Journalism Failures – Big Time

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– In February 2001, Fortune magazine named ENRON the &#8220-most innovative company&#8221-.

– In October 2007, Robin Hanson, on the Overcoming Bias blog, re-published the falsehood that James Surowiecki (and 3 other book authors in their respective book) made a mistake about Francis Galton in his book, The Wisdom Of Crowds.

– In January 2008, the &#8220-BetFair Prof&#8221- (Leighton Vaughan-Williams) claimed, on the BetFair blog, that the &#8220-betting markets&#8221- foresaw the Republican race in the Michigan primary.

– In January 2008, Risk magazine named SOCIETE GENERALE (recently busted by one of its traders, which lead to a loss of 7.2 billion dollars) the &#8220-equity derivatives house of the year&#8221-.

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TAKEAWAY: Either by complete incompetence or by lack of investigation means, journalism is not up to its lofty goal &#8212-telling the truth to people.

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Risk magazine

(Via Marc Andreessen.)

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Jerome Kerviel, soon to be named &#8220-person of the year&#8221- by Risk magazine? :-D

Jerome Kerviel

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Societe Generale Logo

Societe General Tower in Paris

Previous blog posts by Chris F. Masse:

  • A second look at HedgeStreet’s comment to the CFTC about “event markets”
  • Since YooPick opened their door, Midas Oracle has been getting, daily, 2 or 3 dozens referrals from FaceBook.
  • US presidential hopeful John McCain hates the Midas Oracle bloggers.
  • If you have tried to contact Chris Masse thru the Midas Oracle Contact Form, I’m terribly sorry to inform you that your message was not delivered to the recipient.
  • THE CFTC’s SECRET AGENDA —UNVEILED.
  • “Over a ten-year period commencing on January 1, 2008, and ending on December 31, 2017, the S & P 500 will outperform a portfolio of funds of hedge funds, when performance is measured on a basis net of fees, costs and expenses.”
  • Meet professor Thomas W. Malone (on the right), from the MIT’s Center for Collective Intelligence.

No blog reaction about Justin Wolfers prediction market piece in the WSJ.

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Yet.

That&#8217-s key to see whether his flavor of prediction market journalism (heavily based on a single technique called prediction market event study) can take off. As I said in yesterday&#8217-s blog post, even though his work is interesting, he is up against formidable competitors. Political analysts like Lawrence O&#8217-Donnell, Eleanor Clift, Mort Zuckerman, Pat Buchanan, Radley Blako, etc. &#8211-to name a few pundits (left and right)&#8211- produce riveting content. Can Justin Wolfers, as a political analyst using a prediction market analysis tool, break through this competitive pack? As of today, Justin Wolfers&#8217- journalistic work is artificially subsidized (so to speak), because the WSJ wants to launch and establish a play-money prediction sub-exchange. A step in the forward direction would be to see the big political blogs like InstaPundit or DailyKos stealing Justin Wolfers&#8217- method, and boosting their pageviews thanks to that. We will see. I&#8217-m not holding my breath.

The criteria that I would use to assess prediction market journalism are professional credibility, webpage popularity, the quantity and quality of the blog reactions, the amount of visitors sent to the discussed prediction market(s), and the number of journalists who ultimately embrace this method. See another criterion?

Read the previous blog posts by Chris. F. Masse:

  • Barack Obama’s victory in South Carolina won’t stop the Clintons.
  • eTech 2008 — Google’s enterprise prediction markets
  • Predictocracy = Market Mechanisms for Public and Private Decision Making
  • Prediction Market Management — Foresight Exchange vs. Inkling Markets & HubDub
  • Why you should launch your brand-new prediction exchange at a conference
  • Why Indian Software Outsourcing Companies are Outsourcing to China
  • Midas Oracle is the only popular, independent, exhaustive, multi-author, multi-exchange, Web-based resource on prediction markets.

Work for free for InTrade -and become famous (a little bit).

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InTrade embraces &#8216-crowd sourcing&#8217-:

Intrade is looking for New Market Ideas!

Friday, Jan 25, 2008

What uncertain event are you interested in trading? What uncertain event are you interested in getting predictive information on from the Intrade community? Please let us know by mailing [email protected].

By suggesting a new market* and agreeing to be cited you will be joining an impressive list of luminaries from Academia, Business, and Government.

Here is just a small sample of those who have previously suggested markets that Intrade has listed?

  • Robin Hanson (Prof.)
  • International Strategy &amp- Investment Group
  • Peter McCluskey
  • David Pennock (Dr.)
  • Mark Perry (Prof.)
  • Koleman Strumpf (Prof.)
  • Justin Wolfers (Prof.)
  • Eric Zitzewitz (Prof.)

Before we list any new market we [endeavor] to ensure the following:

  1. The market will be easily understood and capable of definitive settlement.
  2. Market is based on an event that is of significant economic, social, or public interest.
  3. Typically be defined as a yes or no (0-100) proposition.

Ensuring your suggestion complies with the above criteria [maximizes] the chance we will list your suggestion for free. In other circumstances we may still list your suggestion for a fee.

*A market that we list and had not previously listed or considered.

They should look in the direction of PopSci PPX for new ideas. [And they should look for a Merriam-Webster dictionary to write the North-American English correctly. I have corrected them two times.]

Yahoo! Research scientist David Pennock&#8217-s prediction market proposals for InTrade are great.

And what about a prediction market on whether North Korea will soon launch an intercontinental missile? :-D

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NEXT: I recommend that you read the comments on David Pennock&#8217-s post.

Read the previous blog posts by Chris. F. Masse:

  • Why you should launch your brand-new prediction exchange at a conference
  • Why Indian Software Outsourcing Companies are Outsourcing to China
  • Midas Oracle is the only popular, independent, exhaustive, multi-author, multi-exchange, Web-based resource on prediction markets.
  • Here’s an example of the total crap that the BetFair blog is publishing.
  • P(election) = P(nomination) * P(election conditional on nomination)
  • Journalism Failures — Big Time
  • South Carolina showdown: Barack Obama vs. Hillary Clinton

Business Overconfidence as seen thru Googles Enterprise Prediction Markets

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Bo Cowgill:

At OVERCOMING BIAS, Robin Hanson blogs about the overconfidence of CEOs, CFOs and software managers. Our paper also measured overconfidence in the workplace. We found that our marketplace was overconfident as a whole, although the market&#8217-s optimistic bias subsided as time passed. We also pointed out the particular overconfidence exhibited by new employees &#8212- but prediction markets can be used to measure overconfidence and other biases for any part of an organization. Note that our study was about overconfidence regarding their employers&#8217- prospects on a variety of fronts. In a future draft, we hope to measure overconfidence for by looking at how people bet in markets related to their day-to-day jobs. In Table 9 of our paper, you can see some other information about what parts of the company produced the biases (although admittedly not in the most readable format).

Here&#8217-s the table 9. Right-click on the thumbnail to open it in another of your browser tabs.

Table9

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Related Links:

Using Prediction Markets to Track Information Flows: Evidence From Google – (PDF file – PDF file) – by Bo Cowgill (Google economic analyst), Justin Wolfers (University of Pennsylvania) and Eric Zitzewitz (Dartmouth College)

Read the previous blog posts by Chris. F. Masse:

  • Why you should launch your brand-new prediction exchange at a conference
  • Why Indian Software Outsourcing Companies are Outsourcing to China
  • Midas Oracle is the only popular, independent, exhaustive, multi-author, multi-exchange, Web-based resource on prediction markets.
  • Here’s an example of the total crap that the BetFair blog is publishing.
  • P(election) = P(nomination) * P(election conditional on nomination)
  • Journalism Failures — Big Time
  • South Carolina showdown: Barack Obama vs. Hillary Clinton

Fundamentals of Prediction Markets: Probabilities, Prediction Timescale, and Absolute & Relative Accuracy

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Jed Christiansen outputs the best explainer on prediction markets I&#8217-ve seen in years. Go read it.

– Fundamentals of Prediction Markets
– Different types of Prediction Markets
– Problem #1 – Understanding Probabilities
– Problem #2 – Prediction timescale
– Problem #3 – Assessing accuracy
– Problem #4 – Compared to what?
– Summary – How have the political prediction markets really performed?

Search engine futures!

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Cross posted from Oddhead Blog.

I am happy to report that on my suggestion intrade has listed futures contracts for 2008 search engine market share.

Here is how they work:

A contract will expire according to the percentage share of internet searches conducted in the United States in 2008. For example, if 53.5% of searches conducted in the United States in 2008 are made using Google then the contract listed for Google will expire at 53.5&#8230-

&#8230-Expiry will be based on the United States search share rankings published by Nielson Online.

I think this could be a fascinating market because:

  • Search engine market share is very important to these major companies, with dramatic effects on their share prices.
  • Search engine market share is fluid, so far with Google growing inexorably. However, Microsoft has cash, determination, Internet Explorer, and the willingness to experiment. Ask.com has erasers, 3D, ad budgets, and The Algorithm. Yahoo!, second in market share, often tests equal or better than Google, and new features like Search Assist are impressive.
  • The media loves to write about it.
  • A major search company might use the market to hedge. Well, this seems far-fetched but you never know. Certainly, from an economic risk management standpoint it would seem to make a great deal of sense. (Here, as always on this blog, I speak on behalf of myself and not my company.)

Finally, I have to comment on how refreshingly easy the process was in working with intrade. They went from suggestion to implementation in a matter of days. It&#8217-s a shame that US-based companies are in contrast stuck in stultifying legal and regulatory mud.

What is a usable market?

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A usable market is: a market where you exert the least effort for the greatest understanding possible, that allows you to comfortably engage at the level (and in the role) you wish, results in your maximum possible satisfaction, and where your actions in the market feed back positively into the market.

You can jot down your thoughts on the Usable Markets blog&#8230-

No more anonymized trading data, please. State your source(s).

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I think that&#8217-s the takeaway from the BetFair blog fiasco.

My questions are still unanswered this morning. What data was used to concoct that dithyrambic write-up about the predictive power of the &#8220-betting markets&#8221- on the 2008 US primaries and caucuses (and in particular the Michigan race)? BetFair? If so, please, send me the expired charts. InTrade? Another source? A cocktail of sources? Please, cite everything, so we can check.

I will blog about this issue, every day, till it is resolved &#8212-one way or another. I&#8217-m resilient.

I&#8217-ll blog about this BetFair blog fiasco for the whole year of 2008, and more, &#8220-to infinity and beyond&#8221- (as said Buzz LightYear in Toy Story), if that&#8217-s what it takes to get answers from Hammersmith and Nottingham. Those folks are as voluble as yellow canaries, usually, when it comes to touting their wares. Cat got their tongue? What data did they use for their dithyrambic blog post? Is that so confidential?