Ben Shannon (alias “-Jesse Livermore”-, who blogs at “-Wiser Than The Crowd”-) claims on his blog to have an uncanny ability at forecasting the future and profiting from it, whether it is speculating on InTrade’-s prediction markets or on the US stock market. Here is his stock market call from July 10, 2009:
SELL SELL SELL
REALITY CHECK:
The stock market is up about 12% since Ben Shannon’-s “-sell sell sell”- call on July 10th.
Spot the 10th on the chart…- Ben Shannon sold the exact bottom immediately before the rally.
I disagree, Chris. Much experience on FX has shown that interesting questions (those that aren’t routine repetitions of previous questions) often result in realities that diverge from the obvious expectations of nearly everyone involved in describing the possibilities. In those situations, we’ve found that trying to interpret intent leads to more confusion than sticking to the letter of the question as asked.
If a [prediction market] sticks to its written description of what the claims mean, then careful readers are rewarded, and they learn that they have a good chance to predict how the judge will interpret the question and events in the world. If questions are determined based on “intent”, then everyone has to spend time deciding which aspect of the question the judge will decide was more important, when reality decides not to conform to the question’s expectations.
Sometimes (as you argue was the case with the North Korea question) the result is surprising and disappointing, but choosing the other approach leads to much less participation as people who see that something surprising is preparing to happen or has happened back out of their bets rather than waiting to find out what the judge decides is important. I’m much happier when the participants spend their time figuring out what will happen in the world, rather than when they have to spend their time predicting how the judge will react. Strict construction gives us a predictable world.
Since FanDuel won’-t be free, it won’-t generate any buzz on the Web. [UPDATE: See Nigel Eccles’s comment, just below.]
Nigel Eccles is proud of the fact that his team crafted FanDuel in a matter of weeks. But have they thought long enough about marketing strategy?
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Addendum:
The FanDuel press release:
SHAKING UP THE FANTASY SPORTS INDUSTRY
New Fantasy Sports Game Lets You Play Today, Win Today
There are at least 20 million of us playing fantasy sports every year and yet in recent years it has seen very little innovation. For many, one of the major problems with fantasy sports is the huge time-commitment involved –- when you play fantasy, you have to play for the whole season – no breaks, no holidays, no excuses. However, in this era of Facebook and Twitter, people want instant gratification.
This issue is tackled head on by FanDuel.com, a new fantasy sports game which launches today. FanDuel.com lets us play and win in a day instead of waiting the whole season. Players can draft a new team at any time, and pitch it head-to-head against an opponent – a friend, or another FanDuel player – for real money. The player whose team has the most fantasy points at the end of the day’s games wins the cash prize. It’s purely fantasy baseball right now, but the fantasy football game will launch with the start of the football season.
Clever integration with sites like Facebook means that picking opponents is slick, as is bragging about your wins. This is a first for the fantasy sports industry which has been dominated by the big players such as Yahoo, CBS and ESPN for too long.
The game is a competitive draft rather than salary cap – making it much more challenging. However unlike traditional competitive draft both players don’t have to draft at the same time. The way it works is one player drafts their first pick and a back-up for each position. They then order their draft and submit their roster. When they are matched with another user (a friend or another FanDuel user) the system works through each player’s draft in priority order. You get an email telling you and your opponent’s final roster and then you can watch the live stats on both fantasy teams update in real-time as the games progress.
Online social gaming is already well developed but the daily fantasy sports market is quite new. Nigel Eccles, CEO of the company behind FanDuel, admits, “After playing Mafia Wars and other social games on Facebook, going back to playing traditional fantasy sports on CBS felt like going back in time. We felt we could build something faster, more social and exciting.”
Thanks to the fantasy sports carve out of the 2006 Unlawful Internet Gaming Act [Unlawful Internet Gambling Enforcement Act of 2006], FanDuel.com is perfectly legal to play in the US – something that the team behind FanDuel have been very careful to adhere to. FanDuel offers free and paid entry games with users able to enter $5, $10 and $25 competitions.
Actually, our mechanism is a market, it’-s just not a stock market. We use an automated market maker to efficiently price every bet, adjust crowd beliefs, and price an interim sell. In essence, participants trade binary spreads with the market maker.
Because our new version was not yet market-ready, I did not enter the markets vs. non-markets debate when you were having it some months ago. However, among other reasons, we avoid collective forecasting because it is too similar to collaborative forecasting, which is key in supply chain. Honestly, when all is said and done, our clients care not what the mechanism is. They care that we can efficiently gather team intelligence and translate it into actionable business intelligence. That is our mission.
With OboPay you can instantly pay back a friend, split a dinner bill, get money from your parents, get quick cash, pay up or collect on a friendly wager, track purchases, check your balance, and much, much more. And, you can do it all from your phone– anywhere, anytime with anyone.
Would it work for real-money prediction markets (InTrade, BetFair, etc.)?
On a broader point, you would be well served as a Frenchman to promote Badiou and his notion of “mathematics as ontology”. Moreover, you and your merry band of readerswould all do well to put Badiou’s “Being and Event” on your holiday reading lists- for a little light vacation reading.
Introduction to Being and Event Drawing from 8 March 2006 “-Art’-s Imperative”- lecture
The major propositions of Badiou’-s philosophy all find their basis in Being and Event, in which he continues his attempt (which he began in Theorie du sujet) to reconcile a notion of the subject with ontology, and in particular post-structuralist and constructivist ontologies.[3] A frequent criticism of post structuralist work is that it prohibits, through its fixation on semiotics and language, any notion of a subject. Badiou’-s work is, by his own admission,[4] an attempt to break out of contemporary philosophy’-s fixation upon language, which he sees almost as a straitjacket. This effort leads him, in Being and Event, to combine rigorous mathematical formulae with his readings of poets such as Mallarme and Holderlin and religious thinkers such as Pascal. His philosophy draws equally upon ‘-analytical’- and ‘-continental’- traditions. In Badiou’-s own opinion, this combination places him awkwardly relative to his contemporaries, meaning that his work had been only slowly taken up.[5] Being and Event offers an example of this slow uptake, in fact: it was translated into English only in 2005, a full seventeen years after its French publication.
As is implied in the title of the book, two elements mark the thesis of Being and Event: the place of ontology, or ‘-the science of being qua being’- (being in itself), and the place of the event — which is seen as a rupture in ontology — through which the subject finds his or her realization and reconciliation with truth. This situation of being and the rupture which characterizes the event are thought in terms of set theory, and specifically Zermelo–Fraenkel set theory (with the axiom of choice), to which Badiou accords a fundamental role in a manner quite distinct from the majority of either mathematicians or philosophers.
Mathematics as ontology
For Badiou the problem which the Greek tradition of philosophy has faced and never satisfactorily dealt with is the problem that while beings themselves are plural, and thought in terms of multiplicity, being itself is thought to be singular- that is, it is thought in terms of the one. He proposes as the solution to this impasse the following declaration: that the one is not. This is why Badiou accords set theory (the axioms of which he refers to as the Ideas of the multiple) such stature, and refers to mathematics as the very place of ontology: Only set theory allows one to conceive a ‘-pure doctrine of the multiple’-. Set theory does not operate in terms of definite individual elements in groupings but only functions insofar as what belongs to a set is of the same relation as that set (that is, another set too). What separates sets out therefore is not an existential positive proposition, but other multiples whose properties validate its presentation- which is to say their structural relation. The structure of being thus secures the regime of the count-as-one. So if one is to think of a set — for instance, the set of people, or humanity — as counting as one the elements which belong to that set, it can then secure the multiple (the multiplicities of humans) as one consistent concept (humanity), but only in terms of what does not belong to that set. What is, in following, crucial for Badiou is that the structural form of the count-as-one, which makes multiplicities thinkable, implies that the proper name of being does not belong to an element as such (an original ‘-one’-), but rather the void set (written O), the set to which nothing (not even the void set itself) belongs. It may help to understand the concept ‘-count-as-one’- if it is associated with the concept of ‘-terming’-: a multiple is not one, but it is referred to with ‘-multiple’-: one word. To count a set as one is to mention that set. How the being of terms such as ‘-multiple’- does not contradict the non-being of the one can be understood by considering the multiple nature of terminology: for there to be a term without there also being a system of terminology, within which the difference between terms gives context and meaning to any one term, does not coincide with what is understood by ‘-terminology’-, which is precisely difference (thus multiplicity) conditioning meaning. Since the idea of conceiving of a term without meaning does not compute, the count-as-one is a structural effect or a situational operation and not an event of truth. Multiples which are ‘-composed’- or ‘-consistent’- are count-effects- inconsistent multiplicity is the presentation of presentation.
Badiou’-s use of set theory in this manner is not just illustrative or heuristic. Badiou uses the axioms of Zermelo–Fraenkel set theory to identify the relationship of being to history, Nature, the State, and God. Most significantly this use means that (as with set theory) there is a strict prohibition on self-belonging- a set cannot contain or belong to itself. Russell’-s paradox famously ruled that possibility out of formal logic. (This paradox can be thought through in terms of a ‘-list of lists that do not contain themselves’-: if such a list does not write itself on the list the property is incomplete, as there will be one missing- if it does, it is no longer a list that does not contain itself.) So too does the axiom of foundation — or to give an alternative name the axiom of regularity — enact such a prohibition (cf. p. 190 in Being and Event). (This axiom states that all sets contain an element for which only the void [empty] set names what is common to both the set and its element.) Badiou’-s philosophy draws two major implications from this prohibition. Firstly, it secures the inexistence of the ‘-one’-: there cannot be a grand overarching set, and thus it is fallacious to conceive of a grand cosmos, a whole Nature, or a Being of God. Badiou is therefore — against Cantor, from whom he draws heavily — staunchly atheist. However, secondly, this prohibition prompts him to introduce the event. Because, according to Badiou, the axiom of foundation ‘-founds’- all sets in the void, it ties all being to the historico-social situation of the multiplicities of de-centred sets — thereby effacing the positivity of subjective action, or an entirely ‘-new’- occurrence. And whilst this is acceptable ontologically, it is unacceptable, Badiou holds, philosophically. Set theory mathematics has consequently ‘-pragmatically abandoned’- an area which philosophy cannot. And so, Badiou argues, there is therefore only one possibility remaining: that ontology can say nothing about the event.
