Previously: The prediction market approach
Are you PMA compatible? These 2 researchers are leading the way.
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Yearly Archives: 2008
The prediction exchanges that have fully embraced the prediction market approach
These prediction exchanges present prices as probabilities (expressed in percentages):
– HubDub
– InTrade .NET …- [*] …- would get the full point if they were to switch the label “-price”- for “-probability”- on their charts.
– NewsFutures …- gets half a point. No mention of “-probabilities”- on their charts.
– Inkling Markets …- gets a quarter of a point.
– TradeFair …- gets an honorable mention, but won’-t show its charts to the non-registered public. 
[*] Which prefigures what InTrade .COM is going to be, soon, if I understood well my Deep Throat’-s tip.
As for the ultra innovative YooPick, is it yet another case of “-do what I say, not what I do“-?…- 
APPENDIX: Lance Fortnow is PMA compatible:
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UPDATE: See the comments…-
Do the top brass really tell everything to the trading employees? Do the EPM traders have access to all the primary indicators?
Prediction markets: the future of decision-making – Companies are now making business decisions based on information employees provide via internal trading systems. – The Times of London – 2008-09-04
“-We use them [“them” = the enterprise prediction markets] as another point in the decision-making process, alongside asking experts and other business leaders,”- said Christina LaComb, a computer scientist in the R&-D lab at GE.
OK. You’-re using enterprise prediction markets- you’-ve gotten your name in the newspapers- you’-re “-cool”-.
And our good friend David Perry’-s gotten your money.
But do your event derivative traders have the same access as you do to “-experts”- and other “-business leaders”-?
Or do you leave them in the dark? In that case, your enterprise prediction markets would be clueless, useless, and worthless.
WORLDS MOST EXPERIENCED PREDICTION MARKET PRACTITIONER CASTS A DOUBT ON THE VALIDITY OF MSR, IN USE IN MOST PUBLIC PLAY-MONEY PREDICTION EXCHANGES AND IN MOST ENTERPRISE PREDICTION EXCHANGES.
WE ARE BETFAIR. RESISTANCE IS FUTILE. YOU WILL BE ASSIMILATED.
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A list of the Betfair forum threads about the new premium charges.
A FaceBook group has been created to protest the new BetFair premium charges.
PREVIOUSLY: BetFair impose new “-Premium Charges”-…- Do BetFair gag the critics, too?
Nigel Eccles (the CEO of HubDub) and Robin Hanson (the inventor of MSR) have some explaining to make about the extreme zigzagging of the Barack Obama event derivative (in blue on this static compound chart). Look at the right end of the chart.
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UPDATE:
Nigel Eccles:
There was a bug in that chart which is now fixed. However the excess volatility is still there. The problem is that our early markets were created with a liquidity parameter which was too low. That is fixed with more recent markets. However we are also looking at modifying the MSR in some significant ways.
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Previously:
– the latest InTrade predictions
– Emile Servan-Schreiber’-s post on market arbitrage
WORLDS #1 PREDICTION MARKET GURU IMPLIES THAT THE PREDICTION MARKETS ARE NOT MATURE ENOUGH.
Is this a sign that the BetFair prediction exchange and the BetFair blog are not the best sources of information on the 2008 US presidential elections?
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Previously:
– the latest InTrade predictions
– Emile Servan-Schreiber’-s post on market arbitrage
With the premium charges, BetFair is asking the hogs to pony up. However, the collateral damage is that the concept of exchange is stabbed in the back.
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A list of the Betfair forum threads about the new premium charges.
A FaceBook group has been created to protest the new BetFair premium charges.
PREVIOUSLY: BetFair impose new “-Premium Charges”-…- Do BetFair gag the critics, too?
Is Intrade out on a limb?
As I write this, Intrade gives the advantage to McCain over Obama and has the Republican party even with the Democratic party to win the election, whereas all the other prediction markets, meaning IEM, Betfair, and the NewsFutures play-money kind still favor a Democrat in the White House. That disconnect prompted Chris to wonder aloud whether Intrade is faster than the other markets to incorporate the latest polls, perhaps because of its “-bigger liquidity”-.
That’-s an interesting reaction on several levels.
First, reactivity and accuracy are not to be confused for one another. Given that market prices are supposed to be more accurate and more stable that fickle U.S. raw polls (Berg et al, 2008), one should not necessarily be impressed by the market that is quickest to mirror the latest polls. I very much doubt that traders in the “-other”- markets have not heard about the latest polls giving McCain an edge. Rightly or wrongly – it is too soon to tell – they just gave those polls less weight that the Intrade traders apparently did.
Second, the argument from “-bigger liquidity”- is not receivable. Recently, Paul Tetlock analyzed Tradesports data in depth and found that more liquidity may in fact make the market dumber. He concludes: “-In both sports and financial prediction markets, the calibration of prices to event probabilities does not improve with increases in liquidity- and the forecasting resolution of market prices actually worsens with increases in liquidity.”-
My personal theory is that Intrade has a hair-trigger Republican bias which is not found in the other markets, because Intrade appeals to, and is marketed to, the more Republican-leaning segments of the U.S. population. In my opinion, the Intrade/Tradesports Republican bias was already evident in the 2004 election, as this analysis shows.
Of course, I may be completely wrong. In any case, I find today’-s dual disconnect between the polls and most of the markets, on the one hand, and between Intrade and the other markets, on the other hand, to be two very interesting data points that should be duly recorded so we can come back to them later, with hindsight.