InTrade on the elimination of Osama Bin Laden – [ANALYSIS]

Mike Giberson:

How do we know, now, that Intrade’-s market price was not an accurate estimate of the probability bin Laden was killed or captured by September 2011? Is an prior estimate of 50 percent likelihood that a tossed coin will come up heads wrong if the coin comes up as “-100 percent”- heads (and not half-heads and half-tails)?

I’-m not buying Chris’-s implied definition of success and failure.

However, one might ask Robin Hanson about what the Intrade market’-s performance implies about the usefulness of his Policy Analysis Market idea.

Note that I was contrasting the InTrade-Bin-Laden failure with the high expectations set by Robin Hanson, Justin Wolfers and James Surowiecki.

Also, other than statisticians, most people don’-t have a probabilistic approach of InTrade’-s predictions. That’-s the big misunderstanding, which is one part of the big fail of the prediction markets.

If prediction markets are such a powerful tool, then why arent we able to use them to solve [INSERT YOUR FAVORITE WORLD PROBLEM HERE]?

Justin Wolfers is asked the question, but I would have a different answer than his.

The reason prediction markets are not widely used in business is that their many boosters (Robin Hanson, James Surowiecki, Justin Wolfers, etc.) have exaggerated their usefulness. Just because they are objective in their wisdom does not mean that they are very useful.

Objectivity is over-rated. This is a painful lesson for the handful of young startups who swallowed the prediction market myth. Next step: the dead pool.

John Stossel – Gambling in America – [VIDEO]

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Part 4 is about prediction markets and InTrade.

Part 4 is about InTrade’-s prediction markets:

Michael Weiss of Gawker is misinformed about the wisdom of crowds.

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His Jason Calacanis-inspired critique of The Wisdom Of Crowds is an abyssal nullity.

James Surowiecki is a great thinker, and the principles behind the wisdom of crowds are effective. (see point #3.)

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Previous blog posts by Chris F. Masse:

  • If you want your affiliation with the “Prediction Markets” group to appear on your LinkedIn profile, then click on “Edit Public Profile Settings”, and check the “Groups” option.
  • If you want to connect with InTrade CEO John Delaney on LinkedIn…
  • Do join the “Prediction Markets” group at LinkedIn, if you have a strong interest in the prediction markets or if you work in the prediction market industry. It’s free, and that’s a way for the LinkedIn visitors browsing stuff about prediction markets to stumble upon your resume / profile.
  • You can now join the LinkedIn group on Prediction Markets.
  • Nigel Eccles says that HubDub generates “data on peoples’ reputations for accurately analyzing and forecasting future events”.
  • I did drop BetFair from the Midas Oracle coverage of the prediction markets. They should re-establish the direct links, from their 2 frontpages, to the prediction markets on politics, finance, and the other socially valuable issues.
  • I dropped BetFair from the Midas Oracle coverage of the prediction markets. They should re-establish the direct links, from their 2 frontpages, to the prediction markets on politics, finance, and the other socially valuable issues.

James Surowiecki, author of The Wisdom of Crowds, sums up his book.

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Video #1

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Video #2

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Previous blog posts by Chris F. Masse:

  • The FaceBook profiles of the 2 most important men of the field of prediction markets
  • THE HUMAN GADFLY WHOSE OBJECTIONS ROBIN HANSON IS DUCKING…???…
  • Google now considers Midas Oracle as a major blog.
  • Horizon 2015: A long-term strategic perspective for the real-money prediction markets
  • Join our group at LinkedIn to have your “Prediction Markets” badge on your profile. It’s ‘chic’. (“Groups” info should be set as “visible”, in your profile options.) We are 63 this early Saturday morning —keeps growing.
  • If you have been using PayPal to fund your InTrade, TradeSports or BetFair account, please, check that horror story.
  • 48 hours after the launch of the “Prediction Markets” group at LinkedIn, we have already 52 members —both prediction market luminaries and simple people (trading the event derivatives or collecting the market-generated probabilities).

James Surowiecki, author of The Wisdom of Crowds, talks to the Midas Oracle readers.

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James Surowiecki – Short video

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Previous blog posts by Chris F. Masse:

  • The FaceBook profiles of the 2 most important men of the field of prediction markets
  • THE HUMAN GADFLY WHOSE OBJECTIONS ROBIN HANSON IS DUCKING…???…
  • Google now considers Midas Oracle as a major blog.
  • Horizon 2015: A long-term strategic perspective for the real-money prediction markets
  • Join our group at LinkedIn to have your “Prediction Markets” badge on your profile. It’s ‘chic’. (“Groups” info should be set as “visible”, in your profile options.) We are 63 this early Saturday morning —keeps growing.
  • If you have been using PayPal to fund your InTrade, TradeSports or BetFair account, please, check that horror story.
  • 48 hours after the launch of the “Prediction Markets” group at LinkedIn, we have already 52 members —both prediction market luminaries and simple people (trading the event derivatives or collecting the market-generated probabilities).

James Surowiecki was in Texas (Michael Gibersons new land), yesterday, spinning educators (interested in technology) about prediction markets and collective intelligence.

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National Educational Computing Conference (”-the premier forum in which to learn, exchange, and survey the field of educational technology“-)

Classic stuff about the wisdom of crowds, but people enjoyed it.

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Previous blog posts by Chris F. Masse:

  • The FaceBook profiles of the 2 most important men of the field of prediction markets
  • THE HUMAN GADFLY WHOSE OBJECTIONS ROBIN HANSON IS DUCKING…???…
  • Google now considers Midas Oracle as a major blog.
  • Horizon 2015: A long-term strategic perspective for the real-money prediction markets
  • Join our group at LinkedIn to have your “Prediction Markets” badge on your profile. It’s ‘chic’. (“Groups” info should be set as “visible”, in your profile options.) We are 63 this early Saturday morning —keeps growing.
  • If you have been using PayPal to fund your InTrade, TradeSports or BetFair account, please, check that horror story.
  • 48 hours after the launch of the “Prediction Markets” group at LinkedIn, we have already 52 members —both prediction market luminaries and simple people (trading the event derivatives or collecting the market-generated probabilities).

ABC 20/20 – A good (but servile) explainer on the wisdom of crowds and the prediction markets

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ABC 20/20 featuring InTrade – (May 9, 2008)

Foretelling The Future: Online Prediction Markets —- (4 pages in all)

ABC video

YouTube video

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  1. Not a single word about InTrade-TradeSports fucking up its traders during the North Korea Missile episode.
  2. Although James Surowiecki is a great thinker overall, I’-m not happy he served InTrade’-s past forecasting successes in absolute terms —-and not in terms of probabilities. That shows James Surowiecki can’-t be the ultimate leader of the field of prediction markets. Robin Hanson, Justin Wolfers, Koleman Strumpf, Eric Zitzewitz, or even Emile Servan-Schreiber, would have not made that mistake.
  3. All prediction markets are not created equal. Spot that they go too far, saying terrorism prediction markets or earthquake prediction markets could serve a societal purpose. That is complete bullshit. That is pure hype. As I said yesterday, an analyst should check whether a given prediction market is really able of aggregating important information. Just because John Delaney wants to create a betting market to get money doesn’-t mean that that given prediction market will be able to give sound forecasts. Otherwise, we would have prediction markets about future lottery outcomes and we would make a fortune out of that. :-D
  4. Spot that they put the emphasis on the easy translation between the 0–-100 prices and the 0–-100 probabilities. That puts BetFair’-s model (based on those damn digital/decimal odds) out of the picture.

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Mathematically speaking, as the saying goes, no one wins the lottery. Sports betting, by contrast, involves skill, and it is possible, although very difficult, to consistently win money on it. Sports bettors are closer to stock or commodities buyers than to people who buy lottery tickets. How much d

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Guess who said that in 2006.

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Previously: BetFair’-s Mark Davies on sports betting

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The Promise Of Enterprise Prediction Markets – The McKinsey conference should have been rooted in the economic science and McKinsey should have invited economists.

No GravatarMcKinsey: The Promise Of Prediction Markets

James Surowiecki: The premise is that under the right circumstances, the collective judgment of a large group of people will generally provide a better picture of what the future might look like than anything one expert or even a small group of experts will come up with. […-]

James Surowiecki: The Wisdom of Crowds is not an argument against experts. It is saying that you shouldn’t rely wholly on the judgment of one person or even a very small group of people. But for a crowd to be smart, it needs to satisfy certain criteria. It needs to be diverse, so that people are bringing different pieces of information to the table. It needs to be decentralized, so that no one at the top is dictating the crowd’s answer. It needs to summarize people’s opinions into one collective verdict. And the people in the crowd need to be independent, so that they pay attention mostly to their own information and don’t worry about what everyone around them thinks.

James Surowiecki: […-] One shortcoming is that a lot of people inside organizations don’t find the market mechanism intuitive or easily understood. They find it very challenging to use, which limits the pool of people who participate.

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On James Surowiecki’-s last remark, I would say that Robin Hanson’-s MSR technology (which powers most enterprise prediction exchanges but Google’-s one) brought much needed simplification to trading.

Overall, a good roundup, but the conference speakers should have mentioned Robin Hanson’-s pioneering work, and McKinsey should have invited him. He would have towered anybody and given great insights.

See Jed Christiansen for other remarks.

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As an aside, I’-d say I prefer the sketch that is supposed to represent Bo rather than the real photo. The sketch makes him look like he is subtitle, charming, smiling, humble, and modest —-quite a quantum leap. :-D

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Bo Cowgill

Bo Cowgill – Economics at Google

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  • PhotoShop designers improve the look of models on glossy magazine covers.
  • Sketchy artists improve the look of testosteroned, ultra-serious, ambitious, young business managers. :-D

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Previously: Do Google’s enterprise prediction markets work?

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Previous blog posts by Chris F. Masse:

  • Collective Error = Average Individual Error – Prediction Diversity
  • When gambling meets Wall Street — Proposal for a brand-new kind of finance-based lottery
  • The definitive proof that it’s presently impossible to practice prediction market journalism with BetFair.
  • The Absence of Teams In Production of Blog Journalism
  • Publish a comment on the BetFair forum, get arrested.
  • If I had to guess, I would say about 50 percent of the “name pros” you see on television on a regular basis have a negative net worth. Frightening, I know.
  • You can’t measure the usefulness of a system by how many resources it consumes.