–
UPDATE: Some smart comments, just below…-
–
Forrester recommend to view enterprise prediction markets as…- addition —-not substitution.
Excellent point.
–
Prediction Markets Harness The Wisdom Of The Crowd To Predict The Future
Prediction Markets Bring A Market Function To The Gathering Of Information
Most Markets See Accuracy That Is At Least As Good As Traditional Forecasting Methods
Prediction Markets Have Substantive Benefits For The Enterprise…-
…-But Still Need Active Supervision To Ensure Success
–
The “-wisdom of crowds”- is capturing the attention of corporate strategists across the globe, and, as a result, many are now looking to prediction markets — speculative markets in which traders collectively predict future events — to generate collective intelligence. For enterprises, prediction markets bring unique value: They focus on the future, aggregate diverse information pools that can be applied to multiple decision-making domains, create streams of actionable data suitable for executive decision-making, and can often cut through corporate politics and pressures at lower cost than traditional forecasting methods. Market researchers will, however, need to have an active hand in the management of these mechanisms, ensuring strong management support, the right incentives for traders, and a focus on appropriate questions. When executed properly, the value to the enterprise is enormous- as a result, Forrester believes that prediction markets will ultimately find a permanent home in the market research toolbox.
–
Andreas Graefe,
Please, index the BusinessWeek news article (see the page #2, too) on your IIF webpage.
–
I believe it’-s an Earth-shattering piece featuring major thinkers of the field of prediction markets, who were interviewed by that bright journalist —-smart enough to sense who are the truly important prediction market experts who count nowadays.
–
And if you need an alternative title:
BusinessWeek: The most famous and forward-thinking experts in the field of prediction markets talk about the future regulations of event derivative exchanges in the United States of America. – (page #2) – (print page)
–
–
BetFair:
Improvements to Betfair’s bet matching logic today, Monday 14th July:
What’s changing?
We’ve improved the code that matches bets. As well as matching backs against lays as we’ve always done, we’ll also try to match your bet against bets on other selections in the market. We‘ll give you an improvement over the price you‘ve requested where possible, and we‘ll match you against whichever bets get you the best price.
For example in a tennis market:
Roger Federer is 1.9 to back, 2.1 to lay.
Rafael Nadal is 1.8 to back, 2.0 to lay.
If you try to back Federer at 1.9 or less, previously we would have matched your bet against the customer looking to lay Federer at 1.9. Both bets would have been matched at 1.9, even if you‘d asked for a shorter price. In theory we could do even better than that though: we could match you against the customer trying to back Nadal at 2.0 (backing one player at 2.0 is of course the same as laying the other player at 2.0). Our new bet matching process will see which match gets you the better price. In this case we would get you 2.0 by matching you against the Nadal backer (who is offering a better price than the layer of Federer).
When placing a new bet you will only ever be matched by the new process if doing so gives you a better price than you would otherwise have got. We will match your bet at the best price possible that’s a valid increment on Betfair’s odds ladder, as we explained in our update of 6th June.
Does this only work for 2-runner markets like tennis?
No. The new matching logic works for any number of runners in a market. An example with a 2-runner market is probably easiest to understand, but the principle is the same for markets with 3 runners or more. For example if a football market looked like this:
Spain 2.3 to back, 2.5 to lay
Germany 3.9 to back, 4.0 to lay
The Draw 2.9 to back, 3.0 to lay
Then if you want to back Spain we could match you with customers looking to back Germany and the Draw at 4.0 and 3.0 respectively, which would result in you being matched at 2.4, a better price than you would have got had we matched you against Spain layers (who are only offering 2.3).
Which markets will this affect?
We’ll introduce the new code on Monday 14th July, but initially matching will be done exactly as before. As explained earlier in the year, introducing best execution across selections wasn’t possible without significant change to the existing code that matches backs and lays, so we will need verify that performance is as expected for the existing matching process before enabling the new functionality. All being well we’ll enable the new code for a small number of markets to ensure that everything is as it should be later on Monday. We’ll announce which markets on Monday. Again if all is well we’ll roll out to a wider range of markets on Tuesday.
We’d expect to match across selections on the same range of markets as we currently do:
Match Odds in Basketball, Boxing, Cricket, Ice Hockey, Rugby League, Rugby Union, Snooker, Tennis and Volleyball, Greyhounds win markets, Darts match odds, correct score and handicaps and Soccer match odds, HT/FT, correct score and unders/overs.
Horse racing will not be covered for now, due to the possibility of non-runners, and the new process isn’t applicable to markets where runners can be added (for example “Next manager” markets), where runners listed might not take part (e.g. First Goalscorer) or where the runners in a particular “market” are treated independently (e.g. Accumulators).
What about bets placed in error?
We’re aware of a concern that this change might make it more likely that customers would match bets placed in error, for example asking for 1.2 when you really wanted to back at 2.2. One consequence of the change we’re making is that any bet you place is more likely to get matched – making it easier to get a match is the whole idea. Being realistic though, if you had placed a bet in error like that in the past, in the vast majority of cases you would have been matched (against lays on that selection). There’ll now be far, far more circumstances where you would have been matched anyway , but instead you’ll now get a better price, than situations where your bet would have been unmatched and you might have had the chance to cancel. On average we would expect customers who place bets in error to be better off as a result.
On a related point, we’d also expect this change to make it more difficult for people who place “trap bets” to get matched (a trap bet is an offer that is only likely to be matched if another customer places a bet in error). While putting up “trap bets” is against Betfair’s terms and conditions and we close the accounts of persistent offenders, on an exchange where any customer can ask for any price it’s difficult to eradicate this practice. In most instances where a trap bet is the best price available on a selection, customers will in future be matched at better prices against bets on other selections rather than matching the trap bet.
How will the change affect liquidity?
We would expect the change to be beneficial to liquidity. Obviously if we have opposing customer bets in the system that could be matched, whether on the same selection or across different selections, the best thing for liquidity is to match them.
–
Further to the above, we’ll be enabling the improved matching on the following markets later today.
Football:
Czech Republic U19 vs. England U19
FC Inter vs. MyPa
Tennis:
Andujar vs. Hanescu
Minar vs. Rochus
Greyhounds:
11:28 Sheffield
11:48 Oxford
…- that one is for U.
–
Lewis Sheperd (the Chief Technology Officer of Microsoft’s Institute for Advanced Technology in Governments):
Indeed, it appears to me that [prediction markets] are growing not from corporate or government use, but mostly organically from within academia, stock-futures circles and political-junkie communities. I’-m reading the interesting variety of writers and prediction-marketeers at Midas Oracle, which brings together widely ranging posts from faculty members at Harvard and other universities, daytraders, and even a few “amateurs.”
–
Lewis Sheperd notes in his post that a number of for-profit companies (like Google and General Electric) are using private prediction markets (a.k.a. enterprise prediction markets). Non-for-profit organizations (like governmental agencies) would do great, too, using the same forecasting tool —-an “-information aggregation mechanism”- (IAM), more exactly.
Robin Hanson, instead of boring us with philosophy, go evangelizing that newbie.
–
UPDATE: Yes, he is willing to learn. 
See his comment.
–
How could that “-exemption”- guy have climbed to the top of Memeorandum even though there are no blogs listed that have discussed that WSJ piece?
–
Previous blog posts by Chris F. Masse:
Previous blog posts by Chris F. Masse:
…- wrote that academic guy in the Wall Street Journal. But he doesn’-t mention that HedgeStreet and the Chicago Mercantile Exchange (and the CBOT) are all for the “-excluded commodities”- and the “-Designated Contract Makers”- way.
–
Honesty and fairness, when writing in a prestigious publication, would dictate that you mention your opponents’- opinions.
Academia = Ivory Tower.
–
Will the Wall Street Journal give the same airtime to HedgeStreet and the CME Group?
–
Previous blog posts by Chris F. Masse:
