Could this technique be used in future prediction market games?
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Monthly Archives: October 2008
Can InTrades prediction markets really contribute to solutions in avoiding future [financial] crises?
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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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Securities and Exchange Commission Chairman Christopher Cox said he strongly supports merging his agency with the Commodity Futures Trading Commission.
Excellent.
Previously: The CFTC on prediction markets. + Comments made to the CFTC.
NewsFutures Election Contest – Actually Win Something
Yesterday, NewsFutures launched a new contest on the US election, focusing on swing states. A way for us to beta test some new technology and some new UIs (this blogger/trader seems to like it so far.) As a reward, we’-re offering X$5,000,000 to the best traders. That’-s play money, but it’-s significant play money: if you had X$5,000,000, you’-d be ranked 21st on NewsFutures today, and you could trade your play money for a $100 Amazon Gift Certificate, not just bragging rights.
Check it out: http://vote08.newsfutures.com/vote08/index.html
It’-s free, it’-s fun, and you may actually win something
BetFair is doing fine -thanks for asking.
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The Sporting Exchange – BetFair – Annual Review 2008 – PDF file
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Google CEO Eric Schmidt at Bloomberg on the Future of Technology
Does Competitive Forecasting belong to NewsFutures?
I’-d say no, but I could be damn wrong.
Where is Tom W. Bell when we need him?
Is Spigit stealing the Best Buy quotes on enterprise prediction markets that does in fact belong to Consensus Point (which is the software vendor that has Best Buy as its customer)?
Look at the quote at the bottom of this webpage.
UPDATE: They have just brought the Best Buy quote down. 
Toward Info Accounting In Competitive Forecasting
Toward Info Accounting In Competitive Forecasting – PPT file – by Robin Hanson – 2008-10-15
An interesting set of slides —-though it’-s about the technicalities of value assessment, and not about the big picture.
How the Tampa Bay Rays went from $7.00 to $750.00 on yoonew.com.
No one epitomizes the success you can have on the yoonew exchange like the Tampa Bay Rays. The Rays, were a ball club who finished in last place last season in the AL East for the 3rd straight year. Playing in the same division with the World Champion Red Sox and former dynasty New York Yankees always provided prognosticators an easy pre-season prediction for the Rays: last place. The outlook was never rosy for the Rays despite their young talent because of the financial disparity between them and the teams who held court at the top of their division.
Entering this season, Las Vegas sportsbooks had the Rays as a 200-1 futures bet to win the World Series. Seven months later, the Rays are now in the World Series and bettors who even invested $10.00 in them can walk away with a cool $2000.00. Vegas sportsbook’-s will be in for a cold winter if the Rays manage to pull off a World Series victory against the Phillies and possibly become the greatest baseball story of all-time. There’-s already been talk out of Vegas that they’-ll never open a team at those odds again.
But, on the yoonew exchange it was a totally different story. yoonew.com is the “-Stock Market for Sports Tickets.”- A futures site where fans can get tickets for the big events like the Super Bowl, Stanley Cup, NBA Finals, World Series, UEFA Finals, Final Four, and BCS National Title at prices much lower than face value. On yoonew, you can also buy a “-Team Fantasy Seat”- or “-Matchup Fantasy Seat”- on a team and as they progress in the season, the initial value of your futures stock could increase and you can either sell it for a profit, hold on to them hoping it continues increasing, or hope your team makes it to the big game to receive your free ticket.
The initial IPO for Rays 2008 World Series ticket futures was $7.50 before the season started. When yoonew began making markets for the team in June when they looked like a real threat, there were asks at 18.50. Looking back, It was a steal for anyone on the exchange. Plenty of traders appeared to be saying: “-Why not the Rays?”- They had nowhere to go but “-UP,”- especially with the excessive amounts of young talent they had entering the season and the early season struggles of the Sox and Yanks.
Before we delve deeper into explaining the meteoric rise of the Rays, let’-s take a month by month look at the Rays and how yoonew users who bought this season were happy to hold on to them.
Take a look at the chart below and the month by month breakdown which was originally analyzed on yoonewverse.com:
Month by month Rays breakdown:
March Pre-Season (Market launch):$7.50
April: $7.50 (14-12 record)
May: $15.00 (33-22 record)
June: $217.07 (49-33 record)
July: $161.68 (62-45 record)
August: $342.44 (83-52 record)
September: $394.10 (97-65 record)
Up 3-1 on the Red Sox: $1050.00
Up 3-2 on the Red Sox: $750.00
Tied 3-3 with the Red Sox: $650.00
Clinch ALCS Title: $750.00
There are obviously two sides to every trade and it won’-t always be as profitable as the Rays. For example, take the story that Bigleaguestew.com wrote on yoonew and the Chicago Cubs market and how it completely dropped from nearly $4000.00 to a stunning $2.00.
Plenty of yoonew users invested in the Rays in mid-May when the Rays swept the Los Angeles Angels and then won 3 out of 4 against the same team who beat up on them for years, the Yankees, in a division battle that sent a clear message: “-We are here to stay.”- As the season progressed, the Rays continued to make believers out of their doubters. On the season, the biggest increase the Rays made month to month was from May to June when they increased +134% on the exchange.
As the summer ended and the Fall classic was weeks away, fans and sports futures traders began registering on the site and buying the Rays as an investment they felt was profitable. Rays fans also saw the potential World Series berth waiting in the wings and got in on them as well. Plenty of traders cashed out with their $300 and $400.00 in profit. You even had die-hard Rays fans who cashed out because of the need for extra cash in these down economic times and said they’-d take their chances with the Rays on sale for tickets.
Now, flash forward past the division title, home-field advantage, and ALCS title, the Rays are now in the World Series playing the Phillies for the ultimate prize. Of course, there were other yoonew users from across the country who bought in early and kept their tickets for the World Series at prices in the $50’-s and $100’-s while a ticket on the open market cost above $300.00 at this point in time. A huge savings for them and the yoonew mission was complete – which is to give fans a chance to land tickets under face value to the hard to get games.
By: Claudio E. Cabrera