Emile Servan-Schreiber of NewsFutures:
January 29th, 2008 at 7:25 am
Another important difference with NewsFutures (where people have been “trading news” in 2000) is that hubdub doesn’t give away any prizes to performers. That, perhaps, is a direct consequence of the false good idea of letting people create their own markets. This not only creates many opportunities for fraud (if, for instance, the creator of the market also controls the outcome), but it also encourages incoherent outcome definitions, unverifiable outcomes, and duplicate or junkyard markets. Same problems that Inkling’s public markets suffer from.
Also, the mere idea of a Web 2.0 makeover of prediction markets is laughable. To paraphrase a good ol’ song from the 90’s, prediction markets were web 2.0 before web 2.0 was cool.
Emile Servan-Schreiber’-s criticism is pertinent. However, his conclusion (’-no’- to self-management of event derivatives) is too radical. Without Inkling Markets, we wouldn’-t have had Michael Giberson, who loves experimenting with play-money prediction markets. Somebody will come up, one day, with the right technology (e.g., a reputation system) patching the flaws that EJSS addresses. One day, in the future, we will be able to enjoy both worlds, because they will have merged into one: the libertarian prediction exchanges and the disciplined prediction exchanges.
My good doctor Emile, remember JFK, who pushed his country to do things “-not only because they are easy, but because they are hard“-, …-and succeeded. Just because event derivative management by traders is problematic does not mean that we should give up right now. Kudos to Inkling Markets and HubDub for trying, and acknowledging criticism from veterans.
UPDATE: Emile Servan-Schreiber comments…-
No one has a monopoly on user-driven content. Every exchange out there lets people propose their own ideas for markets that might be of interest to themselves and others. For instance, on NewsFutures, a lot of the general forum discussion is back-and-forth between the users and the admins about which markets to create next. Where NF differs from FX, Inkling and Hubdub is that the NF admins (which, by the way, are recruited from the user-base itself) have the final control on wording as well as settlement. That’-s what guarantees the coherence of the exchange, which in turn means we are able to offer prizes, whereas the likes of FX, Inkling and Hubdub likely cannot because they give too much control away to unknown entities to guarantee the fairness of the contest.
I like NewsFutures, and I get all that. But I’-m saying that, nowadays, on the Web, people want DIY tools. That’-s why HubDub and Inkling Markets are appealing to them. They don’-t have to discuss “-back-and-forth”-. They create the event derivative they want. Straight from the producer to the trader.
Read the previous blog posts by Chris. F. Masse:
- RIGHT-CLICK THIS IMAGE, AND FILL IN THIS SURVEY, PLEASE.
- Papers on Prediction Markets
- The Journal of Prediction Markets
- The 45-degree Line
- Implied Probability of an Outcome –BetFair Edition
- Justin Wolfers on Rudy Giuliani = not convincing… yet
- The Florida primaries thru the prism of the InTrade prediction markets