Yearly Archives: 2008

Video on InTrades political prediction markets

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Via Yahoo! Research scientist David Pennock (pictured in the video, with, in the background, a whiteboard full of complex mathematical equations, which impressed the young New York Post journalist)&#8230- this New York Post video (embedded just below).
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John Delaney&#8217-s statement that people (did he say &#8220-pundits&#8221- or &#8220-people&#8221-?&#8230-) were predicting a John Kerry victory in November of 2004 (while InTrade was predicting that George W. Bush would be re-elected) should be backed by supportive evidence. It&#8217-s difficult to quantify the chatter in newspapers, magazines, TVs, blogs, etc. Did someone do that for the 2004 presidential elections? I know that the polls were favoring Bush, slightly, but I don&#8217-t know whether the political buzz was quantified scientifically, really.
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Launch a prediction market startup for free thanks to Google App Engine.

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Run your web applications on Google&#8217-s infrastructure.

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Matt Cutts:

Google launched App Engine, which lets you write code for a web application, then Google takes care of the scaling/failover/logistics-type issues. You can store your data in a Google Bigtable using the Google File System (GFS). There’s a bunch of App Engine APIs to simplify things like sending email and fetching urls. Your application can authenticate users that are using Google Accounts, so you can avoid the whole “ask your users to create a new account” issue if you want.

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O&#8217-Reilly Radar

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Google App Engine

[Competitor: Amazon AWS]

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YouTube Video

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Bo Cowgill, this is completely crazy.

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UPDATE: Raves from TechCrunch and Silicon Alley Insider.

UPDATE: Google AppEngine – A Second Look

UPDATE: Praxy

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Towards an anti-drugs and anti-corruption body for all sports? – BetFairs proposal…

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No GravatarPlay The Game [I like that website title :-D ]:

Betting industry leader calls for sport world anti-corruption agency

8 April 2008

by Michael Herborn

Mark Davies, managing director of global betting giant Betfair, has called for a world anti-corruption agency for sport. He envisions that the anti-corruption agency would operate along the same lines as the World Anti-Doping Agency (WADA), perhaps encompassing the role as both global watchdog for financial as well as pharmaceutical corruption of sport. “There isn&#8217-t a body that sits at the top of sport that&#8217-s something we&#8217-d love to see, a world integrity agency that encompasses both drugs and betting and any other form of corruption,” Davies told New Zealand newspaper the Sunday Star Times at the Leaders in Sport conference in Auckland on 4 April 2008. “For me it should be the same body. If a sportsman is trying to corrupt by enhancing his performance by drugs or trying to corrupt by minimising his performance and make money off the back of it, I don&#8217-t see a distinction.” [&#8230-]

Previous blog posts by Chris F. Masse:

  • 50% of our prediction market luminaries have a MacBook.
  • STRAIGHT FROM OUR TRUISM DEPARTMENT: Money buys happiness.
  • Ron Paul (R) and Barney Frank (D) ally together to attack “the practical hurdles of the federal law, known as the Unlawful Internet Gambling Enforcement Act, rather than its legitimacy”.
  • Clicking on the “SPHERE: RELATED CONTENT” button, at the bottom of each Midas Oracle post, will bring you a list of external webspots.
  • FRIGHTENING: Jed Christiansen’s prediction market blog was briefly overtaken by web spammers, who inserted invisible links to their commercial sites so as to game the Google PageRank system.
  • InTrade ditch market-leader Bloomberg for low-cost, second-tier data provider eSignal.
  • Drawing a parallel between our reluctance to seek advice and the experts’ reluctance to take the market-generated probabilistic predictions in an un-discriminating, un-critical fashion

Do BetFair understand the statistical concept of expectation?

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No GravatarGraham &#8220-Sharp&#8221- Minds:

[&#8230-] When I was interviewed by BetFair and they explained to me all of the problems with the multiples operation, most importantly the fact that it is a loss making despite the huge overrounds, I was asked for my opinion. I told them the simple solution was to take the bets on the chin like a traditional bookmaker and keep away from the markets as the bets they placed were likely to be taken by traders that are shrewder than their own, especially in-running where most of the BetFair trading activity actually occurs.

They were horrified at this prospect and were insistent on producing a formula to place the bets into the main BetFair market to reduce the risk as close as possible to zero. I was more horrified that they didn’t understand the statistical concept of expectation.

Discussion here, too.

Previous blog posts by Chris F. Masse:

  • 50% of our prediction market luminaries have a MacBook.
  • STRAIGHT FROM OUR TRUISM DEPARTMENT: Money buys happiness.
  • Ron Paul (R) and Barney Frank (D) ally together to attack “the practical hurdles of the federal law, known as the Unlawful Internet Gambling Enforcement Act, rather than its legitimacy”.
  • Clicking on the “SPHERE: RELATED CONTENT” button, at the bottom of each Midas Oracle post, will bring you a list of external webspots.
  • FRIGHTENING: Jed Christiansen’s prediction market blog was briefly overtaken by web spammers, who inserted invisible links to their commercial sites so as to game the Google PageRank system.
  • InTrade ditch market-leader Bloomberg for low-cost, second-tier data provider eSignal.
  • Drawing a parallel between our reluctance to seek advice and the experts’ reluctance to take the market-generated probabilistic predictions in an un-discriminating, un-critical fashion

Problem 17: Prediction Markets – USMA D/Math Problem of the Week – Submission Deadline: April 3, 2008 at 1600

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HubDub

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And we have a winner, Chris Hibbert of Zocalo:

You can buy Giuliani on Q2 for .12 and sell Giuliani on Q1 for .52, and have a combination that will pay $1 no matter what for an outlay of .64. We want to take that .36 gain and turn it into $100. 100 / .36 = 277.777&#8230-

So we&#8217-ll buy 278 shares of each.The 278 shares cost 278 * (.12 + .52), which is 177.92. Whatever happens, you&#8217-ll win $278, which puts you ahead by $100.

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Midas Oracle is now powered by WordPress 2.5 -and you should be too.

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  1. Just updated to WordPress 2.5. (See a screencast here.)
  2. I waited one week before upgrading, so as to take the time to monitor the WP 2.5 compatibility with our plugins.
  3. To upgrade, I used the &#8220-Wordpress Automatic Upgrade&#8221- plugin. The automatic process failed, but the step-by-step process worked fine. Overall, I&#8217-m happy. This plugin is a time saver.
  4. WordPress 2.5.1 is due for May 2008. In the meantime, if you spot some gremlins, let me know.
  5. Speaking of gremlins, WP 2.5 has now a better compatibility with Safari, so maybe Tom W. Bell will come down here to tell us what he thinks of the new US anti-gambling regulations.
  6. The Midas Oracle post/page authors will spot a totally reconfigured &#8220-Write Post / Page&#8221- area.
  7. They have added a bunch of &#8220-media buttons&#8221- (to insert pictures, sounds, videos, etc.) and an &#8220-embedded media&#8221- button (which you&#8217-ll find if you click first on the &#8220-Kitchen Sink&#8221-). I have yet to fully experiment all that.
  8. There is now a &#8220-full screen mode&#8221- for the writing area.
  9. They have hidden the 2 blockquotes button under the &#8220-Kitchen Sink&#8221- sub-menu.

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UPDATE: Gartner is out today saying that open-source software will take over the free world, eventually &#8212-and that includes Chapman University and Tom W. Bell&#8230- :-D

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Matt Mullenweg

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Previous blog posts by Chris F. Masse:

  • Problem 17: Prediction Markets — USMA D/Math Problem of the Week — Submission Deadline: April 3, 2008 at 1600
  • Would be fun to have the equivalent for event derivatives.
  • “We’ll be eight degrees hotter in 30 or 40 years and basically none of the crops will grow.” “Most of the people will have died and the rest of us will be cannibals,” said Turner, 69. “Civilization will have broken down. The few people left will be living in a failed state —like Somalia or Sudan— and living conditions will be intolerable.”
  • QUESTION TO THE READERS: Could anyone guess what Nassim Nicholas Taleb would think of the prediction markets?
  • YouTube Videos on Prediction Markets

Well be eight degrees hotter in 30 or 40 years and basically none of the crops will grow. Most of the people will have died and the rest of us will be cannibals, said Turner, 69. Civilization will have broken down. The few people left will be living in a failed state -like Somalia or Sudan- and livi

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No GravatarTed Turner @ Charlie Rose (on April 1st, 2008)

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The answer is &#8220-better technology&#8220-.

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Previous blog posts by Chris F. Masse:

  • How to win $100 in play money at HubDub, regardless of any political outcome
  • Problem 17: Prediction Markets — USMA D/Math Problem of the Week — Submission Deadline: April 3, 2008 at 1600
  • Midas Oracle is now powered by WordPress 2.5 —and you should be too.
  • Would be fun to have the equivalent for event derivatives.
  • QUESTION TO THE READERS: Could anyone guess what Nassim Nicholas Taleb would think of the prediction markets?

The Prime Minister of Ireland has just said he will resign, but neither InTrade nor BetFair would give the first fig.

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  1. InTrade do not have any open &#8220-Bertie Ahern&#8221- prediction markets. InTrade do not have any closed &#8220-Bertie Ahern&#8221- either.
  2. BetFair do have a series of &#8220-Bye Bye Bertie&#8221- prediction markets &#8212-still open at the time of writing. So I deduce that they would want to close the contracts just after the Irish Prime Minister&#8217-s effective resignation (in early May 2008). Which makes sense to me. (InTrade fell on Larry Craig&#8217-s false resignation, as you may remember.) The BetFair event derivative contract only states:
  • When will Bertie Ahern officially cease to be Taoiseach of the Republic of Ireland? Unmatched bets will not be cancelled at any time. Users are responsible for their own positions. Users should be aware that they are NOT allowed to bet on this event if they are physically present in Austria or Germany.

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BetFair static chart (resignation to happen before January 2009):

PM Ireland 2009

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As a matter of experiment, I am going to try to paste just below a hot-linked BetFair chart&#8230- to see if that works (that is, if BetFair accepts that bloggers do hot-link to their live charts). If you don&#8217-t see the &#8220-Bye Bye Bertie&#8221- chart appearing in the line just below, don&#8217-t mind.

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UPDATE: The experiment is successful. BetFair do accept that bloggers hot-link to their live charts. Great news. (My readers may remember that I did that same experiment with InTrade&#8217-s advanced charts, some weeks ago, and that the experiment failed. But I&#8217-ll re-do that InTrade experiment, a bit later.)

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Via HubDub, The Independent

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Previous blog posts by Chris F. Masse:

  • Thanks to enterprise prediction markets, senior management can move faster to deal with problems or exploit opportunities.
  • NOTE TO SELF: Set up customized e-mail alerts for brand-new, hot Midas Oracle stuff.
  • DAYS OF RECKONING, PART TWO: Matt Drudge features the prediction markets. + Reuters has the right terminology (“traders”, “prediction exchanges”) but ignores BetFair.
  • DAYS OF RECKONING: The New York Times is telling the business world that enterprise prediction markets are an essential management tool.
  • HubDub will soon distribute a continuously-updating chart widget displaying the state of their prediction markets.

QUESTION TO THE READERS: Could anyone guess what Nassim Nicholas Taleb would think of the prediction markets?

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Fortune:

The idea that catastrophe can strike without warning does not seem particularly hard to understand. Why doesn&#8217-t Wall Street ever seem to allow for that possibility? And why doesn&#8217-t it learn from past catastrophes?

Let me blame business schools and the financial economics establishment – they have a vested interest in promoting models and devaluing common sense.

I worked on Wall Street for close to two decades in trading and risk management of derivatives. I noticed that while portfolio models got worse and worse in tracking reality, their use kept increasing as if nothing was happening. Why? Because in the past 15 years business schools accelerated their teaching of portfolio theory as a replacement for our experiences. It looks like science, and they have been brainwashing more than 100,000 students a year. There is no way my experiences can be transmitted to the next generation because of these schools. We&#8217-ve had fiascoes in finance that they need to neglect because they contradict their models. The problem may also be the Nobel in economics that gave a stamp to these junky theories. Someone needs to make the Nobel committee account for this, for the damage to society – and I hope to do so.

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Strongly anti-establishment guy. (More here, last year, with Felix Salmon.)

Could anyone guess what Nassim Nicholas Taleb would think of the prediction markets? Would he think that our prediction market researchers (Robin Hanson, Justin Wolfers, and company) are &#8220-giving stamp to junky theories&#8221-, hence &#8220-damaging society&#8221-?

Anyone (who knows NNT) willing to guess???&#8230-

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UPDATE: Jason Ruspini&#8230-

The basic answer is obvious – Taleb considers predicting as such to be nonsense, although the papers in this area by Wolfers et al only need appeal to information aggregation.

I do think Taleb would be very skeptical of the model-based papers on manipulation. While he and Robin Hanson seem to have some similar interests, this might be a difference. Consider Taleb&#8217-s &#8220-Fat Tony&#8221- and &#8220-Dr John&#8221- characters from The Black Swan. Fat Tony is more intuitive and &#8220-street-smart&#8221-. Dr John is more &#8220-platonic&#8221-, nerdy, and more apt to make mistakes because of a bad model or assumptions. The characters are each posed the following question: &#8220-Say I flip a fair coin ten times and it comes up heads all ten times. What are the chances of it coming up heads on the next flip?&#8221- Dr John replies, &#8220-Elementary. They are independent events, so 50%.&#8221-  Fat Tony says, &#8220-Less than 10% because the coin is probably loaded. Your assumptions are wrong or you are lying!&#8221-

The model-based papers on manipulation assume equal trading budgets and no feedback trading. These assumptions rarely hold.

Previous blog posts by Chris F. Masse:

  • “I’m very concerned with the international situation and what’s happening in Tibet.”
  • How to win $100 in play money at HubDub, regardless of any political outcome
  • Problem 17: Prediction Markets — USMA D/Math Problem of the Week — Submission Deadline: April 3, 2008 at 1600
  • Midas Oracle is now powered by WordPress 2.5 —and you should be too.
  • Would be fun to have the equivalent for event derivatives.