Chris Masse has posted several times about the recent piece on prediction markets in The Economist. Among his recent grand pronoucements:
“If you are a prediction market consultant, and have nothing to say about the negative piece from The Economist, then you don’t matter anymore.”
Really?
What is it that The Economist said that prediction market consultants should have something to say about?
I read article when it showed up online, and then again when the print version arrived and after Chris mentioned it at Midas Oracle, and now a third time since I wonder why he is making a big deal of it.
Fortunately, it is a light read – reading it three times has not been particularly taxing. But there is not much depth to engage: An intro paragraph, some explanation, three brief examples-two of which illustrate implementation problems, and then the article concludes with a quip that “Perhaps the best way to find out when prediction markets will finally take off is to ask your employees–using a prediction market.”
That’s it.
No searing indictment of the prediction market software vendors and consulting business, no challenge to the theoretical foundations of prediction markets, no rejection of the “wisdom of the crowds.” All the article does is observe that the tool has “yet to take off.”
So my question to Chris remains, “What is it that The Economist said that prediction market consultants should have something to say about?”
I’d love to know as well, Michael.
I don’t agree.
Here is the title of the webpage:
QUOTE
An uncertain future for prediction markets | An uncertain future | The Economist
UNQUOTE
It says “uncertain future”… it does not say “promising future”.
QUOTE
NOT SO long ago, prediction markets were being tipped as a fantastic new way to forecast everything from the completion date of a vital project to a firm’s annual sales. But although they have spread beyond early-adopting companies in the technology industry, they have still not become mainstream management tools.
UNQUOTE
This excerpt (of the 2 first lines) gives the tone of the whole thing.
#1. The enterprise prediction markets were touted as a universal forecasting tool for corporations.
#2. It didn’t happen.
#3. Reasons why it didn’t happen.
The tone is negative from the start.
QUOTE It’s still a pretty evangelical business UNQUOTE
This quote (by one “Chief Scientist” of one software vendor) sums it all. Enterprise prediction markets are just fluff, as of today. It is just a dream, at this point.
Business people don’t need dreams. They need professional forecasters and expert solutions.
–
Here’s a post from a blogger who read the article from The Economist:
QUOTE Prediction Market Forecasts Are Not A Sure Thing UNQUOTE
Again, a negative tone.
In the conclusion, the blogger is optimistic, but it is an act of faith.
http://www.intelligententerprise.com/blog/archives/2009/03/prediction_mark_1.html
–
Now, let’s query Twitter.
http://search.twitter.com/search?q=%22prediction+markets%22
QUOTE
Economist on the hurdle of prediction markets: people stop trading without real incentives -
UNQUOTE
http://twitter.com/futuramb/statuses/1259475127
A negative tone.
QUOTE
The enterprise prediction markets not taking off http://tinyurl.com/admswj
UNQUOTE
http://twitter.com/Twit4Brains/statuses/1257030767
Here, again, a negative tone. (They are *not* taking off. = They are *not* working.)
–
Mike Giberson is wrong, and I am right. However, this little dispute (so to speak) is easy to settle. Let’s put the article from The Economist under the very nose of 10 innocent persons (unrelated with the prediction market industry or the free-market movement) and let’s ask them to grade the article according to whether this is positive or negative for the development of enterprise prediction markets… whether the tone of the article is positive or negative…
Let’s just do that.
For people who are just surfacing out their Afghan cave, it might be useful to remind them that The Economist is a pro-market publication (along with the Wall Street Journal).
So if *they* express strong doubts about enterprise prediction markets, just imagine what a leftist, anti-market publication will write…
I don’t agree.
Saying that the future is “uncertain” doesn’t mean that it is not also “promising”. The point of any good reporting is not to paint the brightest picture possible, but rather, to accurately report. It is certainly not to stroke Mr. Masse’s ego or say exactly what he would say were he writing the article.
I’m curious whether you find the two concluding sentences of the article positive, Chris. I’m also curious as to why you tried to make such a *big deal* about this article, and any reactions (or lack thereof) to it.
Some people have better things to do than run their mouth all day.
QUOTE Saying that the future is “uncertain” doesn’t mean that it is not also “promising”. UNQUOTE
The point is that the media have been rather favorable towards EPMs, since the end of 2005. The Economist is the start of the reversing of the trend.
QUOTE The point of any good reporting is not to paint the brightest picture possible, but rather, to accurately report. UNQUOTE
Well, I agree with that. But the feeling that the readers have, after reading the piece, is that the EPMs haven’t delivered, and thus, somewhat, they are not ‘working’.
QUOTE It is certainly not to stroke Mr. Masse’s ego or say exactly what he would say were he writing the article. UNQUOTE
My ego has nothing to do with that. I am not involved in EPMs. I have indexed many news stories since 2003, and this is the first time that I see a pro-market publication being negative on EPMs.
QUOTE I’m curious whether you find the two concluding sentences of the article positive, Chris. UNQUOTE
QUOTE
Bosses may also be wary of relying on the judgments of non-experts. Yet many pilot projects run so far have shown that junior staff can often be surprisingly good forecasters. Perhaps the best way to find out when prediction markets will finally take off is to ask your employees—using a prediction market
UNQUOTE
Sounds neutral.
QUOTE I’m also curious as to why you tried to make such a *big deal* about this article, and any reactions (or lack thereof) to it. UNQUOTE
Because it is a turning point, and because it will influence the further media coverage.
QUOTE Some people have better things to do than run their mouth all day. UNQUOTE
What do you mean? I should shut up my gob?
Re: It says “uncertain future”… it does not say “promising future”.
Look, you don’t have to be a genius to conclude that the future is “uncertain.” Whether the talk is of the prediction market industry or anything else, the future is uncertain.
The article gives no reason to think that enterprise prediction markets are any shakier than any other management consulting enterprise.
In fact, I see the article as mostly just The Economist showing its continued interest in the topic, wanting a status report, and perhaps being mildly disappointed in not finding something dramatic to write about. Hence this short, uneventful summary that finds that the future of the industry is (like anything else) uncertain.
“Whether the talk is of the prediction market industry or anything else, the future is uncertain.”
Well, to be honest, I am not a reader of The Economist.
But in all the IT business publications I read, they tell you whether the trend for a particular innovation is up or down. This is an important information to give to the business people who have to make decisions about which IT solution(s) to buy next.
Saying the future of technology X, Y, Z is “uncertain”, means that the writer thinks that it is unlikely that that technology will take off soon.
When IT publications or blogs write about the Twitter technology, they are very bullish about it. So, yes, contrary to what Mike wrote, sometimes, the future can be “certain” —well at least on the paper.
When the IT journalists or bloggers write about the future of WordPress, they are bullish about it.
In the past, the journalists and bloggers wrote about EPMs in a bullish way. Not anymore. That’s noticeable.
When Chris approached the article he was probably looking for clues, developments, getting a taste of sentiment.
My approach was different. I remember thinking “don’t waste my time…”
And it did waste my time, because the author wasn’t answering the question, because he can’t. It’s all speculation, induced by sentiment. Except for the last paragraph, which got to the point.
But the story has been produced once again, and the monkeys have been fed.
-
This is exactly why we need prediction markets. Just cut the bull and put up a freaking market if you want to get an answer to that question.
What does an article written by one person tell me? Nothing. I couldn’t care less about his opinion.
Just take a step back, for a moment, and think about it… you could have predicted the tone of the article, given the climate we’re in. Objectively… it doesn’t tell me anything. And yet so many people believe what they read. Why ? Cognitive dissonance theory. To save you some time, it works like this > “If you put a lot of energy (expectation) into (reading) something then eventually you will think there might be some truth to it. Why the hell else did you complete reading it in the first place? ”
You’ve been screwed, Chris.
Two vendors have acknowledged the negative tone of the article from The Economist.
http://blog.inklingmarkets.com/2009/02/challenges-of-getting-from-here-to.html
http://www.crowdcast.com/our-solutions
Hi Chris -
Actually, the use of the term “uncertain” may indicate that the writer is presenting an honest unbiased report of the situation. As Giberson indicates, the future of (a) technology is virtually always unpredictable.
Regarding Twitter, I’m curious what you define as a certain future? Certainly not everyone is bullish on the technology.
Wordpress popularity and it’s future growth is IMO more a reflection of the future of open source technologies than WordPress specifically. Also, WordPress is ostensibly already very successful, so there may be positive press now, but I’m not sure anyone can predict the future of the technology.
And, relatedly, people stop caring about the 2008 election, well, pretty much right after the election. So, expecting people to keep talking about the presidential prediction markets seems a bit much.
>> “Two vendors have acknowledged the negative tone of the article from The Economist.”
That’s great… now we can all feel depressed.
Whenever I see the amount of bull out there, I see it as a confirmation for the use of prediction markets.
The article mentions challenges that many new technologies face. This is not negative, this is accurate. Inkling and Crowdcast have seized the opportunity to publicly address these challenges.
Prediction markets will burn rubber…
You can’t stop progress.
they can be
- great fun
- very educational
- depressingly accurate
- etc. etc.
- your stuff, Chris
They will increase our well-being.
Now, it doesn’t take a rocket scientist to combine some of these elements into a business model… you would think.
Meanwhile…. on the British front….
http://forum.betdaq.com/Topic43951-10-1.aspx
>> “So, we’re told we’ve spent too many years feeding the banking parasites and letting them get away with describing high-risk loans as high value investments….
But the lesson has been learned, says Flash Gordon. We’re going to regulate things MUCH more toughly from now on..
EXCEPT, Flash feels the need to COPY the bad example of the banking parasites: he has to dress up some mutton as lamb (our Currency).
It’s sufferin, along with most others, as the international markets try to figure out just HOW MUCH a quid is really worth these days….
“We’re much better placed than most to ride out the Recession” is a common Flash quote…. even though borrowing is hugely higher than ever before, and skrocketing upwards by the day.
Ah, he thinks,…. we’ll copy the parasites. Tell ‘em the quid’s doing fine. Keep telling ‘em that. Print a whole lot more and perhaps (as Harold Wilson did, before the IMF shut him up) say “the Pound in your pocket is unaffected”….
There WAS a time when every Pound was backed by a fixed amount of Gold (still the unshakeable base currency).
But Flash sold all of ours off CHEAP, the last time (sorry, Time) he needed some dosh to cover his tracks….instead every Pound is as solid as, well, the paper it’s printed on????
Maybe Betdaq should open a market on how long it will take the Pound to sink to half its current value (expressed in Pounds per Ounce of gold?
Maybe a year? If we’re “lucky”?
Time to WAKE UP AND SMELL THE COFFEE…. deception over Real Values isn’t DEAD!!!!
It’s STILL going on. In the Highest Places!
Adonis”
—–
>> “New Labour are the worst government in my lifetime by a country mile-they’ve ruined the economy lost control of immigration and gagged us all with political correctness.”
A previous Economist article, that I have archived, spoke of how Napster was revolutionising the music industry. Another one, called Betfair a radical upstart. A recent article on Hulu discussed how it was “online videos new model.” By anybodys standards, these technologies have unleashed the forces of disintermediation, and affected a paradigmatic shift in the industries in which they operate.
By way of contrast, the Economist article on Prediction Markets states that Koch, one of the biggest users of Prediction markets, asserted that they are a compliment to other forecasting techniques and not a substitute to them. The article aslo raises the issue of cultural barriers that are inhibiting the take up of said Prediction Markets – not least, inertia (etc..).
One can take from the article that Prediction markets are not ground break, not radical, not revolutionising; they are not unleasing the forces of disintermediation. Accordingly, on the evidence presented (“much remains to be done to convince sceptical managers of their value”) the battle is an uphill one. Moreover, one can ask, if the battle was not won during the good times, what is the real chance that it will be won during a recession, when company’s are always more resistent to change.
You guys are all speaking from a positiion of being laden down with prediction market baggage. Your views are not objective, and one can only hope that you are not collectively suffering from disaster myopia.
P.S. “The Colonel” – grow up mate and post under your own name. It is clear from your tone and manner that you suffer from a wounded ego – but time heals. And what is comical, is that your outbursts clearly prove the thing that you are trying to undermine – namely, that Masse and his site carry weight. Remember, also, before your next emotional outburst that Masse has your IP address, and will have a reasonable idea as to your identity.
Chris saved my life, as I was being hunted down in Britain by suspicious looking characters with deep pockets for exercising my right to free speech and devoting my attention to what I believe is in the best interest of the public, the consumer.
Chris did not give in, despite being pressured by what seemed one of his allies. Don’t you guys ever forget that. Because in the end it is not about who is right or wrong, it is about doing the right thing, it is about defending and exercising the right to free speech and showing courage while doing so.
Headlice to the people who feel their reputation may be on the line by “exposing” their thoughts on a blog like this. Headlice, to the big ego’s who feel offended whenever the wind changes direction. You’ve already earned my contempt.
Niall, I agree with your analysis. (That said, I still have hope about EPMs, if done right. I’ll expand later on.)
Daniel,
“As Giberson indicates, the future of (a) technology is virtually always unpredictable.”
I disagree strongly. All the purpose of TechCrunch and other IT blogs is to inform readers about the new trends, the new opportunities, and the brand-new startups that make it (and enrich their founders). The TechCrunch bloggers try to discern what’s promising from what’s ‘passé’.
“Regarding Twitter, I’m curious what you define as a certain future? Certainly not everyone is bullish on the technology.”
All the IT bloggers I read sur-inform us about the fact that Twitter is very important.
“And, relatedly, people stop caring about the 2008 election, well, pretty much right after the election. So, expecting people to keep talking about the presidential prediction markets seems a bit much.”
Wrong. Years after the 2004 US elections, InTrade and the journalists writing about PMs would cite that InTrade nailed “all 50 states” in 2004. Any US presidential election is the most important election in the world, and any forecaster is asked how it/he/she did with that prediction.
“The article mentions challenges that many new technologies face. This is not negative, this is accurate. Inkling and CrowdCast have seized the opportunity to publicly address these challenges.”
Daniel, many news articles about PMs were published in 2006, 2007, and 2008. Inkling and CrowdCast didn’t respond systematically to all of them. In early 2009, they felt compelled to respond to the article from The Economist, because they disagreed with its negative tone, which is their constitutional right of course. But the fact that they had to respond whereas in the past they did not should tell you that, indeed, that news article was special. It marks a discontinuity in the hyping of (enterprise) prediction markets.
This article from The Economist (one of the 3 or 4 most prestigious publication in the field of business and economics) will prompt the other journalists either to abstain from writing about prediction markets or to write a bit negatively (or at least not in a bullish way) about their potential or real applications.
Medemi,
I agree with some of what you say. Just stay tuned, and when I have more time, I will blog about how EPMs can be demonstrated to be a useful tool in some specific situations.
I am not all negative on EPMs. I am against the current discourse. But I favor a more scientific and rational discourse, with participants that adopt the open approach. I hope to elaborate more on that in the future. Thanks for your comments, and for the attention.
Apropos Niall’s comment, a great idea would be to compare a previous article on PMs written by the same The Economist…
Positive or Negative? The Economist, Prediction Markets, and Mechanical Turk
http://behind-the-enemy-lines.blogspot.com/2009/03/positive-or-negative-economist.html
What Panos Ipeirotis didn’t tell you
http://www.midasoracle.org/2009/03/06/what-panos-ipeirotis-didnt-tell-you/
What is the point of a new technology that is *not* “promising”? To be interesting to businesses, a brand-new forecasting technique should be deemed as “promising” by the vertical media.
If EPMs are *not* “promising”, then why would businesses bother with trying it?
“I disagree strongly. All the purpose of TechCrunch and other IT blogs is to inform readers about the new trends, the new opportunities, and the brand-new startups that make it (and enrich their founders). The TechCrunch bloggers try to discern what’s promising from what’s ‘passé’.”
Techcrunch’s job is to create hype or controversy. They are not trying to present an unbiased opinion. I also doubt they are good predictors of anything.
“All the IT bloggers I read sur-inform us about the fact that Twitter is very important.”
You are collecting biased data. There are many questions about Twitters future, but more importantly (for a lot of reasons) I don’t think it’s a good analogy.
“Wrong. Years after the 2004 US elections, InTrade and the journalists writing about PMs would cite that InTrade nailed “all 50 states” in 2004. Any US presidential election is the most important election in the world, and any forecaster is asked how it/he/she did with that prediction.”
This is because 2004-2005 was when the hype surrounding prediction markets started, consequently most people cited the recent 2004 presidential markets.
“Daniel, many news articles about PMs were published in 2006, 2007, and 2008. Inkling and CrowdCast didn’t respond systematically to all of them. In early 2009, they felt compelled to respond to the article from The Economist, because they disagreed with its negative tone, which is their constitutional right of course. But the fact that they had to respond whereas in the past they did not should tell you that, indeed, that news article was special. It marks a discontinuity in the hyping of (enterprise) prediction markets.”
There are less PM articles than there used to be so it is much easier to respond. Or, perhaps they are trying to fight all the negative publicity you are trying to bring to the domain. “Hype” is a network effect and likely to be governed by power laws. Any expectation of continuousness or linearity is misguided.
“Techcrunch’s job is to create hype or controversy.”
You are too harsh with them.
“They are not trying to present an unbiased opinion. I also doubt they are good predictors of anything.”
I mildly agree.
“This is because 2004-2005 was when the hype surrounding prediction markets started, consequently most people cited the recent 2004 presidential markets.”
No, this is because the US presidential election is the most important event in the world, and that each forecaster is asked to tell how it/he/she fared about the last one.
“There are less PM articles than there used to be so it is much easier to respond. Or, perhaps they are trying to fight all the negative publicity you are trying to bring to the domain.”
What does the blog intro says, at the top? Is that negative publicity or good publicity?
http://www.midasoracle.org/
How Jed Christiansen assesses the news article on EPMs by The Economist
http://www.midasoracle.org/2009/03/10/how-jed-christiansen-assesses-the-news-article-on-epms-by-the-economist/