Monthly Archives: October 2008

Max Keiser is going to practice (an entertaining form of) prediction market analysis for BBC World News.

Posted on by
Reply

No Gravatar

Max Keiser:

CAUGHT OFF GUARD BY GLOBAL FINANCIAL MELTDOWN? NOT IF YOU HAD WATCHED THE ORACLE!

Max Keiser looks into the future every Friday on BBC World . . . coming soon

BBC World News is working with Max Keiser, the creator of the Hollywood Stock Exchange, to produce &#8220-The Oracle,&#8221- a weekly entertaining look into the future with the help of today&#8217-s headlines and prediction market charts.

The Oracle&#8217-s partners include Eldorado Pictures, the production company of Emmy award winning star, Alec Baldwin.

BBC World News Head of Programmes, Paul Gibbs, says: &#8216-If Max had been on our screens a year ago the current global financial crisis would not have been a surprise. It might not even have happened.&#8217-

Alec Baldwin, who has enjoyed a relationship, both personal and professional, with Keiser for nearly 30 years says, &#8220-I&#8217-m excited to be working with Max on The Oracle. Keiser combines blazing intellect, total irreverence and searing honesty to put forth news and commentary like no one else can.&#8221-

The Oracle is planned to air every weekend from early 2009 on BBC World News. Celebrity and expert guests join Max to pore over the prediction market charts to see where people are predicting today&#8217-s news might lead.

Max Keiser, has a long and amazingly accurate history of looking at market prices in order to predict the future.

As the creator of the world&#8217-s first prediction market, the Hollywood Stock Exchange, Max presented &#8220-Rumble at the Box Office&#8221- for NBC&#8217-s Access Hollywood accurately predicting box office.

Max went on to predict the present economic turmoil in a series of ten films for the Aljazeera English magazine series, People and Power.

As early as 2006, Max predicted in these films –

* the crisis in the global banking system to be triggered by subprime debts,
* the rescue of the financial system by wholesale government intervention,
* the rise in the price of gold,
* the Russian invasion of Georgia,
* economic meltdown in Iceland,
* and more.

Max continues to stay one step ahead of the game with his weekly radio show in London on Resonance 104.4 FM and in his writing for the Huffington Post and Intrade, the prediction market site.

The producers of the program will be in Mipcom and available for meetings.

BetFair Predicts = a new WordPress-powered website concocted out of San Francisco, California… -whose informational value is close to zero.

Posted on by
16

No Gravatar

BetFair Predicts

–

UPDATE: The guy in charge says in the comment area that this is just an early beta website, which is going to be much improved soon.

–

–

WHAT I LIKE IN BETFAIR PREDICTS

  1. BetFair Predicts is a (clumsy) response to some of the (harsh) criticism I directed at them. So, it shows that they listen up.
  2. They chose WordPress as the content management system (CMS) for this project &#8212-it’s the right choice. (DruPal would have been OK for a more sophisticated project.)
  3. They are web-hosted on an independent domain name (as opposed to a sub domain on the betfair.com website.) It’s good because it gives them freedom to use whatever information technology they want. (For security reason, they get limitations on their main website. That’s why the BetFair blog had to be run on MovableType, and not on WordPress.) – [UPDATE: The website now redirects to http://predicts.betfair.com/.]
  4. The architecture of this new website is well done. It’s standard. (Unlike the BetFair blog, which is a price of crap, technically.)
  5. They created a new compound chart on the 2008 US presidential elections. (I have hot-linked to it, just below.)

–

–

WHAT I DISLIKE IN BETFAIR PREDICTS

  1. It was an error to call this project BetFair Predicts“, singular. “BetFair Predict”, plural, would have been better, because the wisdom of crowds requires both a collective judgment mechanism (here, a predition exchange named BetFair) and the event derivative traders associated with that prediction exchange. By using the singular, BetFair appropriates a predictive power that should be credited to a community (lead by BetFair).
  2. Overall, it’s a very thin website. It does not bring much to the kitchen table. (That new compound chart above is really the novelty at this time. But it’s not Earth shattering, since the BetFair Politics Zone already displays compound charts, which are dynamic, and which can be hot-linked to.)
  3. That compound chart is probably not a dynamic one (that is, a chart that will update itself in the future). This compound chart is just an image that has been uploaded from the BetFair exchange to this new BetFair Predicts blog, I doubt that that image will be updated in the future.
  4. And they seem light-years behind when it comes to embeddable chart widgets. (They claim on the frontpage that you can “embed” their charts in your blog, but what they offer is just static charts. Those idiots don’t know what they are talking about.)
  5. Their explainer on prediction markets is&#8230- so-so.
  6. Their blog is written by a “Joe Seither”, whose background is not disclosed. The writings (well, only 2 posts, as of today) are typical of any copy-writer who would have been instructed about the mechanism of the prediction markets the day prior to undertaking this project. You won’t find any insights- just banalities. What I see is worthless.
  7. They can’t spell “RSS”. (See below. :-D )

–

–

TAKEAWAY:

  1. BetFair is still struggling with the web publishing technologies.
  2. BetFair is still struggling with the prediction market approach, embodied by InTrade.
  3. BetFair has a hiring problem: they pick up incompetents on the job market and put them in charge too quickly. The result is the disaster detailed above, and chronicled in the Midas Oracle archives since 2006.

InTrade should ditch their prediction markets on the InTrade prediction markets, and run a continuing series of 5-minute prediction markets instead.

Posted on by
2

No Gravatar

I don&#8217-t like the concept.

It has received criticism.

I don&#8217-t spot much volume.

I think that TradeFair&#8217-s 5-minute prediction markets are based on a much, much better concept and usability.

Time for John Delaney to act decisively. There is a reason the trash can was invented: to ditch the bad products.

Mortgage Crisis -> Credit Crisis -> Financial Crisis -> Economic Crisis -> THE GREAT DEPRESSION

Posted on by
Reply

No Gravatar

Feed readers: Download this post to be able to watch this CBS 60 minutes video on the credit crisis.

–


Watch CBS Videos Online

Mystification, demystification, value assessment, and prediction markets – REDUX

Posted on by
Reply

No Gravatar

A little explainer on my previous post, as I got some feedback on it.

–

#1. Yes, the measure of the usefulness of an idea or theory is the number and the quality of web links it receives.

– Google PageRank (the engine powering the world&#8217-s #1 media) organizes the world&#8217-s information according to how many links go to one source of information, and how high the social status of those links are.

– A quality document posted on the Web is always linked to &#8212-if it is not, it is not a quality document. Period.

–

#2. The prediction markets should be useful to the experts [*] &#8212-otherwise, they are useless and should be terminated (as a forecasting tool).

– The lovers of the prediction markets represent a little coterie of hyper-excited economists, free-market columnists, and opportunistic bloggers.

– The high traffic to the InTrade prediction exchange website is generated out of curiosity. This is the result of the free publicity performed by researchers who live off the trading data handed out by the InTrade executives &#8212-it&#8217-s a symbiosis (&#8221-you pump up my exchange in the media- I help your academic career&#8221-).

– For the happy few who understand the mechanism of information aggregation, the prediction markets are a tool of convenience: they get all the week&#8217-s politics summed up in a number &#8212-that spare them the need to read the newspapers. The problem with that behavior is that when there is an upset, those people don&#8217-t understand why the prediction markets failed, because they didn&#8217-t pay attention to the primary indicators.

– I am aware of the vapors of some dreamers, but the fact is the polls are still the main forecasting tool in politics &#8212-and the main primary indicator of the event derivative traders. (Snake eats itself.) It&#8217-s going to stay that way, I forecast.

– In an ideal world, the prediction market scholars should be able to point to situations where some prediction markets were very useful to society and to some other situations where the prediction markets were not useful at all. We need a hierarchy of the prediction markets &#8212-based on their usefulness.

– Where are the evidence that our prediction markets provide decisive help to the experts?

–

[*] “the experts” = all the experts but the prediction market experts (who are expert in nothing else than pumping up the prediction markets).

–

APPENDIX

Robin Hanson:

[I]nfo value [] is the added accuracy the markets provide relative to other mechanisms, times the value of accuracy in improved decisions, minus the cost of maintaining the markets, relative to the cost of other mechanisms. A highly accurate market has little value if other mechanisms can provide similar accuracy at a lower cost, or if few substantial decisions are influenced by accurate forecasts on its topic.

–

Prediction Market Definition -now updated with the name of Chris Hibbert and Eric Cramptons cult leader built into.

Posted on by
Reply

No Gravatar

Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that the traders bring when they agree on prices. These event derivative traders feed on the primary indicators &#8212-i.e., the primary sources of information. (Garbage in, garbage out&#8230- Intelligence in, intelligence out&#8230-) Hence, prediction markets are meta forecasting tools.

Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism.

A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 60 times out of 100, the favored outcome will occur- and 40 times out of 100, the unfavored outcome will occur.

The value of a set of prediction markets consists in the added accuracy that these prediction markets provide relative to the other forecasting mechanisms, times the value of accuracy in improved decisions, minus the cost of maintaining these prediction markets, relative to the cost of the other forecasting mechanisms. According to Robin Hanson, a highly accurate prediction market has little value if some other forecasting mechanism(s) can provide similar accuracy at a lower cost, or if very few substantial decisions are influenced by accurate forecasts on its topic.

Mystification, demystification, value assessment, and prediction markets

Posted on by
2

No Gravatar

Justin Wolfers:

Prediction markets can yield valuable insight into the dynamics of political campaigns, a conclusion we&#8217-ve drawn from years of intensive study and research. We&#8217-ve even proselytized about the value of these markets, extolling their ability to yield sharper insights than pundits or polls. […]

–

If this statement were true,

  1. Justin Wolfers&#8217- columns at the WSJ would have been linked to by the blogging political experts. They never were.
  2. The blogging political experts would have adopted the prediction market tool (over than just quoting the InTrade prices out of curiosity). They never did.

–

Both the mystification of the prediction markets (mudding the primary indicators into commentary- suggesting that the traders&#8217- anticipations are always sound) and their demystification (listing the primary indicators) don&#8217-t do the trick: Economic science should be able to tell us whether the prediction markets on 2008 US elections are of high social utility, and whether other kinds of prediction markets are of higher social utility. I am not satisfied by what I have been reading, as of today. The prediction markets are rather a tool of curiosity, as of today, not much a tool of forecasting. The prediction markets are not used as a tool by the experts &#8212-by &#8220-the experts&#8221-, I mean all the experts but the prediction market experts (who are expert in nothing else than pumping up the prediction markets): the political experts, the financial experts, the management experts, the oil production experts, the credit experts, the health care system experts, the automobile market experts, the wine market experts, the web technology business experts, the web advertising experts, the medical drug experts, the foreign affairs experts, the military experts, the aviation industry experts, the condom industry experts, the restaurant industry experts, etc.

–

APPENDIX

Robin Hanson:

[I]nfo value [] is the added accuracy the markets provide relative to other mechanisms, times the value of accuracy in improved decisions, minus the cost of maintaining the markets, relative to the cost of other mechanisms. A highly accurate market has little value if other mechanisms can provide similar accuracy at a lower cost, or if few substantial decisions are influenced by accurate forecasts on its topic.

–

PREVIOUSLY: See Robin Hanson&#8217-s take on Google&#8217-s enterprise prediction markets.

–