of education should show some interest in this. - None of this will happen when we offer shitty markets that act as a diversion more than anything else. And kill our product.        Lots of possible innovative ways to get these markets going. Remember the value of value, meaning where there is added value there should be room for government subsidy. Imagine the Government doubling an initial $100 deposit. With 500,000 new account holders it will cost you $50,000,000. That’s probably a very good investment in fueling a whole new economy, creation of jobs etc.
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In order to be able to make money betting you’ll have to do your homework. Read articles, look around on the Web etc. Then form an opinion based on the information you collected, and place your bets. It’s a fun combination of learning and playing, and so the department of education should show some interest in this.
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None of this will happen when we offer shitty markets that act as a diversion more than anything else. And kill our product.       

]]> http://www.midasoracle.org/2008/07/09/chris-masse-comment-2/#comment-20300 Ed Murray Thu, 10 Jul 2008 19:07:46 +0000 http://www.midasoracle.org/?p=7478#comment-20300 *then with the money saved by the government planners who have more efficient tools to calculate future demand/provision of government spending, generated by the socially valuable prediction markets, those cost savings in terms of both the immediate term (paying for consultants) and long term savings through efficient provision of "G", that could in turn be passed back to the populace in the form of tax cuts through lower costs of government.   result :-) *then with the money saved by the government planners who have more efficient tools to calculate future demand/provision of government spending, generated by the socially valuable prediction markets, those cost savings in terms of both the immediate term (paying for consultants) and long term savings through efficient provision of “G”, that could in turn be passed back to the populace in the form of tax cuts through lower costs of government.   result

]]> http://www.midasoracle.org/2008/07/09/chris-masse-comment-2/#comment-20299 Ed Murray Thu, 10 Jul 2008 19:04:39 +0000 http://www.midasoracle.org/?p=7478#comment-20299 There are some noble ideas in here, but,..... - <em>My point here is to emphasize the uber importance of <strong>liquidity</strong> on socially valuable prediction markets. In my view, </em><strong><em>the best situation is when a big, generalist, real-money prediction exchange organizes socially valuable prediction markets and helps them to thrive. - .... </em></strong>I believe that suggesting there are positive externalities from allowing an exchange operator to be licensed in the USA may perhaps hold, however, the extra demand for the socially valuable prediction markets in some kind of spillover from the non-socially valuable ones would I suspect be miniscule.  If the negatives of the spillover were harnessed within the market mechanism, then by all means, BF USA should be licensed, but they aren't yet (legal costs imposed directly because of the existence of the prediction markets are often being paid for by the taxpayer, not by a split between suppliers and customers of the prediction markets, whilst the costs of regulation are also - somewhat disgracefully - not being paid for from the original prediction market mechanism).  The result is the over-supply of non-valuable prediction markets.  - Whenever you provide a financial incentive to people to wager on prediction markets, the money will become intelligent.  Perhaps the way forward is for US citizens to be given a prediction exchange 'grant' of some sort, where the financial reward for people who use the socially valuable prediction exchanges is outweighed by the benefit to decision makers/policy makers, on subjects such as civil planning, etcetera.  This would be costly, but perhaps not as costly as the original financial decisions through waste/mismanagement through poor decision making without the data from the prediction markets being available.  - My gut feeling is that there is a demand for sports wagers from US and non-US citizens.  It is this that can be satisfied through well-licensed, regulated exchange mechanisms, where negative externalities are compelled on to the operators to be incorporated into the provision of the markets.  If this does not happen, and it mostly isn't happening at the moment outside of the US, then its time to forget it.  The internet was a good idea for academics to share research papers etcetera, but people really for the most part want sex, drugs and rock'n'roll.  The 'net isn't really fuelled by an overwhelming demand for academic papers ;-) .  There will be costs to the US economy from allowing deregulation of gambling (exchange and non-exchange), and the increase in provision of socially valuable markets, bearing in mind the experience in the UK - where 'socially-valuable' markets are often devoid of liquidity even on the more liquid providers - is probably not the answer.  How about cutting people's wages in the US in real terms (not nominal terms - there would be an outcry), whilst giving them a prediction exchange 'allowance' to replace their missing real wages.  That would generate a growth in shrewd web fora (this is where MO comes in ;-) ,....) , where people could exchange information with a financial incentive to do so, and then plough that money back into the prediction exchanges.   Yes it sounds silly, but yes its probably a more effective tool than deregulating the current exchange market place.  ;-) There are some noble ideas in here, but,…..
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My point here is to emphasize the uber importance of liquidity on socially valuable prediction markets. In my view, the best situation is when a big, generalist, real-money prediction exchange organizes socially valuable prediction markets and helps them to thrive.
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…. I believe that suggesting there are positive externalities from allowing an exchange operator to be licensed in the USA may perhaps hold, however, the extra demand for the socially valuable prediction markets in some kind of spillover from the non-socially valuable ones would I suspect be miniscule.  If the negatives of the spillover were harnessed within the market mechanism, then by all means, BF USA should be licensed, but they aren’t yet (legal costs imposed directly because of the existence of the prediction markets are often being paid for by the taxpayer, not by a split between suppliers and customers of the prediction markets, whilst the costs of regulation are also – somewhat disgracefully – not being paid for from the original prediction market mechanism).  The result is the over-supply of non-valuable prediction markets. 
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Whenever you provide a financial incentive to people to wager on prediction markets, the money will become intelligent.  Perhaps the way forward is for US citizens to be given a prediction exchange ‘grant’ of some sort, where the financial reward for people who use the socially valuable prediction exchanges is outweighed by the benefit to decision makers/policy makers, on subjects such as civil planning, etcetera.  This would be costly, but perhaps not as costly as the original financial decisions through waste/mismanagement through poor decision making without the data from the prediction markets being available. 
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My gut feeling is that there is a demand for sports wagers from US and non-US citizens.  It is this that can be satisfied through well-licensed, regulated exchange mechanisms, where negative externalities are compelled on to the operators to be incorporated into the provision of the markets.  If this does not happen, and it mostly isn’t happening at the moment outside of the US, then its time to forget it.  The internet was a good idea for academics to share research papers etcetera, but people really for the most part want sex, drugs and rock’n'roll.  The ‘net isn’t really fuelled by an overwhelming demand for academic papers .  There will be costs to the US economy from allowing deregulation of gambling (exchange and non-exchange), and the increase in provision of socially valuable markets, bearing in mind the experience in the UK – where ‘socially-valuable’ markets are often devoid of liquidity even on the more liquid providers – is probably not the answer.  How about cutting people’s wages in the US in real terms (not nominal terms – there would be an outcry), whilst giving them a prediction exchange ‘allowance’ to replace their missing real wages.  That would generate a growth in shrewd web fora (this is where MO comes in ,….) , where people could exchange information with a financial incentive to do so, and then plough that money back into the prediction exchanges.   Yes it sounds silly, but yes its probably a more effective tool than deregulating the current exchange market place. 

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