[...] 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 this man, Paul’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’s analysis in full.

I would like to add 2 things to Paul’s conclusion:

1. We have been lied to about the real value of the prediction markets. Part of the “field of prediction markets” (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 “practitioners” have done this job.

Who was behind chrismasse.com and/or overcomingmidas.com?

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Chris Masse will admit to being behind chrismasse.com and/or overcomingmidas.com

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First ever comment from “The Colonel”:
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

Third comment:
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)

Telling Chris Masse’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’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

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Who was behind chrismasse.com and/or overcomingmidas.com?

Now is time to give you some background information about last week’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’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 —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 (“Chris F. Masse is a Fraud”, and “Overcoming Midas”). Just after that the 2 websites were discovered (by one innocent reader, who simply followed the web link posted by a commenter, “The Colonel”), many people e-mailed me to tell that I should do a “reverse IP lookup“ to find out who is behind… I did… The result was “dev24.newsfutures.com”. 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 “The Internets” —as would say former president George W. Bush.

It turned out that:

- NewsFutures sent a “cease and desist” 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… even though Emile and his team had nothing to do with this attack.

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The Reverse IP Lookup is so easy to fudge that it’s totally meaningless. It’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 “evidence”.

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 “reverse DNS” 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 “dev24.midasoracle.org”.

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

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

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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/

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Background: See http://www.midasoracle.org/tag/chris-f-masse-is-a-fraud/

Settlement details: True if Chris Masse admits to being behind chrismasse.com and/or overcomingmidas.com on one of his sites (chrisfmasse|midasoracle).(org|com|net) or other verifiable means.

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Good bet. I have just bought for $5,100 of “NO” derivatives.

Tomorrow morning, I am going to post (some of) the information that Emile Servan-Schreiber of NewsFutures sent me regarding this cyber attack (and the whereabouts of the attacker). Let me repeat once again that NewsFutures is not behind the attack.

(Our good friends at Inkling Markets are not behind the attack. Ditto for CrowdCast, Jed, etc.)

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 —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.

Let’s turn this regrettable incident into something positive. Let’s take this opportunity to turn things around.

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.