Did Florian Riahi of Texodus Predictions really read those academic papers about prediction markets?

No Gravatar

I described in a previous post why I delisted his company from my list of prediction market consultants.

I want to share a remark with you, today. Here is a man from Holland who recruited by e-mail some US-based &#8220-advisors&#8221- &#8212-one ocean away. One curious online recruit he made is professor Christopher Wlezien, the co-author of an academic paper&#8230- that claims that prediction markets are *NO* better than damped polls:

For now, our results suggest the need for much more caution and less naive cheerleading about election markets on the part of prediction market advocates.

I bet that Florian Riahi didn&#8217-t read that paper, and I bet that professor Christopher Wlezien accepted the advisory slot in order to make the simple point that the &#8220-prediction market advocates&#8221- are just a bunch of baloneys who don&#8217-t read academic papers. :-D


– How that prediction market consultant in Holland attracts economic advisers on the cheap

– I bet that those academic scholars…

Removal of Florian Riahi of Texodus Predictions

No Gravatar

Dear readers,

I am informing you of the removal of Texodus Predictions from my listing of prediction market consultants. The listing is intended to display serious and professionally minded consultants, only.

Thanks for your attention.


– How that prediction market consultant in Holland attracts economic advisers on the cheap

– I bet that those academic scholars…

How that prediction market consultant in Holland attracts economic advisers on the cheap

No Gravatar


I am writing on behalf of [PREDICTION MARKET SOFTWARE VENDOR’S NAME], a Netherlands based consulting firm, because our research has identified you as a scholar with some expertise in Prediction Markets or a related field. [THEY JUST SCRAPPED MIDAS ORACLE’S LISTINGS] We would like to assess your suitability and interest to join the panel of scientific advisors with [PREDICTION MARKET SOFTWARE VENDOR’S NAME] (www.url.com).

In doing so, we propose to explore your area of experience and knowledge of Prediction Markets. Having established this, we would like to list you as our scientific advisor on your area of expertise on Prediction Markets. This will allow us to seek your services for a negotiated fee, once your particular expertise in developing or interpreting a Prediction Market issue is required.

I trust this message clarifies in short the mutual benefits in our cooperation. Please feel free to contact me to discuss further details.


Communications Manager

The prediction market consultants who matter -and the others who dont

No Gravatar

Who are the prediction market consultants who took part of the conversation prompted by the publication of the devastating story by The Economist?

Adam Siegel of Inkling Markets

Mat Fogarty of CrowdCast

George Tziralis of AskMarkets

Jed Christiansen of Mercury

Notably absent from the conversation:

– David Perry of Consensus Point

– &#8220-Chief Scientist&#8221- Robin Hanson of Consensus Point

– Emile Servan-Schreiber of NewsFutures

– Chris Hibbert of Zocalo

– The HSX people

– The academic canaries who are over-quoted by the New York Times and the Wall Street Journal

Taking all this into account, I am updating my &#8220-Consultants&#8221- listing published at CFM. I am putting the consultants who participate in web conversations ahead of the others, and in bold, so as to signal to my numerous readers who they should contact first &#8212-should they have any inquiry about enterprise prediction markets. And I will consider doing the same for the other Midas Oracle listings.

Starting today, there will be retaliations of measured and graduated amplitude against any prediction market people or prediction market company who snobs the important conversations about prediction markets &#8212-which take place on Midas Oracle or elsewhere.

You can&#8217-t be bragging everywhere that you are a &#8220-prediction market expert&#8221- and be absent from important conversations. If you don&#8217-t converse with us, then you are not such a good expert &#8212-&#8221-you&#8217-re the weakest link, bye bye.&#8221-

NEXT: It is not about Midas Oracle&#8230- It is about taking part of the conversation about (enterprise) prediction markets on the Web.

Competitive Forecasting (the brand which NewsFutures Emile Servan-Schreiber is so sanguine about) is probably more than a generic mark, it might well be a descriptive mark -provided X, Y and Z.

No Gravatar

Tom W. Bell – (a law professor who have been following the field of prediction markets for years):

My two cents on “competitive forecasting”: It probably rises above a merely generic mark, which could never be protected, because it is not the commonplace name for the service to which it refers. It more likely qualifies as a descriptive mark, and as such could be protected only if “secondary meaning” were proven. In other words, the claimant would have to show that by dint of long exposure to its use in a commercial context, consumers had come to understand the mark not as a mere description but as the name of the claimant’s service. Whether or not “competitive forecasting” can meet that test remains a question of fact, of course.

Caveat: I speak only of U.S. law, though most common law countries follow similar principles.


PostScriptum: Put aside that discussion about branding, I like NewsFutures as a play-money prediction exchange, and I have come to realize, e-mailing Emile privately, that he is one of the man I would go for to have an in-depth foray into the real value of the prediction markets (going beyond accuracy, onto utility) &#8212-ironically, the kind of stuff that Robin Hanson is researching more seriously these days (PPT file).

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)?

No Gravatar

Look at the quote at the bottom of this webpage.

UPDATE: They have just brought the Best Buy quote down. :-D

What is a prediction market? What is the utility of enterprise prediction markets?

No Gravatar

Consensus Point:

First, every market price is a prediction. Think of a familiar securities market such as a stock market. The price of a company’s stock is a forecast of the value of future dividend payments. A bond price is a forecast of the value of a defined set of interest payments, based on factors such as likelihood of default and future inflation. Second, markets generate forecasts in a very specific way – by aggregating and consolidating information from many individuals, often widely dispersed, each with access to small, idiosyncratic bits of relevant information.

This informational structure is very common in organizational life. Information within firms is often widely dispersed and undocumented, residing in the minds of employees. Junior level workers, for example, while perhaps knowing little about the overall set of strategic issues affecting their company, often have detailed understandings of isolated aspects of the business.

The fundamental challenges of corporate forecasting are to access and coordinate all relevant bits of information dispersed throughout a company and to consolidate them into a set of quantitative metrics that can be employed as forecasts.

But organizations impose significant constraints on the flow and processing of information. The hierarchy that defines organizational life often restricts the movement of information, from the bottom-up as well as across business units, and sometimes, because of various forms of “politics,” motivates the concealing of information or even the spreading of disinformation. When combined with well-documented effects such as human limitations in expressing complex thoughts and systematic biases in group decision-making, the result is that employees often do not reveal their honest assessments, sometimes because they’re not provided the opportunity and sometimes because they fear reprisal for offering an unpopular opinion. Forecast quality suffers.

Prediction markets offer firms the opportunity to incorporate the information aggregating and predictive power of markets within corporate structures relying primarily on top-down direction. A prediction market is established within a company to generate predictions on issues of interest to managers in a manner that directly addresses the foundational communication constraints within firms.

A “stock” is defined to reflect an issue of interest to managers, perhaps unit sales of a product over a specified future time period. A group of employees – perhaps salespeople and marketing personnel -are selected to participate as traders on the basis of their perceived understanding of future sales prospects. Using software that is commercially available and run as an internet (or intranet) application, the participating employees are provided trading accounts, the stock is assigned an initial value (perhaps reflecting management’s current expectation of sales in the defined period) and a currency is established to provide a medium for exchange.

With the protection of anonymity (eliminating the fear of reprisals for offering unpopular opinions) and a well-defined incentive structure, employees are motivated to acquire relevant information and contribute their best assessments. They buy and sell shares of the security based on their beliefs about future sales prospects and their desire to increase the value of their portfolio. When an employee, for example, observes that the price of the stock is less (or more) than his/her expectation of future sales, he/she will buy (or sell) the stock, thereby driving its price up (or down).

As a result of this dynamic, the stock price serves as an ongoing real-time forecast of future sales. It continuously reflects traders’ aggregated assessment of future sales of the product, in the same way that the trading of a company’s stock on a stock exchange continuously reflects the trading community’s collective assessment of the value of the company.

Several internet-based prediction markets have been functioning for many years, and many companies have implemented prediction markets internally. Performance comparisons reveal that such markets produce forecasts that are more accurate than those from traditional systems.

Prediction markets not only produce forecasts and assessments that are, on average, more accurate than those produced from traditional forecasting approaches at any point in time (because they incorporate more information and less disinformation), but also, because the markets function continuously, will reveal the impacts of new information far faster than any alternative approach. Because the usual disincentives for employees to reveal bad news to managers have been eliminated, this system can in some instances serve as an effective “early warning system.”

The informational content of a prediction market is not limited to the stock price. The underlying bid data can be examined for insights into the knowledge and the beliefs of specific employees and groups within the organization. Analysis of market transactions in prediction markets will identify areas where there is substantial disagreement among employees about future values of key parameters driving the firm’s strategic decisions. Such disagreement, reflecting a collective uncertainty about underlying factual premises and/or interpretations, will highlight areas where the incremental value of additional managerial attention, in the form of information gathering (including perhaps discussion with select employees) and/or analysis, will be particularly high.

There are additional benefits of prediction markets – such as improved decision-making on personnel issues and improved employee morale – that can be realized with the most force when the markets are employed for long time horizons.

Thanks to David Perry of Consensus Point for allowing me to republish this explainer.