ABC 20/20 – A good (but servile) explainer on the wisdom of crowds and the prediction markets

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ABC 20/20 featuring InTrade – (May 9, 2008)

Foretelling The Future: Online Prediction Markets &#8212- (4 pages in all)

ABC video

YouTube video

  1. Not a single word about InTrade-TradeSports fucking up its traders during the North Korea Missile episode.
  2. Although James Surowiecki is a great thinker overall, I&#8217-m not happy he served InTrade&#8217-s past forecasting successes in absolute terms &#8212-and not in terms of probabilities. That shows James Surowiecki can&#8217-t be the ultimate leader of the field of prediction markets. Robin Hanson, Justin Wolfers, Koleman Strumpf, Eric Zitzewitz, or even Emile Servan-Schreiber, would have not made that mistake.
  3. All prediction markets are not created equal. Spot that they go too far, saying terrorism prediction markets or earthquake prediction markets could serve a societal purpose. That is complete bullshit. That is pure hype. As I said yesterday, an analyst should check whether a given prediction market is really able of aggregating important information. Just because John Delaney wants to create a betting market to get money doesn&#8217-t mean that that given prediction market will be able to give sound forecasts. Otherwise, we would have prediction markets about future lottery outcomes and we would make a fortune out of that. :-D
  4. Spot that they put the emphasis on the easy translation between the 0&#8211-100 prices and the 0&#8211-100 probabilities. That puts BetFair&#8217-s model (based on those damn digital/decimal odds) out of the picture.