Wrong Tomorrow Here today

No Gravatar

I have posted this just to show that it is possible to beat Mr Masse at his own game- namely uncovering prediction market related websites.

Wrong Tomorrow is a site hosted by the one and only Maciej Ceglowski – whoever the hell he may be. The site is riddled with flaws, but perhaps the good prediction market people could assist said gent by pointing them out.  And, accordingly, I have no doubt that the aforementioned Mr Masse will activate the following link forthwith.


Commenting on Midas Oracle

No Gravatar

1. Some members noticed problems when they logged in in the comment area (at the bottom of a post). I have tested yesterday, and this problem seems gone. Let me know, otherwise. UPDATE: Oops, the problem remains. [Might be a cache problem.]

2. I have installed a new login area, on the top of the right-side sidebar. [It’s hand made, this time. The previous login area was generated by a plugin, which I have now deleted. I need to cut down on the use of plugins, generally. I use 32 plugins, as of today. Still too much, probably. Down from 60.]

You can right-click on the login link so as to open the login webpage in another tab &#8212-and then you come back to your first tab. Alternatively, you can bookmark the login link, and use that bookmark to login &#8212-before loading the frontpage.


2. You have to know that Internet Explorer has conflicted with the WordPress administration internal webpages. Do prefer Mozilla FireFox. (Or Opera, or Safari, or Chrome.)

3. As for the bug that prevents Midas Oracle to show the embedded YouTube videos in the feed, it is not yet resolved &#8212-but an engineer from Automattic (WordPress) is looking into it. :-D

4. Do become a Midas Oracle member. Here is how to comment. Here is how to publish.

5. I am going to send soon an e-mail to all Midas Oracle members about my attempt at creating an &#8220-Open Institute Of Prediction Markets&#8220-. See you soon in your inbox. I&#8217-ll tell you everything you need to know.

The gamble of downplaying manipulation

No Gravatar

Whether it is GOP bias, manipulation, or simply confident well-funded traders, there is some agreement that the Intrade presidential markets have been affected by &#8220-non-informational&#8221- trading. To be clear, this is not a condemnation of Intrade. The exchange&#8217-s liquidity and trader diversity are hamstrung by archaic laws in the U.S., the continuation of which will frustrate a fair assessment of market accuracy. The point is that arguing for legal and regulatory change while downplaying the viability of manipulation and other market pathologies is counterproductive.

That prediction markets may be manipulated with some persistence should be no surprise to anyone who has followed the subject in the past couple of years. Here is a sampling of some of the warnings:

The HRC attack, part 2
The Giuliani manipulator buyer is back.
Manipulation can affect prices.
Is there manipulation in the Hillary Clinton Intrade market?
Is there manipulation in the Hillary Clinton Intrade market? Redux
Measured Enthusiasm For Prediction Markets

We now even find some academic papers that admit that manipulative trading may be profitable given certain assumptions. It is up to readers to decide which papers contain the most &#8220-stylized&#8221- assumptions.

No-one argues whether, in the long run, in general, manipulation is a losing proposition that subsidizes other traders — but is it really prudent to deploy that message, in comments to CFTC for example?

First, if Obama wins the election, based on the other available markets and poll projections, it would seem that an error had been introduced into the largest and most widely-cited of prediction markets. When comparing market and poll accuracy over time we are usually talking about only a few percentage points difference, so this error isn&#8217-t trivial. Furthermore this is a market that takes place only once every four years, so long-run arguments ring a little false. There&#8217-s no reason why something similar couldn&#8217-t happen in 2012. At least, one is optimistic that the regulatory situation will improve and Intrade&#8217-s traders will be more numerous and less capital-constrained at that time, which should make manipulation more difficult on average. Those who downplay the dangers of manipulation risk such goals by sacrificing their general credibility. It&#8217-s a negative skew proposition.

Second, some markets can irreversibly affect the outcome they predict. This happens infrequently and requires some fundamental basis, but specific cases can spectacularly undermine a general argument. This is the old bit about trying to cross a river that&#8217-s three feet deep on average. An example we&#8217-ve seen recently: when a business is predicated on maintaining a deposit base or borrowing short-term at certain rates, manipulation might be irreversible if it targets confidence or attacks the business&#8217-s funding costs. In essence, the manipulator forces the (possibly quite liquid) market to &#8220-settle&#8221- as the firm approaches insolvency, and prices do not snap back. Breaking a currency peg has a similar dynamic. Now, there is currently no real analog to these situations in prediction markets as such, but either these markets will continue to be relatively small and not widely-followed, or &#8230-.

Kenneth Arrow and Intrade CEO John Delaney are making the right arguments here: transparency in the form of more public markets, along with less concentrated risk, would have helped avoid this crisis. But don&#8217-t try to sweep uncomfortable subjects under the rug. That won&#8217-t end well.

[ Orginally posted to Risk Markets and Politics on Wednesday, 10/15 ]

The Dumb Agents page on prediction markets

No GravatarGood idea, but they should put the most liquid prediction markets (InTrade, for North-America issues) ahead of the others &#8212-and they should publish BetFair&#8217-s charts, too.

See Midas Oracle&#8217-s page on prediction markets.

Read the previous blog posts by Chris F. Masse:

  • Jason Ruspini was an imprudent and cocky predictor, but, in the end, he is a honest man.
  • Polls Vs. Prediction Markets
  • Prediction exchanges let traders buy and sell contracts on the likelihood of future events. Contracts are structured so the prices can be read as a percent likelihood of an event occurring.
  • What Jed Christiansen did say about Predictify
  • Russell Andersson, Chief Operating Officer: Third Ave Beach
  • Based on the analysis of some 600,000 official Iraqi documents seized by US forces after the invasion and thousands of hours of interrogations of former officials in Saddam’s government now in US custody, there is no evidence Saddam Hussein had ties to Al Qaeda.
  • Robin Hanson is breaking the Internet.

BLEG: Maine data

No GravatarHas somebody saved the InTrade expired charts for Maine, on the Republican side, some time ago? Desperately seeking. Contact me. Thanks a lot.

Read the previous blog posts by Chris F. Masse:

  • Ratted by his bank, sex-addict New York governor Eliot Spitzer (alias “Client 9”) resigns.
  • BBC’s coverage of politics is dull like taxes, death and German sausages.
  • Never talk when you can nod, and never nod when you can wink, and never write an e-mail because it’s death. You’re giving prosecutors all the evidence we need.
  • Is Justin Wolfers a libertarian? Probably not.
  • The information technology that caught Eliot Spitzer
  • Eric Zitzewitz’s 10 minutes of fame
  • Fun with conditional probabilities

2nd annual Tech Policy Summit

No Gravatar2nd annual Tech Policy Summit – @ Hollywood, California, U.S.A. – 2008-03-26~28

Inkling Markets is a silver sponsor&#8230- if you can believe it.

Read the previous blog posts by Chris F. Masse:

  • Ratted by his bank, sex-addict New York governor Eliot Spitzer (alias “Client 9”) resigns.
  • BBC’s coverage of politics is dull like taxes, death and German sausages.
  • Never talk when you can nod, and never nod when you can wink, and never write an e-mail because it’s death. You’re giving prosecutors all the evidence we need.
  • Is Justin Wolfers a libertarian? Probably not.
  • The information technology that caught Eliot Spitzer
  • Eric Zitzewitz’s 10 minutes of fame
  • Fun with conditional probabilities

Donald Luskin outputs a bad explainer on prediction markets.

No Gravatar

Firstly, I&#8217-d like to say that I respect Donald Luskin as a Wall Street professional and as a libertarian blogger. But I think that his explainer is too simplistic.

Not a single word on the concept of probabilistic prediction:

The financial incentive to get it right, and the ability to draw on bettors from around the world &#8212- anyone who might have any information on whatever proposition is being bet on &#8212- is what gives these markets their uncanny predictive power.

Mixing prediction markets (a reality) with decision markets (a utopia):

Economics professor Robin Hanson, who has studied prediction markets extensively, told me he envisions a &#8220-futarchy&#8221- &#8212- government by futures contracts traded in a prediction market.

Claiming that these information aggregation mechanisms (the prediction markets) will supplant the advanced indicators which they feed on:

Today prediction markets are threatening to replace political polling &#8212- they&#8217-re certainly doing a better job. Tomorrow, who knows? Prediction markets might replace politics itself.

My readers will prefer the Midas Oracle explainer on prediction markets.

Getting from Collective Intelligence to Collective Action

No Gravatar

I really enjoyed attending the Collective Intelligence FOO Camp, sponsored by Google and O&#8217-Reilly Media, last weekend. I&#8217-d been expecting a sort of geek slumber party, and had looked forward to rolling out my awesome Darth Vader impersonation. I was all set to cut loose with a growling, &#8220-I&#8217-m your father, Luke.&#8221- It didn&#8217-t quite come to that, but I still had a blast, meeting lots of smart, informed, articulate, creative, and successful people. Friendly people, too.

I described how to establish the legality of real money, open-access prediction markets under U.S. law. I called my presentation, Getting from Collective Intelligence to Collective Action [PPT file]. In very brief, I proposed this algorithm:

  1. Set up an enterprise prediction market, make playing it a condition of continued employment, and offer valuable prizes to the best predictors.
  2. Set up a limited access prediction market, hire a number of independent contractors researchers to play it, pay them a relatively low salary for doing so, and offer valuable prizes to the best predictors.
  3. Set up an open-access prediction market but require anyone playing it to go through a click-wrap license that creates the sort of independent researcher relationship described at step 2, above.

When and if standing for declaratory judgment obtains, a litigation team should bring suit seeking to establish the legality of the prediction market under U.S. law. The market should be run by a worthy institution and deal only in claims likely to generate large positive externalities. Google.org, for example, might set up a market in earthquake claims and ask for a court&#8217-s blessing.

That strategy would stand a fair chance&#8211-a 75% chance, I&#8217-d say&#8211-of establishing the legality of a great many in-house and (effectively) public prediction markets under U.S. law. The strategy would not impose great costs or risks, though it would take some careful planning and execution, and would almost certainly generate large private and public goods. It might even save lives- we could really use a reliable early-warning system for major earthquakes.

This legalization program would most directly benefit subsidized markets- it would not plainly establish the legality of markets where traders could invest their own funds or hedge against off-market risks. I&#8217-m still working out a legal hack for that step. It will be an easier step to take, however, if we&#8217-ve already made it as far as establishing the legality of open-access, real money prediction markets under U.S. law.

We should still pursue other routes to establishing the legality of prediction markets under U.S. law, of course. It already helps that so many U.S. residents evidently make and lose money on Ireland-based InTrade. That at least goes to show that prediction markets hurt nobody. Getting the CFTC to issue safe-harbor regulations would help, too. All of those routes to public, real money prediction markets in the U.S. merit exploration. Any of them might offer a shortcut to a better, freer future.

[Posted at Agoraphilia, The Technology Liberation Front, and Midas Oracle.]