Extreme Prediction Markets & Ethics

Posted on May 30, 2008 by admin

While Robin Hanson was busy signing Bob&#8217-s petitions and blablabling on philosophy, Jason Ruspini answered the questions.

Jason Ruspini (&#8221-The Brain&#8221-) has established himself as one of the experts in the field of prediction markets. Listen up.

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1-2) These markets could have insider trading restrictions and forced settlement w/ new contract set.
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3-4) The CFTC/NFA could monitor a “large trader” list and have special reporting requirements for them. If trading seemed unreasonable given the objective outlook for a candidate, they could begin an investigation.
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5) Don’t void or unwind the market, just settle the contracts at the price immediately before the event and then start a new set of contracts as soon as possible.
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The only problem there is what happens when a price manipulation precedes an event such that the manipulated outcome locks-in the “manipulated” prices. The arrangements in 3-4) would go a long way towards addressing that scenario. Failing that, contracts could be worded in such a way to allow for freezing funds and unwinding trades in that sort of situation. Also, it would be difficult for a trader to set-off a feedback loop in a liquid binary market even if they were very large.

Justin Wolfers should have his own Wikipedia entry.

Posted on May 29, 2008 by admin

Any Wikipedian out there willing to start off his page?

http://en.wikipedia.org/wiki/Justin_Wolfers

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Robin Hanson, Tyler Cowen, Steve Levitt, and even Don Luskin and Robert Scoble, have their own Wikipedia entry. Why not Wolfers???&#8230- I realized that when I updated my &#8220-acknowledgments&#8221- page:

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Acknowledgments

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– Friedrich August Von Hayek (an economist who introduced, among other things, the concept of the market as an information aggregation tool in The Use of Knowledge in Society, and the 1974 co-winner of the Nobel Prize in economics)-

– Professor Vernon Smith (an experimental economics pioneer, and, as such, the 2002 co-winner of the Nobel Prize in economics)-

– Professor Robin Hanson (one of the contemporary co-inventors of the prediction markets)-

– Doctor James Surowiecki (author of The Wisdom Of Crowds)-

– Professors Justin Wolfers and Eric Zitzewitz (meta analysts of the prediction markets)-

– Professor Steve Levitt (co-author of Freakonomics)-

– Professor Tyler Cowen (co-author of Marginal Revolution and author of Discover Your Inner Economist)-

– Donald Luskin (author of The Conspiracy To Keep You Poor And Stupid)-

– The GNU, Linux, WordPress, World Wide Web Consortium, Mozilla, Opera, Yahoo!, Google, Wikipedia, Creative Commons and Free Software Foundation people (among others) for freeing our information-based society.

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More Thanks

The Midas Oracle Blog Authors
Credits

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The simplicity and social utility of the gravatars explained to Tom W. Bell by blog guru Chris Pirillo.

Posted on May 29, 2008 by admin

Tom W. Bell,

Please, watch this short video, and get yourself a gravatar. It&#8217-s easy and fun.

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The little difference between Midas Oracle and Chris Pirillo&#8217-s blog is that he set up things so that when somebody does not have a gravatar, a randomly-pixelized image appears, while on Midas Oracle, there&#8217-s a face pic of an anonymous person that appears.

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Previous blog posts by Chris F. Masse:

How you should read Midas Oracle
The best prediction exchanges
“There will be no media consumption left in ten years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form.”
Hillary Clinton won’t be on the Democratic ticket. — It’s not going to happen. — N-E-V-E-R. — Not a chance. — Period.
Suggestion for WordPress — Subscribers’ Capabilities
This is why I said that those who believe that Hillary Clinton has a chance to be on the Democratic ticket are “clueless”.
WEB EXCLUSIVE: — The annoted, historical, compound chart that those triple morons at the BetFair blog are hiding from their readers’ view. — It is located in a secret cache, linked to behind a picture of Hillary Clinton. — Curious place to locate a prediction market chart. — I bet nobody downloaded that chart. —

Where to find advice on how to set up your enterprise prediction markets

Posted on May 29, 2008 by admin

Consultants

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Inkling – URL: Inkling Markets – (Chicago, Illinois, U.S.A.)

Adam Siegel — Post Archives at Midas Oracle
Nathan Kontny

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Consensus Point – (Nashville, Tennessee, U.S.A. &amp- Calgary, Alberta, Canada)

David Perry — Post Archives at Midas Oracle
Ken Kittlitz, who co-founded the Foresight Exchange in 1994. — Post Archives at Midas Oracle

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NewsFutures – (Maryland, U.S.A. &amp- Paris, France, E.U.)

Emile Servan-Schreiber — Post Archives at Midas Oracle
Maurice Balick

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Xpree – (U.S.A.)

Mat Fogarty — Post Archives at Midas Oracle

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HP Services – HP Labs – (U.S.A.)

Predicting the future &#8211-with games — Introductory article
Information Dynamics Lab — Internal prediction markets
BRAIN – (Behaviorallly Robust Aggregation of Information in Networks) — Scoring Rules (i.e., non-trading technique)
Bernardo A. Huberman – Bernardo Huberman – Senior Fellow &amp- Director
Kay-Yut Chen –
Google Search for &#8220-prediction markets&#8221-

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Hollywood Stock Exchange (HSX) &amp- HSX Research – (L.A., California, U.S.A.)

Prediction market consultancy firm
Movie business

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Chris Hibbert – (California, U.S.A.)

Chris Hibbert (Software architect / Zocalo project manager) — Post Archives at Midas Oracle
Chris Hibbert&#8217-s personal website — Chris Hibbert&#8217-s personal blog —
Chris Hibbert&#8217-s CommerceNet profile — (His stint there ended in mid-2006.)

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Robin Hanson – (George Mason U., Virginia, U.S.A.)

Robin Hanson — Post Archives at Midas Oracle
Robin Hanson does prediction market consulting work, and have no exclusive arrangements.
&#8220-I&#8217-m more interested in helping groups that want to add lots of value to big decisions, versus groups that just want to dabble in a new fad.&#8221-

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Justin Wolfers – (U. of Pennsylvania&#8217-s Wharton business school, Pennsylvania, U.S.A.)

Justin Wolfers — Post Archives at Midas Oracle
Justin Wolfers takes on prediction market consulting work.
The prediction market industry is &#8220-a case where the interaction between firm practice and academic research are reasonably close.&#8221-

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Koleman Strumpf – (U. of Kansas, Kansas, U.S.A.)

Koleman Strumpf — Post Archives at Midas Oracle
Koleman Strumpf can be approached to consult on prediction market projects.
&#8220-Prediction markets help harness the knowledge of diverse groups. They have great potential as a tool for industry.&#8221-

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Michael Giberson – (Virginia, U.S.A.)

Michael Giberson (energy economist, who is also an expert in prediction markets) — Post archives at Midas Oracle
Knowledge Problem – Blog on economics, energy policy, more.

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Robert Hahn – (American Enterprise Institute, Washington, D.C., U.S.A.)

Robert Hahn — Post Archives at Midas Oracle
Robert Hahn does consulting focused on improving decision making in the private and public sector. &#8220-This work builds on our evolving understanding of prediction markets and other economic tools.&#8221-

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IntelliMarket Systems – (L.A., California, U.S.A.)

Charles R. Plott – Charles Plott – (CalTech Inst., California, U.S.A.)

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Mercury Research and Consulting – (United Kingdom, E.U.)

Jed Christiansen — Post Archives at Midas Oracle

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Ask Markets – (Greece, E.U.)

George Tziralis — Post Archives at Midas Oracle

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Gexid – Global Exchange for Information Derivatives – (Germany, E.U.)

Bernd Ankenbrand — Post Archives at Midas Oracle

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Nosco – (Danemark, E.U.)

Jesper Krogstrup — Post Archives at Midas Oracle
Oliver Bernhard Pedersen

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Qmarkets – (Israel)

Noam Danon — Post Archives at Midas Oracle

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ProKons – (Germany)

Peter Gollowitsch

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Hive Insight – (Raleigh-Durham, North Carolina, U.S.A. &amp- London, U.K., E.U.)

Robert Wilburn (ex-NewsFutures)

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Foresight Markets – (??)

BPH Technologies

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NimaniX – (Israel)

Elad Amir (CEO), Littal Shemer Haim (VP Business development), David Shahar (VP R&amp-D)

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PrediCom – (London, United Kingdom, E.U.)

Mikael Edholm

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Previous blog posts by Chris F. Masse:

This is why I said that those who believe that Hillary Clinton has a chance to be on the Democratic ticket are “clueless”.
WEB EXCLUSIVE: — The annoted, historical, compound chart that those triple morons at the BetFair blog are hiding from their readers’ view. — It is located in a secret cache, linked to behind a picture of Hillary Clinton. — Curious place to locate a prediction market chart. — I bet nobody downloaded that chart. —
Knows the similarity between Google, Craig’s List, and the Drudge Report?
“Listening to each other is core to our culture, and we don’t listen to each other just because we’re all so smart. We listen because everyone has good ideas, and because it’s a great way to show respect. And any company, at any point in its history, can start listening more.”
2 days after my ringing the alarm bell… THE FREE FALL
Tech News Of The Day — Friday Morning Edition
VIDEO: Why Hillary Clinton will never be the Vice President of the United States of America.

He asks questions; youll provide answers.

Posted on May 29, 2008 by admin

I would like to ask the U.S. contributors to Midas Oracle what they would make of a prediction market for the 2012 Democratic nomination where one contender was backed heavily, at any price, despite losing every single primary heavily for months.
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The Democratic nomination is only a once every four years event, but similar things to this happen regularly on tennis markets in the last 12 months.
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The questions are
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(1) What if Hillary Clinton herself wagered millions of dollars that she would not be the next Democratic candidate?
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(2) What if someone had the power to knock Hillary Clinton out of the race somehow had wagered millions on her not being the 2012 candidate? An example where this could happen would be the tournament where a spectator knifed Monica Seles during that tennis match in the early 90s. She would then not be able to win that tournament, but what if there is a financial incentive for people to injure participants, like with Seles? Or if someone assassinated Clinton? Should that market be paid out?
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(3) Should people be able to bet in near unlimited size on prediction markets, who weren’t regular bettors/traders? If it is a brand new account waging a quarter of a million dollars on a tennis player to lose, should that account have been restricted before placing that bet?
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(4) Should there be circumstances where a multi-million pound gamble is paid out on Obama 2012, if over a period of a number of months, someone had backed him heavily to win the nomination, even though he was losing every single primary?
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(5) If someone knifed Maria Sharapova, as happened with Monica Seles, you could make the argument that bets on that tournament should be void, if the knifeman has bet heavily on Sharapova not to win it, and because of her being knifed, she then doesn’t make the final and win. However, you could then reach a situation where someone injures a player deliberately, expecting that a prediction market would be voided, which they could also benefit from financially. A situation like this occurred in England in the seasons 1995/1996 and 1996/1997, where floodlights at soccer games were deliberately sabotaged, forcing abandonment of the matches concerned, as a result of the saboteurs not liking the half time scoreline. There is an incentive for someone to bet heavily against a Seles or a Sharapova, and then seriously wound or assault them to alter the outcome of a sports prediction market, but there is also an incentive to try to get a prediction market voided. The knifeman benefits from ensuring that Sharapova or Seles cannot win the tournament, but the saboteur benefits from the market being voided. The answer to the first one is probably to void the market due to foul play, removing the financial incentive to knife a female tennis player, but the chance to get a void market will provide a financial incentive to try to get the event abandoned,………. how should the arbiters of a prediction market put the right safeguards in place to remove financial moral hazard from the market?

Answer these questions below this present post or here.

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Lawsuit aiming at compelling the office of the United States trade representative to produce a copy of its compensation settlement with the European Union over the United States withdrawal of gambling services from the General Agreement on Trade in Services.

Posted on May 28, 2008 by admin

&#8220-National Security&#8221- is the reason given for the cover up.

The Center for Independent Media and Public Citizen are suing their pants off.

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Iraq War = not necessary, a serious strategic blunder – US News Media = complicit enablers in the manipulation of the public (the propaganda campaign) – George W. Bush turned away from candor and honesty when those qualities were most needed.

Posted on May 28, 2008 by admin

Scott McClellan

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Check what he wrote on Katrina and on Condoleeza Rice.

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And, now, the clincher:

[Scott McClellan] does not exempt himself from failings — “I fell far short of living up to the kind of public servant I wanted to be” — and calls the news media “complicit enablers” in the White House’s “carefully orchestrated campaign to shape and manipulate sources of public approval” in the march to the Iraq war in 2002 and 2003.

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Excellent article about enterprise prediction markets and Inkling Markets -with a good word for Robin Hanson, who invented MSR.

Posted on May 28, 2008 by admin

Via Daniel Horowitz (Business and Technology Consultant)

Software taps into the zeitgeist to predict the future.

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Previous blog posts by Chris F. Masse:

No Trades (other than at the start) —-> Not a reliable predictor, as of today
How you should read Midas Oracle
The best prediction exchanges
“There will be no media consumption left in ten years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form.”
Hillary Clinton won’t be on the Democratic ticket. — It’s not going to happen. — N-E-V-E-R. — Not a chance. — Period.
Suggestion for WordPress — Subscribers’ Capabilities
This is why I said that those who believe that Hillary Clinton has a chance to be on the Democratic ticket are “clueless”.

The CFTC safe-harbor option for event markets

Posted on May 28, 2008 by admin

The recommendation for safe-harbor of a group of influential economists to the CFTC aims squarely at the 4(c)3(K)* clause of the Commodity Exchange Act. The CFTC may approve a public interest exemption under 4(c) provided that the affected contracts are traded only between &#8220-appropriate persons&#8221-. 4(c)3(k) is the only qualification that would accommodate &#8220-retail&#8221- trading in the style of IEM, allowing, &#8220-Such other persons that the Commission determines to be appropriate in light of their financial or other qualifications, or the applicability of appropriate regulatory protections.&#8221- Regarding &#8220-other qualifications&#8221-, the economists recommend:

&#8220-that three types of entities be eligible for safe harbor treatment. The first would be not-for-profit research institutions, including universities, colleges, and think tanks wishing to operate exchanges similar to the Iowa Electronic Markets. The second would be government agencies seeking to do research similar to that of nongovernmental research institutions. The third group would consist of private businesses and not-for-profits that are not primarily engaged in research, which would only be allowed to operate internal prediction markets with their employees or contractors.

Regarding the applicability of regulatory protections, the economists recommend that such markets should be limited to small-stakes, low-fee contracts. This limitation addresses consumer protection because the CFTC is typically much less interested in non-levered transactions, and there is little chance of being able to manipulate a market with a small-stakes account. Possibly, consumer protection measures could completely satisfy 4(c)3(K).

The safe-harbor proposal looks like an expedient option that would avoid the problems of treating event markets as excluded commodities (or exempt commodities), which were touched on last time. One problem the CFTC faces is selecting a principle that would include only markets that pass an economic purpose test within their jurisdiction, and the safe-harbor proposal avoids this problem. Although there doesn&#8217-t seem to be anything in the CEA to indicate that an exempted market could possibly lie outside the agency&#8217-s jurisdiction, Congress has determined – significantly – that, &#8220-Rather than making a finding as to whether a product is or is not a futures contract, the Commission in appropriate cases may proceed directly to issuing an exemption.&#8221-

Arguably, if someone were to set-up non-profit small-stakes exchanges similar to the ones the economists describe, they would not need CFTC safe-harbor anyway – especially if they restrict trading to States where the predominant factor test applies. Safe-harbor would, however, allow for exchange profits.

I believe that a combined approach would work best. Treating event markets as excluded commodities would not contradict granting some exchanges public interest safe-harbors, which would especially be appropriate if they wanted to host markets like research science claims, where a trader might be in control of the outcome. Exchanges seeking to host larger stake markets useful for hedging could do so with a trading prohibition for people who might be in control of the outcome. From the CFTC&#8217-s perspective, the safe-harbor would be a less complicated option with regard to their jurisdictional scope. Ultimately, statutory clarification is needed.

* This section is listed as USC Title 7, Chapter 1 6(c) here.

Cross-Posted from RM&amp-P

Tasmanias Prime Minister who licenced BetFair Australia departs abruptly.

Posted on May 27, 2008 by admin

Mercury + The Austrlalian

Hello to our readers from Down Under.

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Previous blog posts by Chris F. Masse:

American Enterprise Institute’s Center For Regulatory And Market Studies (Policy Markets)
IIF’s SIG on Prediction Markets
Science
Why did prediction markets do well in the pre-polling era, professor Strumpf?
Mozilla FireFox users, do you have trouble downloading academic papers (as PDF files) from SSRN?
“Impact Matrix. Used to collect and gauge the likelihood and business impact of various events in the very long term.”
Ends and Means of Prediction Markets — Tom W. Bell Edition

Midas Oracle.ORG – Predictions & Innovation

Prediction Markets, Collective Intelligence, Innovation and Growth

Yearly Archives: 2008

Extreme Prediction Markets & Ethics

Justin Wolfers should have his own Wikipedia entry.

The simplicity and social utility of the gravatars explained to Tom W. Bell by blog guru Chris Pirillo.

Where to find advice on how to set up your enterprise prediction markets

He asks questions; youll provide answers.

Lawsuit aiming at compelling the office of the United States trade representative to produce a copy of its compensation settlement with the European Union over the United States withdrawal of gambling services from the General Agreement on Trade in Services.

Iraq War = not necessary, a serious strategic blunder – US News Media = complicit enablers in the manipulation of the public (the propaganda campaign) – George W. Bush turned away from candor and honesty when those qualities were most needed.

Excellent article about enterprise prediction markets and Inkling Markets -with a good word for Robin Hanson, who invented MSR.

The CFTC safe-harbor option for event markets

Tasmanias Prime Minister who licenced BetFair Australia departs abruptly.