Prediction market expert Robin Hanson is so right, once again.

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No GravatarRobin Hanson about his concept of decision markets:

[&#8230-] A novel approach to policy deserves more attention, including sympathetic discussions, when there is a positive expected payoff from further explorations of it. Such explorations can include math models, lab experiments, and field experiments. A positive payoff comes if such explorations can refine the approach into useful fielded implementations, while a negative payoff comes from wasted effort and harmful implementations. If the cost of experimenting is low and the final positive payoff could be very high, a novel policy approach can be worth exploring even with a very low probability of success.

As I wrote many times here, Robin Hanson&#8217-s concept will have applications if you view it as &#8216-decision-aid markets&#8216- (where conditional prediction markets are used to assess scenarios) &#8212-not &#8216-decision markets&#8217- (where the machine would decide for us).

All this conditional ( :) ) that Robin Hanson can interest people into trading on his complex prediction markets&#8230- That&#8217-s the biggest challenge.

Read the previous blog posts by Chris F. Masse:

  • Terrorism Futures
  • InTrade-TradeSports and BetFair-TradeFair should take a close look at Cantor Fitzgerald’s strategy to gain a share of the $100 billion U.S. gambling industry.
  • The secrecy-seeking Mark Davies is solely to blame for all this mess… but this vibrating BetFair spin doctor has managed to repair the PR damages quite brillantly, it shall be said.
  • A Betting Exchange = A Bookmaker —> !??
  • BetFair’s new bet matching logic + BetFair Malta’s trading on the multiples
  • Dick Cheney, the new Churchill?
  • BetFair Malta’s combo market maker (trading algorithm + human market makers) operating on the multiples

Freakonomics listens to Chris Masse.

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No GravatarFollowing our Freakonomics blogroll suggestion, NewsFutures has been added. And they are plugging PopSci PPX on their frontpage, this Saturday.

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NewsFutures on the Freakonomics blogroll

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PPX at Freakonomics

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Happy Face

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Freakonomics: A Rogue Economist Explores the Hidden Side of Everything

Read the previous blog posts by Chris F. Masse:

  • Terrorism Futures
  • InTrade-TradeSports and BetFair-TradeFair should take a close look at Cantor Fitzgerald’s strategy to gain a share of the $100 billion U.S. gambling industry.
  • The secrecy-seeking Mark Davies is solely to blame for all this mess… but this vibrating BetFair spin doctor has managed to repair the PR damages quite brillantly, it shall be said.
  • A Betting Exchange = A Bookmaker —> !??
  • BetFair’s new bet matching logic + BetFair Malta’s trading on the multiples
  • Dick Cheney, the new Churchill?
  • BetFair Malta’s combo market maker (trading algorithm + human market makers) operating on the multiples

CORRUPTION IN TENNIS: Nikolay Davydenko claims that he is innocent.

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No GravatarDid we suspect an innocent??

Bet scandal worries Davydenko

RUSSIAN Nikolay Davydenko is worried his reputation will suffer after becoming embroiled in a betting controversy. Davydenko retired with a foot injury in the third set of his match with Argentine Martin Vasallo Arguello at the ATP event in Sopot, Poland, last week, only to find the match was at the centre of a betting scandal. &#8220-It&#8217-s so surprising,&#8221- Davydenko said in Montreal, where he is competing in the Masters Series tournament. &#8220-Like, who can know that I can be injured and (would) retire in my match? &#8220-I am disappointed, because I&#8217-m a top player and people are talking (about it) not only in Russia, in my country, (but) also talking everywhere in the world. &#8220-It is pretty tough for me, I get more pressure now. Mentally, it&#8217-s pretty tough.&#8221- British betting exchange Betfair voided all bets on the match, saying $8.55 million had been placed on it, more than twice the usual amount. Though world No. 5 Davydenko won the first set, Vasallo Arguello &#8212- ranked about 80 places lower &#8212- became the favourite, the opposite of normal practice in such a situation. Betfair voided all bets and notified the governing body of men&#8217-s tennis, the ATP. Davydenko said he was not in contact with anyone regarding the throwing of a match. &#8220-I play 30 tournaments in a year,&#8221- he said. &#8220-Last year I lost 10 tournaments in the first round and also sometimes I&#8217-m injured and I retire from a match.&#8221-
– Reuters

Previous: CORRUPTION IN TENNIS: the Nikolay Davydenko vs. Vassallo Arguello prediction markets at BetFair

More info from The Guardian

NEXT: BetFair has an anti-fraud team whereas InTrade-TradeSports has none.

Read the previous blog posts by Chris F. Masse:

  • Terrorism Futures
  • InTrade-TradeSports and BetFair-TradeFair should take a close look at Cantor Fitzgerald’s strategy to gain a share of the $100 billion U.S. gambling industry.
  • The secrecy-seeking Mark Davies is solely to blame for all this mess… but this vibrating BetFair spin doctor has managed to repair the PR damages quite brillantly, it shall be said.
  • A Betting Exchange = A Bookmaker —> !??
  • BetFair’s new bet matching logic + BetFair Malta’s trading on the multiples
  • Dick Cheney, the new Churchill?
  • BetFair Malta’s combo market maker (trading algorithm + human market makers) operating on the multiples

VIDEO: InTrade CEO John Delaney is interviewed by the naive or misinformed or misinforming Larry Kudlaw of CNBC.

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VIDEO: InTrade CEO John Delaney interviewed by CNBC Larry Kudlaw

The sound output is feeble. I can barely hear them. They should put it on YouTube.

At the end of the segment, Larry Kudlaw asks John Delaney to give him a call the day he is in New York. Larry Kudlaw does not seem to know that John Delaney will not come in New York any time soon, because there is a chance that he gets arrested once his plane touches the US soil.

Are the CNBC viewers aware that the InTrade prediction markets are illegal in America?

What is a network externality?

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No GravatarKeyword Of The Day: NETWORK EXTERNALITIES

Network externality has been defined as a change in the benefit, or surplus, that an agent derives from a good when the number of other agents consuming the same kind of good changes.

Previous blog posts by Chris F. Masse:

  • Collective Error = Average Individual Error – Prediction Diversity
  • When gambling meets Wall Street — Proposal for a brand-new kind of finance-based lottery
  • The definitive proof that it’s presently impossible to practice prediction market journalism with BetFair.
  • The Absence of Teams In Production of Blog Journalism
  • Publish a comment on the BetFair forum, get arrested.
  • If I had to guess, I would say about 50 percent of the “name pros” you see on television on a regular basis have a negative net worth. Frightening, I know.
  • You can’t measure the usefulness of a system by how many resources it consumes.

U.S. Prediction Markets May Want to Review Court Decision in NYMEX v. Intercontinental Exchange.

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Robin Hanson, in the eyeforpharma podcast linked here earlier, mentions three benefits of prediction markets: they can provide accurate estimates of event probabilities, they provide numerically precise estimates, and they provide continuously updated estimates. While some caveats would emerge in a longer discussion, a well-designed prediction market can provide an accurate, numerically precise, characterization of the current expectation about the underlying event.

Question: If you run a prediction market, who owns the right to use your market output?

Prediction markets in the United States may want to consider a recent court decision in a copyright case, that, depending upon the prediction market’s business model, may impinge on its exclusive use of public prices or other market data produced by its systems. Be warned that I am not a lawyer – I don’t even play one on TV. I’ve just read the court decision, and now I’m sort of ‘thinking out loud’ about what it might mean.

In New York Mercantile Exchange v. IntercontinentalExchange, the New York Mercantile Exchange (NYMEX) sought to enforce a copyright in NYMEX oil and gas settlement prices against the IntercontinentalExchange (ICE). ICE uses NYMEX’s daily settlement prices to clear ICE’s customers’ trades. NYMEX alleged that ICE’s use of NYMEX prices infringes upon NYMEX’s copyright. So far, courts have sided with ICE.

I discuss the reasoning a bit in a long post available at Knowledge Problem: “What is a Price?” The decision itself is available online from the Second District of the U.S. Court of Appeals. I won’t repeat all of my KP discussion here, but rather get right to what I think might be of interest to the prediction market community.

The court ruled against NYMEX’s copyright claim, arguing that NYMEX’s settlement prices could not be disentangled from the idea of the prices.

The court explained that NYMEX’s prices couldn’t be disentangled from the idea of the prices, because (1) prices will be expressed as a number, (2) only a small range of numbers would adequately reflect the underlying market conditions. “Because any settlement price for a particular futures contract would be determined based on the same underlying market facts, any dissension would be exceptionally narrow,” said the court. In such a case, the court concluded, granting a copyright would frustrate access to anyone else who sought to express the same idea.

Because ideas cannot be copyrighted, the court said NYMEX cannot be granted a copyright in its prices.

I don’t think this has any implications for internal company prediction markets, the results of which are probably protected as trade secrets rather than by copyright. But if a prediction market’s business model relies upon a copyright claim in the market’s prices or other market data, such business model may be threatened by the court’s decision in NYMEX v. ICE.

CORRUPTION IN TENNIS: the Nikolay Davydenko vs. Vassallo Arguello prediction markets at BetFair

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No GravatarAs Midas Oracle has reported, BetFair decided to void all bets because its 40-person anti-corruption team detected foul speculation:

  • The volume was ten times higher than the normal-
  • The clear favorite (Nikolay Davydenko) was short-sold en masse one hour before the start of the tennis match-
  • Nikolay Davydenko (who won the first set, but lost the second set) declared an injury in the third set and resigned from the game.

Nikolay Davydenko

Czarek Sokolowski / AP

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The Numbers Guy (who blogs for the Wall Street Journal) has interviewed the BetFair manager responsible of the anti-corruption team at BetFair, and tries hard to come up with explanations for the foul betting. He can&#8217-t.

[&#8230-] To verify, tape of the match would have to be reviewed to see if Mr. Davydenko’s injury was apparent. Mr. Marks told me that a Betfair employee watching the match saw no evidence of injury until a trainer visited Mr. Davydenko in the second round. [&#8230-]

It looks like Nikolay Davydenko, before the match, had alerted some accomplices that he would resign in the third set. Those accomplices would have short-sold him at BetFair. But it&#8217-s of course impossible to accuse a professional tennis athlete of foul play without strong evidence.

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UPDATE

Did we suspect an innocent??

Bet scandal worries Davydenko

RUSSIAN Nikolay Davydenko is worried his reputation will suffer after becoming embroiled in a betting controversy. Davydenko retired with a foot injury in the third set of his match with Argentine Martin Vasallo Arguello at the ATP event in Sopot, Poland, last week, only to find the match was at the centre of a betting scandal. &#8220-It&#8217-s so surprising,&#8221- Davydenko said in Montreal, where he is competing in the Masters Series tournament. &#8220-Like, who can know that I can be injured and (would) retire in my match? &#8220-I am disappointed, because I&#8217-m a top player and people are talking (about it) not only in Russia, in my country, (but) also talking everywhere in the world. &#8220-It is pretty tough for me, I get more pressure now. Mentally, it&#8217-s pretty tough.&#8221- British betting exchange Betfair voided all bets on the match, saying $8.55 million had been placed on it, more than twice the usual amount. Though world No. 5 Davydenko won the first set, Vasallo Arguello &#8212- ranked about 80 places lower &#8212- became the favourite, the opposite of normal practice in such a situation. Betfair voided all bets and notified the governing body of men&#8217-s tennis, the ATP. Davydenko said he was not in contact with anyone regarding the throwing of a match. &#8220-I play 30 tournaments in a year,&#8221- he said. &#8220-Last year I lost 10 tournaments in the first round and also sometimes I&#8217-m injured and I retire from a match.&#8221-
– Reuters

NEXT: BetFair has an anti-fraud team whereas InTrade-TradeSports has none.

Read the previous blog posts by Chris F. Masse:

  • A climate scientist takes a close look at InTrade’s global warming prediction markets…
  • Terrorism Futures
  • The secrecy-seeking Mark Davies is solely to blame for all this mess… but this vibrating BetFair spin doctor has managed to repair the PR damages quite brillantly, it shall be said.
  • A Betting Exchange = A Bookmaker —> !??
  • BetFair’s new bet matching logic + BetFair Malta’s trading on the multiples
  • Dick Cheney, the new Churchill?
  • BetFair Malta’s combo market maker (trading algorithm + human market makers) operating on the multiples

SPORTS CORRUPTION: The dark side of the prediction markets

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No GravatarBetFair:

Market Suspended – Martin Arguello v Nikolay Davydenko

Betfair Customer Services 02 Aug 18:45
Betfair has suspended settlement of the betting markets on this afternoon’s second round match of the ATP Orange Prokom Open in Poland between Martin Arguello and Nikolay Davydenko, pending investigation and consultation with relevant regulatory authorities. Betfair has had a Memorandum of Understanding with the ATP since 2003, and will use it to exchange information should it become necessary.

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All bets are void in Davydenko v Arguello match

Betfair Customer Services 03 Aug 11:46
Following consultation with the men’s professional tennis tour, the ATP, Betfair has decided to void all bets [*] placed on Thursday’s 2nd round match between Nikolay Davydenko and Martin Vassallo Arguello at the Orange Prokom Open. Betfair suspended settlement of bets at the conclusion of the match yesterday because of concerns over irregular betting patterns. The company has taken this action in the interests of maintaining integrity and fairness in all our markets.

[*] First time in the history of BetFair.

Times – Telegraph

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BetFair (which is a regulated betting exchange) has signed agreements with over 25 sports bodies and has an internal team looking for foul betting. TradeSports-InTrade (which is an unregulated betting exchange) has none. Thus, it is quite possible that some sports prediction markets at TradeSports are rigged. You will notice that nobody in America asks this tough question. (All US-based prediction market conferences being sponsored by InTrade-TradeSports, and all the US-based researchers being depend on InTrade-TradeSports data, no wonder.)

Midas Oracle and CFM are the only publications that tell you the whole truth about the prediction markets:

  • the good side,
  • and the dark side.

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ADDENDUM: The BetFair people do not send anonymous insults sent from fake e-mail accounts. They are professional and ethical people.

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Previous: BETFAIR DOES FIGHT VIGOROUSLY ANY ATTEMPTS AT MONEY LAUDERING. + BetFair on Responsible Gambling

NEXT: BetFair has an anti-fraud team whereas InTrade-TradeSports has none.

Read the previous blog posts by Chris F. Masse:

  • Terrorism Futures
  • InTrade-TradeSports and BetFair-TradeFair should take a close look at Cantor Fitzgerald’s strategy to gain a share of the $100 billion U.S. gambling industry.
  • The secrecy-seeking Mark Davies is solely to blame for all this mess… but this vibrating BetFair spin doctor has managed to repair the PR damages quite brillantly, it shall be said.
  • A Betting Exchange = A Bookmaker —> !??
  • BetFair’s new bet matching logic + BetFair Malta’s trading on the multiples
  • Dick Cheney, the new Churchill?
  • BetFair Malta’s combo market maker (trading algorithm + human market makers) operating on the multiples

Get your prediction market fix from Midas Oracle -daily.

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No GravatarBee

by aussiegall

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

Is your firm among the early adopters of internal prediction markets used as forecasting tool?

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No GravatarIs your boss a visionary? Or is he/she among the laggards?

Technology Adoption Life Cycle

Previous blog posts by Chris F. Masse:

  • If Midas Oracle were to meet, would we use Huddle, and why?
  • WORLD’S SUCH A SMALL PLACE: Smarkets meet HubDub.
  • 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.