Archive for the tag 'decision making'

Decision Markets and Futarchy are solutions in desperate search for a problem to solve and for their early adopters… and that may stay that way well after Robin Hanson’s head gets cryogenized.

Chris F. Masse April 14th, 2008

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Robin Hanson:

[...] We rarely seek out advice, and when we do it is usually on much smaller decisions. [...] One reason we avoid getting advice is that it lowers our status relative to those who give advice. Of course this is also makes asking for advice a good way to flatter and supplicate. Not sure if this explains the puzzle though. But all this doesn’t seem to bode well for fielding decision markets on the biggest organizational decisions.

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The big picture:

  1. The insurmountable obstacle to the implementation of any “decision market” (in Robin Hanson’s original concept - PDF file) is the decision maker’s ego. CEOs, board administrators and heads of states are honchos who will never outsource decision-making to conditional prediction markets. That will never happen.
  2. Let alone the impossibility of overhauling our democracies.
  3. The concept of decision markets (PDF file) in itself is superb, though —and that makes Robin Hanson a great thinker.
  4. Great inventors seldom make great innovators. Innovators borrow ideas from inventors and apply them in ways that inventors never envisioned. In the future, Robin Hanson’s concept of decision markets might inspire applications in digital communities of libertarians (like Second Life), for instance.
  5. As for decision-aid markets (a derivative, which most people confuse with his original concept), they make full sense —provided that you talk in decision makers who are already convinced by the no-ego, free-market, information-aggregation, secondary-information-source philosophy. There is only a fistful of them, out there. In that regard, Robin Hanson’s best use of his time would not be blogging incessantly about decision markets for his little clique of fanboys, or touring the world to plug futarchy to gullible audience, but to consult with the 1% of the Fortune-500 companies that could be truly interested in that radical market-based solution. Or maybe Robin Hanson should start up his own enterprise, all managed in accordance with his radical concept(s).
  6. The next frontier is prediction market marketing —a bottom-up approach focused on quantifying in all dimensions the small population segment that can derive full joy from reading our prediction markets. That is ungrateful hard work, which our prestige-seeking, publicity-thirsty, acclaim-drunken, Earth-shattering propeller heads are not interested in, I suspect.
  7. And that wraps up our “Robin Hanson Watch #23,173″. Stay tuned for our next episode, sometimes later. :-D

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Robin Hanson’s comment:

I don’t recall ever turning down a chance to consult on prediction markets for a Fortune-500 company. If you know of an opportunity that I’m missing, do let me know.

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Media Predict pretend to be able to forecast the next hits.

Chris F. Masse December 12th, 2007

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Media Predict (probably Brent Stinski):

[...] As we so often note at Media Predict, content decisions have historically rested in the hands of select individuals – who unfortunately have an exaggerated confidence in their own tastes. Year in and year out, in media less than 10 percent of the product line generates 90 percent or more of revenue. Elite tastemakers simply can’t consistently predict what will work with millions of consumers – no more than they can levitate or perform telekinesis. [...]

So when it comes to repackaging user-generated content for the mainstream, old media needs new ways to read the tea leaves. Media Predict, clearly, seeks to provide that accurate indicator – and in light of twenty years of evidence supporting the overwhelming power of prediction markets, no other tool promises to meet the task quite so well.

I’m with Brent Stinski when it comes to trusting the prediction markets a little more than the publishers’ executives and managers. However, that does not mean that old media executives are going to change their decision-making modus operandi and outsource their decisions to Media Predict.

  1. Brent Stinski forgets to take into account the business people’s egos, in his reasoning. Why would the publishers’ executives and managers strip themselves of power in favor of a crowd machine if the added benefit is marginal?
  2. Both experts and prediction markets are not able to forecast the next hits, because there are no advanced indicators of future content popularity. Period. It’s impossible to predict who the next Beatles or Rolling Stones will be. And J.K. Rowlings (a poor single mum, then) came out of nowhere.

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