Yearly Archives: 2008

HubDub failed miserably in trying to predict the very unpredictable Mashable Open Web Awards.

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HubDub saw a big future for the Huffington Post (in the &#8220-Politics&#8221- category) and Digg (in the &#8220-Social News&#8221- category)&#8230- [*] &#8230- but, curiously, these big-shot websites didn&#8217-t make it through. That&#8217-s strange, since the other websites they were pitched against are far less popular. The Mashable readers have a knack for fresh startups, maybe &#8212-they didn&#8217-t vote for the already established websites.

Do browse the list of the remaining contenders (among them, HubDub :-D ). There are interesting websites, there.

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[*]

Huffington Post = 38%

Digg = 47%

These probabilities will crash down to zero in the coming hours/days, as these 2 websites are now eliminated from the competition, going further.

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Google vs. Prediction Markets – Which of the 2 will detect the flu, first?

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An Irish research team hopes to make accurate forecasts of key public health indicators.

University College Cork (UCC) School of Medicine + Intrade

Dr Dylan Evans:

Prediction markets are [specialized], small-scale financial markets operated to predict future events. The idea is that the collected knowledge of many people, each with a different perspective, will be more accurate than an individual or small group or even experts.

When they have been used to predict the outcomes of political elections, prediction markets have been found to be more accurate than alternative methods of forecasting.

The obvious area to look at in the first instance is infectious disease, but we plan to extend our research into many other areas of public health. At the moment, people do not get data on infectious disease until it&#8217-s a couple of weeks out of date and we need to get it quicker.

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Dylan Evans&#8217- website

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My opinion:

  • To assess the benefits (if any) of the prediction markets used as forecasting tools for public health, researchers will have to compare them with the experts&#8230- and with the &#8220-Google Flu Trends&#8221- web service, which is entirely free of charge and free of advertising (being sponsored by the Google Foundation). Does not sound good for the prediction markets.
  • The irony is that it&#8217-s our prediction market researchers (David Pennock and his accomplices) who gave weight to this non-market tool. &#8212- Pennock = Treator &#8230-!!&#8230- [ :-D – Joke. ]

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APPENDIX:

– Iowa Health Prediction Market

– Google Flu Trends

– See also: Google Foundation on &#8220-Predict and Prevent&#8221-.

– Google Trends

– David Pennock on the fact that flu-related searches on the Web are precise predictors of the upcoming influenza outbreaks.

– BBC

– New York Times

– WSJ Health blog

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Are prediction markets on deaths and assassinations SOMETIMES acceptable?

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BELOW IS THE CHART OF A SETTLED PREDICTION MARKET:

Will Patrick Swayze die before April 15, 2008?

It was settled on &#8220-no&#8221-.

HubDub CEO Nigel Eccles thinks that his traders &#8220-quickly came to the conclusion that the [early 2008] story [giving him 5 weeks to live] was bogus.&#8221- And Nigel Eccles asks, &#8220-Is this an example where a death pool prediction market is actually socially valuable?&#8221-

In my view:

  1. It&#8217-s the opinion makers external to HubDub who should decide this. If most people and/or lawmakers decide that prediction markets on deaths and assassinations are disgusting and unacceptable, then they should be pruned. We need goodwill towards the prediction markets if we want the real-money prediction markets to be legalized everywhere.
  2. Would Nigel Eccles accept a prediction market about when his wife (or kid) is going to die?
  3. Is there a social utility in knowing when exactly a celebrity is going to die (supposing that such a prediction market could be accurate)? For a head of state, a running politician, or a Justice, that information might have a value. However, in the case of a Hollywood celebrity, I don&#8217-t see where the value lays. A prediction market on the upcoming death of a celebrity would participate in that big, stupid circus that occurs today, with paparazzi and tabloids taking an importance that they shouldn&#8217-t have in the first place. Our youth would be better off browsing and betting on prediction markets about science and technology. We should elevate our global civilization. I don&#8217-t see any (social or individual) benefit about knowing in advance when exactly Patrick Swayze is going to die. I am scratching my head right now &#8212-and I still don&#8217-t see any reason why we should spend our precious time blogging on this issue, betting on that, or collecting probabilistic predictions on that. I just don&#8217-t. (If you have a counter argument, do publish a comment below.)
  4. The very best wishes to Patrick Swayze, by the way.

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Are prediction markets useful to you?

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It&#8217-s &#8220-pretty clear&#8221- that the prediction markets on political elections aggregate information from the polls &#8212-and from the political experts.

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Previously: #1 – #2 – #3 – #4 – #5 – #6

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It&#8217-s &#8220-pretty clear&#8221- that:

  1. InTrade has been over-selling the predicting power of its prediction markets.
  2. The prediction markets are information aggregation systems &#8212-not magical tools.
  3. The main benefit of a prediction market is to express an aggregated expected probability. Most of the times, this is of low utility.
  4. In complicated situations, this aggregation will contrast well with a poor reporting. In these instances, the prediction market is a useful source of information.

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The one thing I enjoy every Monday morning

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As a prediction market aficionado, what lights me up are stories about&#8230- (of course)&#8230- how the prediction markets are assessing important news. The HubDub blog publishes, every Monday morning, a post that rounds up the 5 most prominent (that&#8217-s subjective) news stories of the week, with the prediction market charts, so we can spot which outcome is the more likely, for each issue.

I find this weekly newsletter addictive. I read it with attention each Monday. It is simple, short, but well done and effective.

I wish InTrade, BetFair, and NewsFutures would publish such a prediction market blog.

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The HubDub prediction markets on assassinations could be somewhat useful in some cases -now that I am sober and that I think of it.

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I published 3 times my opinion that it is a nuclear scandal of apocalyptic proportions that HubDub allows prediction markets on celebs&#8217- death and assassination. My view is that this will attract strong criticism from people who are very strict on the issue of morality. And the prediction markets don&#8217-t need another polemique at this time.

But after reading Medemi&#8217-s comment, popped up an idea in my mind. Medemi tells about the assassination of Pim Fortuyn, an extremist politician in Holland &#8212-who received many death threats and did not get appropriate protection. His assassination was predictable. (He was indeed gunned down during a political campaign.) If, at the time, a prediction market had been opened on the likelihood of his violent death, the high probabilities would have attracted attention &#8212-and, as a result, maybe the Police would have granted Pim Fortuyn a special protection.

What do you think?

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Are collective intelligence solutions being oversold?

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Xpree CEO Mat Fogarty:

Chris,

Management struggles to understand and plan for the future. When forecasts are inaccurate, corporations incur huge costs due to inventory write-offs, stock-outs, misallocated resources or cost of capital. Collective intelligence delivers objective, accurate forecasts in real time, thus saving many millions of dollars for our corporate clients. The solution is not being oversold, to the contrary, the potential vastly exceeds current awareness and adoption.

&#8220-If foresight is not the whole part of management, at least it is an essential part of it&#8221- (Henri Fayol, 1916).

In my 10 years experience as a management accountant and corporate planner, I have witnessed multiple forecasts suffer from inaccuracy due to uncertainty and biases. Whether forecasting a launch date, sales volume or cost of development, it is the systematic biases due to incentive systems, politics and common cognitive errors that contribute more to inaccuracy than the uncertainty. The problem stems from the fact that the owner of a forecast is normally the owner of the business unit / sales team / project, and budgets and bonuses are based on forecasts. This necessitates game playing and politics and makes the development of an objective, accurate forecast near impossible.

Collective intelligence can overcome these problems by incentivising a diverse crowd of knowledgeable employees to share their insight, balancing the resulting estimates, and rewarding accuracy and timeliness.

However, we are at an early stage in the development of this opportunity. There is still work ahead of us to develop the ideal mechanism to combine simplicy of UI [user interface] with richness of information gathering. In addition, we need to further develop the way collective intelligence interfaces with traditional corporate structures, processes and systems. These are Xpree&#8217-s challenges&#8230- stay tuned.

Mat
CEO, Xpree

Giving Thanks

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– Thanks to my readers.

– Thanks to InTrade, BetFair, NewsFutures, HubDub, etc.

– Thanks to Robin Hanson, David Pennock, Lance Fortnow, Jason Ruspini, Mike Giberson, David Perry, Adam Siegel, Emile Servan-Schreiber, Nigel Eccles, Chris Hibbert, Panagiotis Ipeirotis, George Tziralis, Eric Zitzewitz, Koleman Strumpf, Mike Linksvayer, etc.

– Thanks to WordPress, FireFox, Google, Wikipedia, etc.

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Are prediction markets useful?

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According to Alan Abramowitz, John Tierney has been &#8220-greatly exaggerating the accuracy of the betting markets.&#8221- &#8220-They follow the polls. That’s it.&#8221-

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My comment to Alan Abramowitz and John Tierney:

&#8220-They follow the polls. That’s it.&#8221-

Yes, they follow the polls. No, that&#8217-s not it.

Traders also dig the news of the day and make anticipations about the outcome. For instance, towards the end of the 2008 Democratic primary, the polls and the mass media were still giving Hillary Clinton a very good standing, whereas the prediction markets (informed by a bunch of political experts who did the counting of the delegates and super-delegates) were telling us that she was as toasted as Lehman Brothers in the middle of the credit crunch crisis.

Are prediction markets useful? If John Tierney wants to answer this question, he should pick up a prediction market and put it in the social context of that day. Some prediction markets are more useful than others. In the case of the 2008 Democratic primary (a complicated matter), the prediction markets sided with the best informed political experts against the mass media and the polls. So to speak, they were an umpire. In that case, we see the emergence of a social utility. We now have the case for the media citing more the probabilities of the liquid (play-money and/or real-money) prediction markets.

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Previously: #1 – #2 – #3 – #4 – #5

External Link: Club of Growth

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