How the prediction market companies should weather the upcoming economic crisis
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Yearly Archives: 2008
TradeFair was first branded as a serious financial prediction exchange, but it didnt work out, and TradeFair is now actually an operator that applies gambling (not betting) to the financial markets.
Take a look at their ad:
Three remarks:
- They got carried away from the prediction market approach (which, unlike InTrade, they never understood fully, anyway).
- This gambling approach of the marketing of the prediction markets is very interesting in terms of potential revenue growth. I encourage InTrade, TradeSports, BetFair, NewsFutures and HubDub to adopt it.
- However, it remains to be seen whether TradeFair is the right venue for gambling. TradeFair was supposed to be a serious financial prediction exchange (the British equivalent of HedgeStreet), and it is now the online equivalent of Macao or Las Vegas. Hummm…- Will these 2 different worlds mix well together? Could La Callas sell pork sausages? Could Yehudi Menuhin sell used condoms?
- And I won’-t mention the issue of problem gambling, which I predict will be made worse thanks to TradeFair Hi &- Lo and BetFair Arcades.
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Once the previous bet is resolved, you can start off anew with another 5-minute bet on the FTSE —-from the level that was the basis for the settlement of the previous bet.
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Max Keiser is going to practice (an entertaining form of) prediction market analysis for BBC World News.
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 “-The Oracle,”- a weekly entertaining look into the future with the help of today’-s headlines and prediction market charts.
The Oracle’-s partners include Eldorado Pictures, the production company of Emmy award winning star, Alec Baldwin.
BBC World News Head of Programmes, Paul Gibbs, says: ‘-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.’-
Alec Baldwin, who has enjoyed a relationship, both personal and professional, with Keiser for nearly 30 years says, “-I’-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.”-
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’-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’-s first prediction market, the Hollywood Stock Exchange, Max presented “-Rumble at the Box Office”- for NBC’-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.
Clarification
Are you really a “-prediction market consultant”- when your occupation is actually to take courses in school?
I’-d answer “-no”-.
Best wishes to him. Let’-s see how the situation evolves later on.
BetFair Predicts = a new WordPress-powered website concocted out of San Francisco, California… -whose informational value is close to zero.
BetFair Predicts
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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.
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WHAT I LIKE IN BETFAIR PREDICTS
- BetFair Predicts is a (clumsy) response to some of the (harsh) criticism I directed at them. So, it shows that they listen up.
- They chose WordPress as the content management system (CMS) for this project —-it’s the right choice. (DruPal would have been OK for a more sophisticated project.)
- 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/.]
- The architecture of this new website is well done. It’s standard. (Unlike the BetFair blog, which is a price of crap, technically.)
- They created a new compound chart on the 2008 US presidential elections. (I have hot-linked to it, just below.)
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WHAT I DISLIKE IN BETFAIR PREDICTS
- 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).
- 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.)
- 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.
- 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.)
- Their explainer on prediction markets is…- so-so.
- 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.
- They can’t spell “RSS”. (See below.
)
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TAKEAWAY:
- BetFair is still struggling with the web publishing technologies.
- BetFair is still struggling with the prediction market approach, embodied by InTrade.
- 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.
I don’-t like the concept.
It has received criticism.
I don’-t spot much volume.
I think that TradeFair’-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.
Criticism about InTrades prediction markets on the InTrade prediction markets
– Manipulation?
– Logical flaw?
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ADDED BONUS: Additional thought on arbitrage.
UPDATE: The HubDub PM on who will win the 2nd debate.
Mortgage Crisis -> Credit Crisis -> Financial Crisis -> Economic Crisis -> THE GREAT DEPRESSION
Feed readers: Download this post to be able to watch this CBS 60 minutes video on the credit crisis.
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Watch CBS Videos Online
Beware the Real Clear Politics polls aggregation?
Mystification, demystification, value assessment, and prediction markets – REDUX
A little explainer on my previous post, as I got some feedback on it.
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#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’-s #1 media) organizes the world’-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 —-if it is not, it is not a quality document. Period.
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#2. The prediction markets should be useful to the experts [*] —-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 —-it’-s a symbiosis (”-you pump up my exchange in the media- I help your academic career”-).
– For the happy few who understand the mechanism of information aggregation, the prediction markets are a tool of convenience: they get all the week’-s politics summed up in a number —-that spare them the need to read the newspapers. The problem with that behavior is that when there is an upset, those people don’-t understand why the prediction markets failed, because they didn’-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 —-and the main primary indicator of the event derivative traders. (Snake eats itself.) It’-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 —-based on their usefulness.
– Where are the evidence that our prediction markets provide decisive help to the experts?
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[*] “the experts” = all the experts but the prediction market experts (who are expert in nothing else than pumping up the prediction markets).
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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.
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