David Pennock wants you to believe that InTrade needs Robin Hansons automated market maker.

&#8220-Our market maker automatically adjusts its level of liquidity depending on trading volume. Prices start off very responsive and, as volume increases, liquidity grows, obviating the need to somehow guess the &#8216-right&#8217- level before trading even starts.&#8221-

CrowdCast = market mechanism = binary spreads with a market maker

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Leslie Fine (CrowdCast Chief Scientist) to me:

Actually, our mechanism is a market, it&#8217-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.

CrowdCast website

Previously: CrowdCast = Collective Forecasting = Collective Intelligence That Predicts

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ProTrade vs. Sports Derivative Exchange

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I asked Chris Hibbert whether they are &#8220-exchanges&#8221-.

Chris Hibbert:

It looks like it from a cursory glance. In both cases, you can buy and sell, and the prices appear to be set by market interactions rather than institutional fiat. They both have a feedback mechanism based on “dividends” produced by on-field performance. ProTrade has a sophisticated formula that takes into account the players’ contribution to a winning season. SDX seems to base their dividends purely on wins and losses. The latter is easier to understand, and probably closer to the way most fans think about things. I think ProTrade is justified in believing they are closer to capturing the individual athlete’s contribution.

There’s also the difference in betting on players or teams. I think both might be helped by offering bets based on both players and teams. But until they cover hockey, I won’t spend a lot of time there. I don’t want to have to start following one of the major sports in order to bet in these play money markets.

ProTrade has a market maker, and SDX uses book orders.

External Links:

– ProTrade

– Sports Derivative Exchange

– Zocalo (the open-source software for enterprise prediction markets, coded by Chris Hibbert)

UPDATE: The SDX co-founder has a comment.

Prediction markets can be directly subsidized with a market maker, allowing all traders who provide info to improve the price to expect to profit. Also, the more fools the more informed traders should be attracted to profit from them, so the mix is endogenous.

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Robin Hanson in a comment, over there.

See also that question for Mike &#8220-Barbecue&#8221- Giberson.