Comments on: The prediction markets chalk another one up, as Susan Boyle is sent packing. http://www.midasoracle.org/2009/05/30/the-prediction-markets-chalk-another-one-up/ Prediction Markets + Market Predictions = Collective Forecasting That Pays Off Sun, 14 Mar 2010 19:01:44 -0400 hourly 1 By: Paul Hewitt http://www.midasoracle.org/2009/05/30/the-prediction-markets-chalk-another-one-up/#comment-24188 Paul Hewitt Thu, 11 Jun 2009 23:27:51 +0000 http://www.midasoracle.org/?p=14258#comment-24188 I forgot, I also wrote a background paper that examines the concept of discrete outcomes in prediction markets. You can find it here: http://torontopm.wordpress.com/2009/06/11/a-lesson-in-prediction-markets-from-the-game-of-craps/ Paul I forgot, I also wrote a background paper that examines the concept of discrete outcomes in prediction markets. You can find it here:

http://torontopm.wordpress.com/2009/06/11/a-lesson-in-prediction-markets-from-the-game-of-craps/

Paul

]]> By: Paul Hewitt http://www.midasoracle.org/2009/05/30/the-prediction-markets-chalk-another-one-up/#comment-24187 Paul Hewitt Thu, 11 Jun 2009 23:25:14 +0000 http://www.midasoracle.org/?p=14258#comment-24187 I've added a few comments on this. The bottom line is that this market (and many like it) failed, because they were trying to predict a discrete outcome. If you miss by a small amount, you may as well be completely wrong. "Close" only counts in horseshoes, hand grenades, and now, continuous variable prediction markets. You can read the full details at: http://torontopm.wordpress.com/2009/06/11/why-public-prediction-markets-fail/ Paul I’ve added a few comments on this. The bottom line is that this market (and many like it) failed, because they were trying to predict a discrete outcome. If you miss by a small amount, you may as well be completely wrong. “Close” only counts in horseshoes, hand grenades, and now, continuous variable prediction markets.

You can read the full details at:
http://torontopm.wordpress.com/2009/06/11/why-public-prediction-markets-fail/

Paul

]]> By: Chris F. Masse http://www.midasoracle.org/2009/05/30/the-prediction-markets-chalk-another-one-up/#comment-24157 Chris F. Masse Wed, 03 Jun 2009 21:28:46 +0000 http://www.midasoracle.org/?p=14258#comment-24157 Cav, Wow, philosophy to the power ten. Are you a reader of Overcoming Bias? :-D Cav,

Wow, philosophy to the power ten.

Are you a reader of Overcoming Bias? :-D

]]> By: Caveat Bettor http://www.midasoracle.org/2009/05/30/the-prediction-markets-chalk-another-one-up/#comment-24156 Caveat Bettor Wed, 03 Jun 2009 19:42:35 +0000 http://www.midasoracle.org/?p=14258#comment-24156 Chris: Absolute returns are an indicator (like Nassim Taleb and Peter Schiff and Nouriel Roubini all losing money for their followers). But risk-adjusted-returns are more useful. To extend, it sounds like you care about means and prefer to ignore variances. You should brush up on your Schrodinger--sure, a lot can be decomposed into, and modeled from binary outcomes. But ignoring the context of those outcomes is not useful. Being rejected by a hot date is a bad thing, but is actually a good thing if she is psychotic. There is so much more to it than the singular outcome of rejection. Extend to jobs, fields of study, sports and other competitive contests ... and , of course, science. In fact, the science of prediction. Chris:

Absolute returns are an indicator (like Nassim Taleb and Peter Schiff and Nouriel Roubini all losing money for their followers). But risk-adjusted-returns are more useful. To extend, it sounds like you care about means and prefer to ignore variances.

You should brush up on your Schrodinger–sure, a lot can be decomposed into, and modeled from binary outcomes. But ignoring the context of those outcomes is not useful. Being rejected by a hot date is a bad thing, but is actually a good thing if she is psychotic. There is so much more to it than the singular outcome of rejection. Extend to jobs, fields of study, sports and other competitive contests … and , of course, science. In fact, the science of prediction.

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