The truth about (enterprise) prediction markets

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Paul Hewitt:

[…] In virtually every case, the prediction market forecast is closer to the official HP forecast than it is to the actual outcome. Perhaps these markets are better at forecasting the forecast than they are at forecasting the outcome! Looking further into the results, while most of the predictions have a smaller error than the HP official forecasts, the differences are, in most cases, quite small. For example, in Event 3, the HP forecast error was 59.549% vs. 53.333% for the prediction market. They’re both really poor forecasts. To the decision-maker, the difference between these forecasts is not material.

There were eight markets that had HP official forecasts. In four of these (50%), the forecast error was greater than 25%. Even though, only three of the prediction market forecast errors were greater than 25%, this can hardly be a ringing endorsement for the accuracy of prediction markets (at least in this study). […]

To the despair of the Nashville imbecile, Paul&#8217-s analysis is quite similar to mine (circa February 14, 2009):

The prediction market technology is not a disruptive technology, and the social utility of the prediction markets is marginal. Number one, the aggregated information has value only for the totally uninformed people (a group that comprises those who overly obsess with prediction markets and have a narrow cultural universe). Number two, the added accuracy (if any) is minute, and, anyway, doesn’t fill up the gap between expectations and omniscience (which is how people judge forecasters). In our view, the social utility of the prediction markets lays in efficiency, not in accuracy. In complicated situations, the prediction markets integrate expectations (informed by facts and expertise) much faster than the mass media do. Their accuracy/efficiency is their uniqueness. It is their velocity that we should put to work.

Prediction markets are not a disruptive technology, but merely another means of forecasting.

Go reading Paul&#8217-s analysis in full.

I would like to add 2 things to Paul&#8217-s conclusion:

  1. We have been lied to about the real value of the prediction markets. Part of the &#8220-field of prediction markets&#8221- (which is a terminology that encompasses more people and organizations than just the prediction market industry) is made up of liars who live by the hype and will die by the hype.
  2. Prediction markets have value in specific cases where it could be demonstrated that an information aggregation mechanism is the appropriate method that should be put at work in those cases (and not in others). Neither the Ivory Tower economic canaries nor the self-described prediction market &#8220-practitioners&#8221- have done this job.

The attacker was from Nashville, Tennesse.

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Yesterday, I explained to you in great details how the attacker tried to incriminate NewsFutures by creating the illusion that the 2 websites denigrating me were webhosted by NewsFutures &#8212-a forged Reverse IP Lookup gave this false impression. Today, I would like to investigate the hypothesis the IP addresses of the attacker.

First ever comment from &#8220-The Colonel&#8221-:
Why are you so quick to assume that the sum total of that company’s employees is only those listed in the press release? Consensus Point is a vast and glowing network of neurons and axons, spanning a veritable galaxy of prediction market technology. Surely there must be artists, coders, schemers, evil geniuses, dolts, and assorted scribblers involved in such a breathtaking endeavor.
http://www.midasoracle.org/2009/02/17/linda-rebrovick-consensus-point/#comment-23404
74.165.154.224
http://whois.domaintools.com/74.165.154.224
BellSouth – Nashville

Second comment from The Colonel (who, for the first time, uses the link to chrismasse.com under his byline):
http://www.midasoracle.org/2009/03/04/google-inkling-markets-is-ranked-much-higher-than-consensus-point/#comment-23565
68.52.155.14
http://whois.domaintools.com/68.52.155.14
ComCast – Nashville

Defending the &#8220-chief scientist&#8221-:
http://www.midasoracle.org/2009/03/04/the-prediction-market-consultants-who-matter-and-the-others-who-dont/#comment-23567
98.211.0.48
http://whois.domaintools.com/98.211.0.48
ComCast – Murfreesboro (a suburb of Nashville, Tennesse)

[UPDATE: The president of the company indeed lives in Murfreesboro, see the bottom of that page.]

Telling Chris Masse&#8217-s opinion is worthless.
http://www.midasoracle.org/2009/03/04/google-inkling-markets-is-ranked-much-higher-than-consensus-point/#comment-23583
68.52.155.14
http://whois.domaintools.com/68.52.155.14
ComCast – Nashville

His further comments (after that Niall O&#8217-Connor has step up in the browl):
http://www.midasoracle.org/2009/03/06/chris-f-masse-is-a-fraud/#comment-23623
67.207.137.220
http://whois.domaintools.com/67.207.137.220
BellSouth – San Diego

NEXT: Dave, was it *you*?

NEXT: Who did it?

How to set Reverse IP Lookup to anything that you like (or dislike, should I say, in this case)… including a NewsFutures server that does not exist in reality…!!!…

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Dear readers,

Now is time to give you some background information about last week&#8217-s incident. As you all know, somebody was irked by what I said about the EPM software vendors and set up, not one, but two websites denigrating moi.

#1. I don&#8217-t care if someone makes a fool of moi. I am fair game. Plus, it gives a laughing opportunity to the Chief Economist of Midas Oracle, because it is revenge for my making fool of him when he is so wrong about the article in The Economist or else (follow the HubDub link given by Mike Linksvayer).

#2. My big concern with that attack is that it might well come from somebody I know &#8212-and who has always had the kindest words for me (including last week). So, that person might well be a hypocrite, and my trust in him (and his prediction market company, if any) will be wiped out, if my suspicion is confirmed.

#3. My secondary concern is that that attacker (who might well be a prediction market software vendor or a disgruntled employee) tried to put the blame on NewsFutures (both a prediction market software vendor and a public prediction exchange) for the 2 websites (&#8221-Chris F. Masse is a Fraud&#8221-, and &#8220-Overcoming Midas&#8221-). Just after that the 2 websites were discovered (by one innocent reader, who simply followed the web link posted by a commenter, &#8220-The Colonel&#8221-), many people e-mailed me to tell that I should do a &#8220-reverse IP lookup&#8220- to find out who is behind&#8230- I did&#8230- The result was &#8220-dev24.newsfutures.com&#8221-. I was very surprised to see NewsFutures involved in this attack, and I sent the link to Emile Servan-Schreiber, who, first, expressed astonishment, and then forwarded the link to his CTO (Maurice Balick, some of you know him very well), who is a computer whiz and a master of &#8220-The Internets&#8221- &#8212-as would say former president George W. Bush. :-D

It turned out that:

– NewsFutures sent a &#8220-cease and desist&#8221- letter to the webhost of these 2 websites. Here is a very short excerpt of the NewsFutures letter:

That IP address provides a Reverse-ARP record containing dev24.newsfutures.com. However, we own the domain newsfutures.com and we have never authorized anyone to setup this fake RARP record.

– In the meantime, following the brouhaha made on Midas Oracle when the IP address of The Colonel was revealed, the attacker cleared the RARP record during the night so that it no longer pointed to NewsFutures (the non-existent dev24.newsfutures.com address).

– There are other technical and legal developments to this case, but I am not at liberty to talk further.

– However, I would like to explain to you how it was possible to put the blame on NewsFutures&#8230- even though Emile and his team had nothing to do with this attack.

The Reverse IP Lookup is so easy to fudge that it&#8217-s totally meaningless. It&#8217-s something that prediction market people should know about, so that, in the future, they would not be fooled into drawing conclusions from this kind of &#8220-evidence&#8221-.

To understand how one could fraudulently make a reverse IP lookup point to a newsfutures.com domain, Emile and Maurice bought a $20 slice on the webhost where the chrismasse.com and overcomingmidas.com websites were hosted. The hosting service then lets you set the &#8220-reverse DNS&#8221- to any URL that you like, and within a few seconds the Reverse IP Lookup tool on iWebTools will point to the URL that you chose. As an example (and as a blink-blink sign to Mike Giberson and Mike Linksvayer), Emile and Maurice made the IP point to &#8220-dev24.midasoracle.org&#8221-.

Try it: http://www.iwebtool.com/reverse_ip?domain=67.23.8.251

midas-oracle-defamer

CONCLUSION: Someone tried to incriminate NewsFutures (and fuck with our readers&#8217- mind) by setting up these agressive websites and having the Reverse IP Lookup point to a fake NewsFutures URL.

UPDATE:

Did the attacker try to pin it on, not just one, but *two* prediction market software vendors?
http://www.midasoracle.org/2009/03/13/did-the-attacker-try-to-pin-it-on-not-just-one-but-two-prediction-market-software-vendors/

Who is behind?

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IMPORTANT UPDATE REGARDING THE INCIDENT.

Somebody did set up a website making a fool of me. Searching who is behind this turned out the IP address of the NewsFutures server &#8212-but Emile Servan-Schreiber is as innocent as a lamb because this data was in fact fudged by the attacker (so as to wrongly put the blame on NewsFutures). It might well be the same thing for the IP that connected to comment here.

UPDATE:

Did the attacker try to pin it on, not just one, but *two* prediction market software vendors?

http://www.midasoracle.org/2009/03/13/did-the-attacker-try-to-pin-it-on-not-just-one-but-two-prediction-market-software-vendors/

the-colonel

nashville

chrismasse-com-1

chrismasse-com-2

overcomingmidas-com-1

overcomingmidas-com-2

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Niall is not happy…

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Niall O&#8217-Connor:

Cowardly bastards …if this can be confirmed I will pass the story on to one of my contacts at the Guardian. And I will ensure that the other cowards who received emails last Friday about the websites, but chose to keep quiet are also exposed- by informing their companies of this obscene example of corporate bullying.

Chris Masses InterPol file

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Chris Masse .com:

Chris F. Masse is NOT a Fraud

But come on, would saying he is really be libel? Seems like a rather subjective statement to me in the first place. What is the metric for &#8220-fraud-ship&#8221-, anyway?

Chris F. Masse

Chris F. Masse, of chrisfmasse.com &amp- midasoracle.org, is NOT a fraud. (But he is slightly overweight, and often stinks of elderberries and old coffee.) Styling himself as &#8220-the most forward thinker in the field of prediction markets,&#8221- Chris daily attempts to offer commentary on prediction markets, economics, and related subjects, from his blog, Midas Oracle.

However, as even a casual reader can glean from Mr. Masse&#8217-s writing, he certainly has an axe to grind. Never mind questions as to whether the man might be bi-polar, or why his posts attract so few comments and engender so little discussion&#8230-no, let us concentrate on what Mr. Masse is saying. From the get-go, Chris attempts to drill into the mind of every reader exactly what a prediction market is, and what its uses are. In a few paragraphs located at the top of his blog&#8217-s main page, Mr. Masse attempts to distill his particular views on the utility of prediction markets while simultaneously dissuading any ideas to the contrary, as though all other writing and actual research in the field is a moot point. Only Chris&#8217-s opinions matter, but they must be taken on faith.

And what are Mr. Masse&#8217-s qualifications to make such claims as are replete throughout his writings? He never provides them, conveniently, but this does not stop Chris from criticizing others who have verifiable experience in the &#8220-nitty-gritty&#8221- of prediction markets. Robin Hanson, the &#8220-father of prediction markets&#8221-, is a particular punching-bag favorite, although Chris apparently has a strong aversion to responding to Robin&#8217-s comments when he posts.

Chris, always a master of logic, claims to take conversation seriously, and in a recent post entitled &#8220-It is not about Midas Oracle&#8230- It is about taking part of the conversation about (enterprise) prediction markets on the Web.&#8221- wrote:

  1. If you are an economist, and have nothing to say about the current banking, financial and economic crisis (the worst in our generation), then you don&#8217-t matter anymore.
  2. If you are a prediction market consultant, and have nothing to say about the negative piece from The Economist, then you don&#8217-t matter anymore.

Mr. Masse seems to be a master of the arbitrary, as he has synthesized rationale for obsoleteness based upon reactions to a very short Economist story that did nothing less than report the facts. And obsoleteness according to whom? Mr. Masse, of course.

But perhaps Mr. Masse missed the critical point that the story had nothing negative to state about prediction markets themselves, simply some observations on their adoption. In conclusion, actually, the story contains these two lines:

Yet many pilot projects run so far have shown that junior staff can often be surprisingly good forecasters. Perhaps the best way to find out when prediction markets will finally take off is to ask your employees—using a prediction market.

Chris, that sounds pro-prediction market to me. Or did you perhaps simply need an excuse to take pot-shots at &#8220-economists&#8221- and &#8220-prediction market consultants&#8221- because &#8220-they&#8221- did not share your reaction against fabricated story content that is not there?

Chris Masse gets a vote of no confidence from me. Any further evidence required to diagnose Mr. Masse&#8217-s ineptness in providing a factual discussion of prediction markets can be found at his blog, Midas Oracle, which you can read for yourself. Mr. Masse is obviously working to overcome something, I am just not sure what. Perhaps you could inform us, Chris?

Previously:

Enterprise prediction markets… the next big thing —not.

Opacity versus Openness

NEXT: Who did it?

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