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To the question asked in the title of this post, some have answered by the affirmative (“Prediction Markets Have a Big Role to Play”). In my view, it is wrong to overvalue the real social utility of the prediction markets.

As of today, we can plainly see 2 things. Number one, the prediction markets are a tool of curiosity. People have heard about InTrade thanks to numerous news articles (where some prediction market researchers who get the InTrade historical data for free pump up the prediction markets as God’s right arm on Earth). At crunch time, the people teased by all this publicity flock to the InTrade website to satisfy their curiosity about the state of the horse race. Number two, a subset of the general population (made up of educated people who believe in the virtues of markets) use the prediction markets as a tool of convenience. Instead of spending long hours reading the various outputs by the pollsters and the commentariat, these people just check InTrade on a daily basis, because they know that it is primarily (but not only) an information aggregation mechanism. InTrade sums up the news of the day, so to speak. Hence, these people (in the know about how to benefit practically from the wisdom of crowds) don’t have to spend time gathering and analyzing the news of the day.

To the question asked in the title of this post, I’ll answer “no” —unless one of my readers can educate me more about the following issues:

1. Did InTrade set up a set of prediction markets, in the summer of 2008, aiming at forecasting the (then) “upcoming financial crisis”? I am afraid that the answer is “no”.
2. Did the World Economic Forum (a.k.a. Davos) manage to open the eyes of the 2,500 so-called “global leaders” (a grandiose denomination that includes many of the Wall Street CEOs, and, yes, some financial bloggers like Felix Salmon, invited to that Swiss annual grand Mess of the capitalism) about the financial instability that was already perceptible in the recent years? I am afraid that the answer is “no”. Now, ask yourself: If Davos can’t, what makes John Delaney think that he can?
   
3. Is there out there at least one expert (by “expert” I mean any professional other than the so-called prediction market experts who are expert in nothing else than pumping up the prediction markets) who can demonstrate clearly that the prediction markets in his/her vertical have helped tremendously in his/her pursuit of creating long standing wealth? I am afraid that the answer is “no”.
4. How come nobody called bullshit on InTrade CEO’s grandiose statement?
5. How come Jason Ruspini, usually so critical, has become as servile as a poodle?
6. Is Robin Hason the only adult in the field of prediction markets?

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I Told You So.

by Ed Miracle

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[This painting was on the cover of Thomas Friedman's book, The World Is Flat.]

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- The top financial officials from the major advanced nations are meeting from Friday to Sunday in Washington, D.C.

- The hope is that they will decide on a major injection of capital into the financial institutions.

- The prediction market companies should prepare for the upcoming economic crisis.

- The blame game focuses on Alan Greenspan.

- Here’s a good post about how companies should reshuffle their marketing budget. Very wise.

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APPENDIX: The Sequoia slides… Download this post if you are viewing this within a feed reader.

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I Told You So.

by Ed Miracle

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I Told You So.

by Ed Miracle

This painting was on the cover of Thomas Friedman’s book, The World Is Flat.

Thomars Friedman’s book, The World Is Flat.

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This blog entry by innovation blogger Dominic Basulto (about Indian outsourcing giant Infosys touting a new Think Flat website) makes me think of something. We are in an industry that is compartmented into two blocks: North American and Europe/Australia. It’s so true that we are using two different keywords (“prediction markets” in North America, and “betting exchanges” in the U.K.).That’s no good. We have to unite to explain to the world that, because the betting exchanges do output objective probabilistic predictions that are more accurate than their competitors’ ones, this activity has high social utility. That’s a goal that the Midas Oracle events would try to achieve.

Previous: I told You So. (Painting by Ed Miracle)

I Told You So.

by Ed Miracle

This painting was on the cover of Thomas Friedman’s book, The World Is Flat.