Yearly Archives: 2007

Deep Throat on the George Mason University exodus to Chapman University.

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#1. David Porter is leaving as of this fall, Stephen Rassenti and Bart Wilson leaving in a year. Kevin McCabe, Daniel Houser and Mark Olson are staying at GMU.

#2. GMU still wants to be able to claim Vernon Smith&#8217-s name, and it could well be that he will remain with some affiliation at George Mason University.

#3. The ICES folks have had a tenuous relationship at best with many members of the economics faculty (Robin Hanson being the most prominent exception) and similarly shaky relations with other folks elsewhere in the university. [Note: About half the ICES crew strongly preferred to work at the Arlington campus, several miles from the main (more distant in the suburbs) Fairfax campus, where most of the department is housed.]

#4. Daniele Struppa [a male professor] was Dean of the College of Arts and Sciences at GMU when ICES arrived. Daniele Struppa, it seems, always did his best to make good on the university&#8217-s side of the deal that brought ICES to GMU. Daniele Struppa being at Chapman University, and now Chancellor, no wonder these ICES guys are so comfortable heading off to suburban L.A.

#5. In any case, within 24 hours or so of Wagner&#8217-s email to students, the ICES folks had heard from people at companies, federal agencies, etc., whom they were working, all calling to say &#8220-so, I hear you are leaving&#8221-. The ICES folks had heard from friends/associates in Europe within a day or so asking for news about what is up. In effect, Wagner&#8217-s (premature) email to students became the press release announcing the moves (even if all the details were not yet arranged).

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NOTE: &#8220-ICES&#8221- as an entity was first established at GMU, but the six core faculty (Smith, Rassenti, Porter, McCabe, Houser, and Wilson) all arrived as a group from the University of Arizona, where they had all worked at the Economic Science Lab (which Smith led).

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UPDATE: Tom W. Bell&#8230-

Chapman is in Orange County–not “suburban L.A.”

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Previous: All GMU’s ICES faculty except Houser and McCabe are leaving to join Chapman University. + NOBEL LAUREATE VERNON SMITH LEAVES ROBIN HANSON’S GEORGE MASON UNIVERSITY TO GO WORKING FOR TOM W. BELL’S CHAPMAN UNIVERSITY.

NEXT: OFFICIAL: NOBEL LAUREATE VERNON SMITH DECAMPS FOR WEST COAST&#8217-S CHAPMAN UNIVERSITY.

NEXT: The latest about the departing of Nobel Laureate Vernon Smith from George Mason University to Chapman University

NPD June sales data reviewed

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This is the fourth month the simExchange video game prediction market has traded contracts on the NPD Group&#8217-s monthly sales data. This month, the simExchange expanded its contract offerings to include 10 software SKUs.

PS3 sales came in line with market expectations at 98,500 units. The simExchange market expected 98,400 units to be sold in the month of June. Sales of Nintendo DS, Sony&#8217-s PSP, and Microsoft&#8217-s Xbox 360 exceeded the market&#8217-s expectations while Nintendo&#8217-s Wii underperformed expectations. Traders likely expected a larger supply of Wii units to be shipped into the US than Nintendo was capable. The PSP&#8217-s price cut proved to be a stronger catalyst for sales than the market anticipated.

The PS3 results were the least surprising to the market (off -0.1%), while the Wii results were the most surprising to the market (off +13.62%). The PS3 futures contract was the most heavily traded futures contract on the simExchange with a total volume of 2,511,424 contracts traded. The Wii futures contract was traded for a total volume of 790,629 contracts.

Mario Party 8 lead the pack of software SKUs tracked by the simExchange, beating expectations. Microsoft&#8217-s Forza Motorsport 2 came in second, inline with expectations. Electronic Arts&#8217- Harry Potter and the Order of The Phoenix significantly underperformed market expectations.

The following tables compare market expectations on the simExchange and actual results as reported by the NPD Group. Expectations by leading analyst Michael Pachter of Wedbush Morgan are also presented for comparison purposes.

US Hardware tracked by the simExchange in June 2007

ConsoleActual Sales*The simExchange**ErrorWedbush Morgan***Error
Nintendo DS561.9K518.7K-7.69%550K-2.12%
Nintendo Wii381.8k433.8K+13.62%435K+13.93%
Sony PlayStation Portable290.1K274.6K-5.34%250K-13.82%
Microsoft Xbox 360198.4k181.2k-8.67%200K+0.81%
Sony PlayStation 398.5k98.4K-0.10%100k+1.52%

US Software tracked by the simExchange in June 2007
(Not the Top 10 software SKUs of June 2007)

RankTitlePublisherActual Sales*The simExchange Expectation**Error
1.Mario Party 8 (Wii)Nintendo426.2K359.7K-15.50%
2.Wii Play (Wii)Nintendo293.2K&nbsp-&nbsp-
3.Pokemon DiamondNintendo288.4K&nbsp-&nbsp-
4.Pokemon PearlNintendo214.7K&nbsp-&nbsp-
5.Forza Motorsport 2 (Xbox 360)Microsoft197.4K199.3K+0.96%
6.Guitar Hero 2 (PS2)Activision197.35K&nbsp-&nbsp-
7.Guitar Hero 2 (Xbox 360)Activision177.6K&nbsp-&nbsp-
8.Pokemon Battle Revolution (Wii)Nintendo157.9K165.5K+4.81%
9.Resident Evil 4 (Wii)Capcom&nbsp-&nbsp-&nbsp-
10.The Darkness (Xbox 360)Take-Two143.0K126.5K-11.54%
&nbsp-Transformers: The Game (PS2)Activision109.2K90.4K+16.67%
&nbsp-Transformers: The Game (Xbox 360)Activision93.3K90.4K-3.11%
&nbsp-Big Brain Academy (Wii)Nintendo89.8K102.1K+13.70%
&nbsp-The Darkness (PS3)Take-Two51.8K69.9K+34.94%
&nbsp-Harry Potter and the Order of the Phoenix (PS2)Electronic Arts30.0K52.4K+74.67%
&nbsp-Harry Potter and the Order of the Phoenix (Xbox 360)Electronic Arts15.0K56.0K+273.33%

How exactly does this work?

Gamers and developers sign up on the simExchange for a free trading account. Using virtual currency called DKP, players buy virtual futures contracts that are under-predicting sales and short sell
futures that are over-predicting sales. This concept is widely known as &#8220-the Wisdom of the Crowd&#8221- and this system is known as a &#8220-prediction market.&#8221-

About the predictions

Predictions on the simExchange should become more accurate over time as (1) the diversity of the pool of traders increases and as (2) more accurate players are rewarded with more virtual currency for their accuracy (thereby enabling them to form more predictions) and less accurate players lose virtual currency (thereby discounting their ability to form more predictions). Check out the simExchange&#8217-s results in May, April, and March.

Copyright and reprinting

The simExchange, LLC retains the right to the content of this article but permits the reprinting of this article with proper credit to the simExchange. Sales data published here includes data disclosed with permission by the NPD Group exclusively for the purpose of settling futures contracts on the simExchange.

This article was cross posted from NPD June sales data reviewed on The simExchange Official Blog.

* NPD Group sales data
** The simExchange trading data
*** Gamasutra, July 16, 2007

THE FATE OF HARRY POTTER IN J.K. ROWLINGS 7TH BOOK, THE DEATHLY HALLOWS: prediction market vs. bookmaker

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No GravatarSPOILER ALERT: MIDAS ORACLE IS REVEALING WHO DIES IN HARRY POTTER AND THE DEATHLY HALLOWS. IF YOU DON&#8217-T WANT TO KNOW, STOP READING. (Hit your back button.)

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Harry Potter and the Deathly Hallows

Harry Potter and The Deathly Hallows

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Pioneer Press:

Here&#8217-s the good news: Harry [Potter], Ron, Hermione, Ginny and Hagrid do not die. But others do. The good guys who meet their demise include Fred Weasley- Tonks (the witch who loves to change her hair color) and her husband, werewolf Remus Lupin- and Tonks&#8217- father, Ted. Bad guys who die are Professor Snape- Bellatrix, Voldemort&#8217-s favorite servant- Crabbe, one of Draco Malfoy&#8217-s mean friends- and Pettigrew, Voldemort&#8217-s servant known as Wormtail. One of the saddest scenes follows the death of Dobby, the house elf Harry [Potter] freed in a previous book. Harry [Potter]&#8217-s beloved owl, Hedwig, also dies.

There is also an epilogue, which takes place 19 years later, revealing that Harry [Potter] married Ginny Weasley and Ron married Hermione. They meet at platform 9? to send their children to Hogwarts.

OK, but I would like more info about the epilogue. Does J.K. Rowling mentions that Harry Potter dies as a happy man at an old age? I think it&#8217-s important because, since the statement of the Harry Potter event derivative is vague (&#8221-alive&#8221-), that could be a factor in the expiry of the NewsFutures contract. (As for me, no matter what is said in the epilogue about Harry Potter dying as an happy man at an old age, I believe that Harry Potter is still &#8220-alive&#8221- if J.K. Rowling will be able to write a sequel to her 7th book.)

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TEMPORARY CONCLUSION (until we get strong confirmation of the outcome of The Deathly Hallows from two other sources):

1. The NewsFutures event derivative was predictive (as was an Internet poll), thanks to comparative literature analysis (analysis of the past writings of J.K. Rowling).

2. The William Hill people were bull-shitting when they said that Harry Potter died and when they opened betting on who was the killer. They took 50,000 British pounds from suckers. 100% pure profit for William Hill. Niall O&#8217-Connor, who swallowed the William Hill P.R. bullshit, should come on Midas Oracle, concede defeat, and analyze the root of his debacle.

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PREDICTION MARKET VS. BOOKMAKER: THE PREDICTION MARKET WON.

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© NewsFutures

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Static chart:

Harry Potter NewsFutures

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THE NIALL O&#8217-CONNOR FESTIVAL (1 + 2):

[1] What is the conclusion to be drawn here? In a market such as this, the outcome will already be known, by certain people. Are we too assume that these individuals choose to bet with traditional risk-averse bookmakers such as William Hill, forcing said bookmakers to close their books on the event? And that the uniformed, who know nothing, but cannot believe that Harry Potter will be killed off, choose to bet on NewsFutures?

[2] My own opinion is that the insiders have no reason to trade on NewsFutures (they are not interested in the notion of bragging rights). Moreover, it is extremely unlikely that they are even aware of the prediction exchange. They are interested however, in being able to take 500 sterling of William Hill, on a [fairly] anonymous basis. And this it would seem is what they have indeed done. The fact that the NewsFutures market has not fallen into line, gives rise to the notion that it represents nothing more than an amalgam of uninformed guessers, who are ignorant in the psychology of traditional betting markets. If Harry Potter is killed off- there will certainly be a lot of explaining to do……

Well, sounds like it&#8217-s Niall O&#8217-Connor who will have &#8220-a lot of explaining to do&#8221-. :) &#8230- And sounds like Niall O&#8217-Connor is &#8220-ignorant in the psychology&#8221- of high-volume play-money prediction markets. :)

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And Michael Giberson, too, should have some explaining to do. :)

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DISCLOSURE: At times, I was a participant in this Harry Potter prediction market, but decided to get out some time ago because of the incertitude regarding how the epilogue would be taken into account in the expiry process.

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NEXT: NEWSFUTURES JUDGES THAT HARRY POTTER IS STILL ALIVE AT THE END OF J.K. ROWLING&#8217-S 7TH NOVEL, THE DEATHLY HALLOWS.

Previous blog posts by Chris F. Masse:

  • Red Herring’s list of the top 100 North-American high-tech startups includes Inkling Markets —but not NewsFutures, Consensus Point, or Xpree.
  • Professor Koleman Strumpf explains the prediction markets to the countryland people.
  • Professor Koleman Strumpf tells CNN that a prediction market, by essence, can’t predict an upset.
  • Time magazine interview the 2 BetFair-Tradefair co-founders, and not a single time do they pronounce the magic words, “prediction markets”.
  • One Deep Throat told me that this VC firm might have been connected with the Irish prediction exchange, at inception.
  • BetFair Rapid = BetFair’s standalone, local, PC-based, order-entry software for prediction markets
  • Michael Moore tells the Democratic people to go Barack Obama in Pennsylvania (a two-tier state), but the polls and the prediction markets tell us that that won’t do the trick.

NOBEL LAUREATE VERNON SMITH LEAVES ROBIN HANSONS GEORGE MASON UNIVERSITY TO GO WORKING FOR TOM W. BELLS CHAPMAN UNIVERSITY.

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Felix Salmon:

GMU&#8217-s economics department is, famously, full of bloggers. Its chairman Donald Boudreaux blogs at Cafe Hayek with colleague Russ Roberts– Robin Hanson founded Overcoming Bias- Bryan Caplan and Arnold Kling blog at EconLog- Peter Boettke blogs at The Austrian Economists- and, of course, Tyler Cowen and Alex Tabarrok are bona fide stars of the blogosphere with their hugely popular Marginal Revolution. I&#8217-m sure there are more I don&#8217-t know about, too. All of these bloggers are famously unrestrained. GMU&#8217-s economics department is, famously, also home to 2002 Nobel laureate Vernon Smith. (He&#8217-s 80 years old, and a Nobelist, so you&#8217-ll forgive him for not having a blog of his own.) Smith more or less invented the hugely fecund field of experimental economics, and is by far the most important economist at GMU. So when GMU grad student Brian Hollar broke the news that Smith was leaving GMU and taking most of its experimental economics faculty with him to Chapman University in California, it&#8217-s not surprising that the blogosphere immediately started buzzing. Or rather, it is surprising that the blogosphere didn&#8217-t start buzzing: so far, none of the GMU economists has seen fit to mention this news at all. One might almost think that a don&#8217-t-blog-this edict had gone out, either explicitly or implicitly. But certainly the silence is puzzling.

Note: The experimental economics is the ancestor of the prediction markets, one could say.

NEXT: All GMU’s ICES faculty except Houser and McCabe are leaving to join Chapman University.

NEXT: Deep Throat on the George Mason University exodus to Chapman University.

NEXT: OFFICIAL: NOBEL LAUREATE VERNON SMITH DECAMPS FOR WEST COAST&#8217-S CHAPMAN UNIVERSITY.

NEXT: The latest about the departing of Nobel Laureate Vernon Smith from George Mason University to Chapman University

Innovation happens when these new things are delivered to the marketplace for the benefit of consumers/society.

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Via the Mises Economics blog, Carleen Hawn.

Commenter Francis Wu:

I’d rather be known as an innovator. Anybody can come up with an idea, but an idea is worthless unless it’s acted upon and properly executed (innovation). Sometimes the idea and the innovation can come from the same person. Other times, the idea people get drunk on their own big ideas and fail to execute.

For more on the &#8220-Invention vs. Innovation&#8221- debate, see this April 2007 blog post from Mike Linksvayer, with plenty of good comments.

One way of putting it is that six billion people generate a huge number of ideas, some number of which could be called inventions. Most are hopeless (the inventions- the people at least manage to survive for a time). Most of the rest are not actively pursued. The only way to test whether an invention is hopeless or useful is to attempt to deliver it at scale. So innovators (think of them as idea entrepreneurs, or whatever) both figure out which inventions are not hopeless and deliver the useful ones at scale. Innovators create all of the surplus, inventors do little more than breathe.