Midas Oracle:
- http://www.midasoracle.org/
- @midasoracle

I am trying to learn how to use Google Wave. First impression: Very weird.

For the Google Wave invite, I thank Martin Frindt of http://www.crowdpark.de/.

UPDATE: Jed says I will get the invite wave in a few days. Patience. I will then be able to invite friends of mine.

Our good friend Mike Linksvayer has 762.

I have only 61.

I feel ridiculous. I am sure people laugh at me in my back about that low number. I need to have at least 100 friends. Help me.

P.S.: I have been focusing more on my LinkedIn network. See the sidebar for all our PM networking links.

- I like Jed a lot, but he often tweets about his private life. I wouldn’t mind, but the problem is that I follow 70 people, and if they all start tweeting about what they had for breakfast, then it becomes Hell on Earth to use Twitter.

- John Delaney is sometimes interesting, but he re-tweets the InTrade RSS feed, which I am already a subscriber to in Google Reader. That is infernal to see 2 times the same info. To add salt to injury, the InTrade RSS feed always re-publishes a second time their feed items. I don’t know why they do that. It is really annoying. So if you subscribe to John Delaney’s Twitter feed, who re-tweets the InTrade feed, then you get the same thing 4 times in a row. It is the craziest thing I have ever seen on the Web. Plus, John Delaney now uses a script to follow every person who follows him —a standard tactic used by the Twitter spammers. It is a bad thing to do.

Addendum:

- Felix Salmon and Tim O’Reilly make a good usage of Twitter. And Felix Salmon is smart enough to poll his people about his Twitter usage.

I have been asked many times by Kruijs on HubDub to update people about the prediction markets created about moi. So, here it is. But, first, a little background. Since the beginning of this year, I have adopted a new stance, as you have seen if you follow Midas Oracle. I am much more skeptical of the claims made by the prediction market people, and I do everything I can to pierce the hype bubble. As you understand, some people who are making a living on surfing on the prediction market hype are not that happy about what I write here. I have been the target of:

1. an EPM software provider (who tried to hide and to pin it on another EPM software provider);
2. an EPM conference organizer (who performed a legal hoax, which lead to the “regrets” episode).

The field of prediction markets comprises both public prediction markets and enterprise prediction markets. The public prediction markets are interesting. They provide objectivity to the public. (And the real-money prediction markets are self sustainable.) However, the jury is still out when it comes to the pertinence and utility of private prediction markets. As I blogged many times, many liars and stupid people have infiltrated the EPM field, and the rest of the EPM industry is incapable of making the cleaning. Worse, they have an association where the fox is in charge of the hen house —giving him liberty to perform hoaxes under any pseudonym he chooses.

OK, now, an update on the HubDub prediction markets.

1. I was not behind the websites chrismasse.com and overcomingmidas.com. Anybody who bet on my name will finish in slip, and I will make sure that that’s what happens to anyone who dares.
2. The person who was behind has been identified at 90%. However, that’s not 100%, and so the set of prediction markets will be expired as “not revealed”. However, that does not mean that that person has escaped the justice of the men.

I am not sure whether Kruijs will be satisfied with this note, but that’s all I have to say at this time. As for the question asked in the title, I leave it to the readers.

Actually, it is by design that Midas Oracle publishes both the good and the bad about prediction markets. The other blogs (Marginal Revolution, Overcoming Whatever, Freakonomics, Odd Head, Mercury, Wiser Than The Crowd, etc.) cherry-pick the good news —and censor the bad news. They never informed you about the 2006 NKM scandal. They never informed you about the fact that The Economist has published a rather negative take on enterprise prediction markets. They never informed you about the fact that Gartner has reported that the enterprise prediction markets are losing ground fast. And I could go on forever.

If you want to read more gentle bloggers, go reading David Pennock or Jed Christiansen. They are good, kind, conformist bloggers. They will never publish the bad news. They will never pick a fight with anyone in the industry, because their biggest dream is to belong to that industry. Midas Oracle, by design, in an independent publication —independent from the industry (and the trading-data-fed academia). This is the reason why Midas Oracle will neither join the PMIA nor appear in the $400-a-seat vendor-sponsored conferences. The ultimate goal of Midas Oracle is to publish the truth —not to make friends with CEOs and researchers. And if they rate Midas Oracle as pesky, that is fine —that means we have published in the past some bits of truth that they didn’t want you to know. The only judgment that matters for Midas Oracle is our readers’ one. The web traffic is solid, the number of feed subscribers increase each week, the PageRank is excellent, we have received plenty of kudos, and Google Web Search loves Midas Oracle —thank you very much.

[...] 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.

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1. How To Join Us

• From within LinkedIn, FaceBook, or Google Reader / Google Mail, send me (Chris Masse) an invite and I’ll accept it.
• You are also invited to join the Prediction Markets group at LinkedIn. We accept everybody (traders, analysts, researchers, consultants, exchange managers, bloggers, etc.).
  
• [As for joining Midas Oracle as a commenter or poster, see this other webpage.]
• I can introduce you to another member of our business network. Just ask me (Chris Masse), and I’ll do.

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2. LinkedIn Network

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For your information, here is the listing of the co-managers of the Prediction Markets group at LinkedIn:

• Jed Christiansen of Mercury
• Tony Clare of BetFair
• John Delaney of InTrade
• Nigel Eccles of HubDub
• Chris Hibbert of Zocalo
• Chris Masse of Midas Oracle
• David Pennock of Yahoo! Research
• Michael Robb of BetFair
• Emile Servan-Schreiber of NewsFutures
• Adam Siegel of Inkling Markets

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- The ownership of the group could be transferred to the yet-to-be-created “Prediction Market Institute”, at one time in the distant future.

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Once you have joined our Prediction Markets group at LinkedIn, here’s how to make its logo visible on your profile.

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- After you have joined our Prediction Markets group at LinkedIn, please make its logo visible on your profile. (In your listing of groups you belong to, you should read, near each one, “change visibility”. Click on that.)

- You are also invited to join Chris Masse’s network at LinkedIn.

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Our Prediction Market People – (from the two networks listed just above)

- Bernd Ankenbrand (Gexid Manager)

- Paul Architzel (Counsel at Alston & Bird)

- Maurice Balick (NewsFutures CTO)

- Pierluigi Buccioli (Entrepreneur and Betting Exchange Trader; Owner of Bookmakers Review)

- Jason Carver (Entrepreneur and Engineer)

- Yiling Chen (Professor at Harvard University)

- Jed Christiansen (Prediction Market Consultant)

- Tony Clare (Head of Strategic Initiatives at Betfair)

- Norris Clark (Vice-President of Sales at NewsFutures)

- Alexander Costakis (Managing Director of Hollywood Stock Exchange)

- Tyler Cowen (Economics Professor at George Mason University)

- Bo Cowgill (Quantitative Marketing Manager at Google)

- Eric Crampton (Senior Lecturer at University of Canterbury)

- Noam Danon (Qmarkets CEO and Founder)

- Pedro Da Cunha (Exago Markets CEO)

- John Delaney (InTrade CEO)

- Juan Manuel Ducler (Founder, BestChartsOnline.com / Trader & Financial Consultant)

- Nigel Eccles (HudDub CEO)

- Leslie Fine (VP of Market Design at Xpree)

- Matthew Fogarty (Prediction Market Consultant – Xpree CEO and Founder)

- Lance Fortnow (Professor of Computer Science at Northwestern University)

- Nick Garner (SEO / PPC / Search Manager at BetFair)

- Cédric Gaspoz (Research and Teaching Assistant at University of Lausanne)

- Michael Giberson (Energy Economist at Texas Tech University)

- Sean Glass (Founder, Chairman, Chief Strategy Officer at Pikum Holdings)

- Andrew Goldberg (Intern at Media Law Resource Center)

- Robin Hanson (Professor of Economics at George Mason University)

- Chris Hibbert (Software Architect, Project Lead at Zocalo)

- Donna Hoffman (Professor and Co-Director, Sloan Center for Internet Retailing)

- Panagiotis Ipeirotis (Assistant Professor at New York University)

- Max Keiser (Entrepreneur, Journalist, Co-Founder of the Hollywood Stock Exchange)

- Alex Kirtland (User Experience Consultant)

- Ken Kittlitz (Software Architect, Foresight Exchange, Consensus Point)

- Greg Knaddison (Developer and Sys Admin for PingVision)

- Nathan Kontny (Inkling Markets CTO)

- Kriss Monaco (Director of New Product Development at International Securities Exchange)

- Dean LeBaron (Independent Investment Management Professional)

- Heidi Levin (Director of Business Development at Inkling Markets)

- Mike Linksvayer (Vice-President of Creative Commons)

- Rory Mackay (PredictionsMarkets.com Co-Founder and Owner)

- Chris. F. Masse (Founder and President of Midas Oracle)

- Tracy Mullen (Penn State Professor of Information Technology)

- Jesper Muller-Krogstrup (Managing Director of Nosco)

- Sean Park (Founding Partner at Sixth Paradigm)

- David Pennock (Principal Research Scientist at Yahoo!)

- Daniel Reeves (Yahoo! Research Scientist)

- Michael Robb (Communications & PR Executive at BetFair)

- Steve Roman (Financial Analyst at FXCM)

- Mark Rose (Ex-HedgeStreet Director of Product Development)

- Jason Ruspini (Financial Research Analyst, Vice President at Conquest Capital Group)

- Mike Sankowski (Product Development and Market Operations Manager at US Futures Exchange)

- Emile Servan-Schreiber (NewsFutures CEO and Co-Founder)

- Brian Shiau (The Sim Exchange CEO and Founder)

- Adam Siegel (Inkling Markets CEO and Co-Founder)

- Ashish Singal (Capital Markets Professional)

- Erik Snowberg (Assistant Professor of Economics and Political Science at California Institute of Technology)

- Brad Stewart (Reality Markets Founder)

- Brent Stinski (Media Predict CEO and Founder)

- Karim Tahawi (MyCurrency Founder)

- Jason Trost (Co-Founder of Smarkets)

- George Tziralis (Doctoral Researcher at National Technical University of Athens, Co-Founder of AskMarkets)

- Robert Wilburn (Rimdex CEO and Founder)

- Gerry Wilson (YooNew CEO and Co-Founder)

- Justin Wolfers (Professor of Business and Public Policy at the University of Pennsylvania)

- Matt Youill (Chief Technologist at Betfair)

- David Yu (BetFair CEO, Former CTO and COO of BetFair)

- Eric Zitzewitz (Professor of Economics at Dartmouth College)

- Plus, many, many more…

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Other Prediction Market People At LinkedIn

- Russell Andersson (Chief Operating Officer, Third Ave Beach)

- Adrian Asher (Global Head of Security at BetFair)

- Henry Berg (Group Manager on Information Markets at Microsoft)

- Matt Carter (Director of the Advanced Technology Group at BetFair)

- Jonathan Cumberlege (Former Director of Registrations & Payments at BetFair)

- Gerard Cunningham (President at BetFair USA)

- Mark Davies (Managing Director of Corporate Affairs of BetFair)

- Mike Dooley (Vice-President of Engineering at NewsFutures)

- Sean Dunbar (Former Head of Technology at Hollywood Stock Exchange)

- Mathias Entenmann (Exchange Managing Director of BetFair)

- Brian Galebach (Freelance Computer Programmer and Owner of Probability Sports)

- Carol Gebert (Former Founder at Incentive Markets)

- Christian Hellmers (Director of US Business Development of BetFair)

- David Jack (TradeFair Director)

- Richard Jaycobs (Cantor Exchange Project Leader)

- Nicholas Jenkins – Nick Jenkins – (Owner of Betcha.com)

- Ajit Kambil (Global Director at Deloitte Research)

- Alam Kasenally (Xpree CTO)

- Mike Knesevitch (Ex-InTrade Director)

- Dawn Tevekelian Keller (Director, Services Business Group & Prediction Markets at Best Buy)

- Robin Marks (Head of Media at BetFair)

- Hunter Morris (Co-Founder of Smarkets)

- George Neumann (Professor of Economics And Applied Mathematics and Computational Sciences at the University of Iowa, Co-Founder of the Iowa Electronic Markets)

- Scott Page (Professor at University of Michigan)

- Paul Pluschkell (Founder & CEO at Spigit)

- Todd Proebsting (Director at Microsoft, Former Group Manager on Information Markets at Microsoft)

- Linda Rebrovick (Consensus Point CEO)

- Don Reynolds (Site Administrator at NewsFutures)

- Felix Salmon (Financial Journalist at Portfolio)

- Bimal Shah (Product Manager at TradeFair)

- Martin Spann (Professor at the University of Passau)

- Will Speck (Director Business Development & Market Research at Financial Times & FT.com)

- Martin Thompson (Engineering Director at TradeFair)

- Geoffrey Tso (Engineering Manager at Xpree)

- Andrew Twaits (Corporate and Business Affairs Director of BetFair Australia)

- Mark Wood (Head of Programme at TradeFair0

- Plus, many, many more…

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http://www.chrismasse.com/

Via mister Cowgill.

UPDATE: The website is down, now. The text has been republished here.

Ha! ha! ha! ha!… That’s what they tell you, anyway… —because they are selling an image (just as Bernie Madoff did). They are selling it thru their vendor websites, vendor conferences, vendor-inspired articles in blogs, newspapers and magazines, and interviews of vendor data-fed professors in the media.

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.

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Here’s now our definition of prediction markets:

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A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative represents the imputed perceived likelihood of the partially uncertain future outcome (i.e., its aggregated expected probability). A 60% probability means that, in a series of events each with a 60% probability, the favored outcome is expected to occur 60 times out of 100, and the unfavored outcome is expected to occur 40 times out of 100.

Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism —with or without an automated market maker.

Prediction markets enable us to attain collective intelligence. Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that the traders bring when they agree on prices. The event derivative traders are informed by the primary indicators (i.e., the primary sources of information), like the polls, for instance. These informed speculators then execute their transactions based on their anticipations about the future —anticipations that will be either confirmed or infirmed.

The value of a set of prediction markets consists in the added accuracy that these prediction markets provide relative to the other meta predictive mechanisms, times the value of accuracy in improved decisions, minus the cost of maintaining these prediction markets, relative to the cost of the other meta predictive mechanisms. A highly accurate set of prediction markets has little value if some other meta predictive mechanism(s) can provide similar accuracy at a lower cost, or if very few substantial decisions are influenced by accurate predictions on its topic.

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PS: I am updating a bit the content of this webpage, over time —so as to finesse the message.