InTrade CEO John Delaney states that prediction markets can prevent the next financial cataclysms. Surely. Prediction markets can also restore womens virginity, and treat mens baldness.

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John Delaney states rightfully that the prediction markets are a mechanism that aggregates information dispersed among the population. Then, he goes on at full throttle and states that prediction markets can help &#8220-avoiding future [financial] crisis.&#8221-

Jesus, Mary, Joseph, that&#8217-s quite an extraordinary statement.

John Delaney writes that crucial information is buried deep in the accounting books. That&#8217-s true, but that&#8217-s up to the financial analysts to decipher this problematic &#8212-our event derivative traders can then just pick up on what those experts conclude. The financial experts were unable to prevent the current financial cataclysm. Adding more event derivative traders and more prediction markets won&#8217-t solve any problem.

Prediction markets are only a reflection of the current knowledge of the best experts in town. At best, they are the best umpire you can get between, on one hand, the mass media or the politicians and, on the other hand, the best experts. But when nobody knows anything (or when nobody listens to Nouriel Roubini), the prediction markets are of no help.

What the prediction market industry needs right now is not an ill-informed, bragging rant.

What the prediction market industry needs is a way to discriminate between accuracy and utility.

What we need is more of Robin Hanson.


16 thoughts on “InTrade CEO John Delaney states that prediction markets can prevent the next financial cataclysms. Surely. Prediction markets can also restore womens virginity, and treat mens baldness.

  1. Jason Ruspini said:

    I agree with John’s message  The point is that the assets did not trade, and this lack of trading was the flip-side of the shock moves we saw in the banks.  A third-party clearing house is also important to get the assets trading.  Granted, I am talking about the assets themselves.

  2. Chris F. Masse said:


    Do you agree with his main point that prediction markets can help “avoiding future [financial] crisis.”?

  3. Medemi said:


    the stock market (indices) act as a predictor on how the economic landscape will look like 6 months from now.

    The problem is that the mainstream media and all the so-called experts on these shows (let’s take CNBC) have been cheerleading for wallstreet all this time. I’m not blaming them for that because we don’t want the doomsday thinkers creating a self-fulfilling prophecy either, but we should not lose track of reality. That’s why we need more prediction markets, and we need to embrace them.

    To mention just one example. A lot of cities here in Holland had money in a bank account in Iceland. They didn’t do their risk analysis properly. Or maybe these prediction markets on failing banks were not available 1 or 2 years ago. If they had been, these officials looking after our money wouldn’t have known about it, and even if they did they probably wouldn’t have embraced them. It seems to me these prediction markets would have reflected at least a 1 or 2% chance of iceland banks failing, at that time, so it doesn’t make sense putting your money there to gain a .4% interest rate over other banks.

    Prediction markets do not just reflect opinions, they represent future risks. I’ll go further than that and say that prediction markets carry an expectation about the future. Obama is now trading at – what, 75% – and we’re kicking ass relative to the polls. As I said at the time, Obama is leading by a wide margin relative to the polls because prediction markets can anticipate on future events. The crisis… is here now.

  4. Medemi said:

    btw, it was you who depicted the correlation between the stock market indices and Obama’s chances, recently.

  5. Jason Ruspini said:

    Yes, the statement is not too strong actually (”can”), and this is clearly the message that PM supporters must push in this environment.  I can imagine some scenarios where additional markets might aggravate a crisis instead of helping, but I do not think the message was over-selling.

  6. Medemi said:

    Chris, don’t fuck this up. This is your moment, this is what you’ve been working for.

    There were lots and LOTS of people who listened to the likes of Roubini, and who made the right call.

    I never thought the crisis would be so deep, but I had a feeling that the economy would play a decisive role in who would become the next president.

    You will not get another opportunity like this.

  7. Medemi said:

    First, if Obama wins the election, based on the other available markets and poll projections, it would seem that an error had been introduced into the largest and most widely-cited of prediction markets. When comparing market and poll accuracy over time we are usually talking about only a few percentage points difference, so this error isn’t trivial.

    I like that, poll projections. Projecting what ???

    Jason, are you saying the prediction market on Obama was off relative to the polls due to an error, possibly manipulation ? It just seems to me most people on here have been playing with funny money for too long, listening to funny people.

    I agree with the second part of your article.

  8. Medemi said:


    I’m not going to watch that video. Maybe the guy feels he needs more attention.

    I’ve been around, on the forums, and what wasn’t present in the mainstream media, was definitely present – at least amongst some groups of people. Possibly the same type of person who would come across the prediction markets on the internet.

  9. Chris F. Masse said:

    Medemi, your call. :-D

  10. Chris F. Masse said:

    on watching the video or not

  11. Medemi said:

    what’s he saying ? is this the end of the world ?

    I look at valuations, sentiment and technicals.

    The nasdaq could double over the next 18 months :-D

    This may be  the reverse of the tech bubble in 2000. 

    Now, there’s free munny out there, and nobody wants it…

  12. Medemi said:

    Believe it or not, he was on CNBC just now. A coincidence ?

    He thinks stocks are going down. :-D

  13. Jason Ruspini said:

    By poll projections I mean things like Pollster and 538. I didn’t make any strong statements about what happened in the Intrade markets. Possibly nothing. I just want to point out that if something did happen, it shouldn’t be much of a surprise. PMs are vulnerable enough to backlashes without setting unrealistic expectations about manipulation.

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