Foretelling The Future: Online Prediction Markets —- (4 pages in all)
Not a single word about InTrade-TradeSports fucking up its traders during the North Korea Missile episode.
Although James Surowiecki is a great thinker overall, I’-m not happy he served InTrade’-s past forecasting successes in absolute terms —-and not in terms of probabilities. That shows James Surowiecki can’-t be the ultimate leader of the field of prediction markets. Robin Hanson, Justin Wolfers, Koleman Strumpf, Eric Zitzewitz, or even Emile Servan-Schreiber, would have not made that mistake.
All prediction markets are not created equal. Spot that they go too far, saying terrorism prediction markets or earthquake prediction markets could serve a societal purpose. That is complete bullshit. That is pure hype. As I said yesterday, an analyst should check whether a given prediction market is really able of aggregating important information. Just because John Delaney wants to create a betting market to get money doesn’-t mean that that given prediction market will be able to give sound forecasts. Otherwise, we would have prediction markets about future lottery outcomes and we would make a fortune out of that.
Spot that they put the emphasis on the easy translation between the 0–-100 prices and the 0–-100 probabilities. That puts BetFair’-s model (based on those damn digital/decimal odds) out of the picture.
ABC 20/20 featuring InTrade on May 9, 2008 —- 10:00 pm ET
Foretelling the Future: Online Prediction Markets —- (4 pages in all)
Now Intrade is more than just a place where people win or lose money making bets. It turns out that the share prices on Intrade can be accurate predictors of the future. Intrade attracts a large and diverse crowd of bettors, and because each participant puts their money on the line, they may be more likely to make careful decisions. As a result of the collective intelligence of more than 77,000 bettors on Intrade [*], the prices on the site may be a good way to predict the outcome of current events —- more accurate than some polls and pundits.
[*] and thanks to InTrade’-s market mechanism…-
Previous blog posts by Chris F. Masse:
Become “friend” with me on Google E-Mail so as to share feed items with me within Google Reader.
Nigel Eccles’ flawed “vision” about HubDub shows that he hasn’t any.
How does InTrade deal with insider trading?
“The Beacon” is an excellent blog published by The Independent Institute.
The John Edwards Non-Affair… is making Memeorandum (twice), again.
Prediction Markets = marketplaces for information trading… and for separating the wheat from the chaff.