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To the question asked in the title of this post, some have answered by the affirmative (“Prediction Markets Have a Big Role to Play”). In my view, it is wrong to overvalue the real social utility of the prediction markets.
As of today, we can plainly see 2 things. Number one, the prediction markets are a tool of curiosity. People have heard about InTrade thanks to numerous news articles (where some prediction market researchers who get the InTrade historical data for free pump up the prediction markets as God’s right arm on Earth). At crunch time, the people teased by all this publicity flock to the InTrade website to satisfy their curiosity about the state of the horse race. Number two, a subset of the general population (made up of educated people who believe in the virtues of markets) use the prediction markets as a tool of convenience. Instead of spending long hours reading the various outputs by the pollsters and the commentariat, these people just check InTrade on a daily basis, because they know that it is primarily (but not only) an information aggregation mechanism. InTrade sums up the news of the day, so to speak. Hence, these people (in the know about how to benefit practically from the wisdom of crowds) don’t have to spend time gathering and analyzing the news of the day.
To the question asked in the title of this post, I’ll answer “no” —unless one of my readers can educate me more about the following issues:
- Did InTrade set up a set of prediction markets, in the summer of 2008, aiming at forecasting the (then) “upcoming financial crisis”? I am afraid that the answer is “no”.
- Did the World Economic Forum (a.k.a. Davos) manage to open the eyes of the 2,500 so-called “global leaders” (a grandiose denomination that includes many of the Wall Street CEOs, and, yes, some financial bloggers like Felix Salmon, invited to that Swiss annual grand Mess of the capitalism) about the financial instability that was already perceptible in the recent years? I am afraid that the answer is “no”. Now, ask yourself: If Davos can’t, what makes John Delaney think that he can?
- Is there out there at least one expert (by “expert” I mean any professional other than the so-called prediction market experts who are expert in nothing else than pumping up the prediction markets) who can demonstrate clearly that the prediction markets in his/her vertical have helped tremendously in his/her pursuit of creating long standing wealth? I am afraid that the answer is “no”.
- How come nobody called bullshit on InTrade CEO’s grandiose statement?
- How come Jason Ruspini, usually so critical, has become as servile as a poodle?
- Is Robin Hason the only adult in the field of prediction markets?
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I Told You So.
by Ed Miracle
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As I indicated in my previous comment, if the assets in question had benefited from the price discovery of a public exchange, they would have delivered less of a shock to credit markets overall. Of course trading on public exchanges will tend to help. Is that seriously a question on the main prediction market blog?
Of course there are scenarios where prediction markets might actually aggravate a crisis. Suppressing these possibilities with idealistic assumptions is more of a danger to credibility than slightly over-selling the upside.
Jason, whatever. That was not my point. My point is that John Delaney says a cretinery, and, immediately, you rush to somewhat flatter him. You have been acting like JD’s poodle, recently. The risk is that you are going to lose your reputation and credibility.
If you have any substantive disagreements I would be glad to hear them. I have been plenty critical of Intrade recently. Just because you preface something with “the point is” doesn’t mean you have a point.
I do have a point.
Chris,
if you’re looking for facts that support JD ’s “claims” then probably there aren’t any. Some of us look at possibilities as well, and it doesn’t take a whole lot of imagination to see how prediction markets can help avoid a crisis. In fact, there are many indicators today which can help avoid a crisis. The Americans are good at this sort of thing. Doesn’t mean any of them could have helped to prevent this crisis, or the next one.
Your “factual” world does not represent reality any more than our beliefs. On the contrary, your factual world sucks big time.
I don’t mean “your” factual world, just in general.