The 6 little things David Pennock didnt tell you about the Prediction Market Institute

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– #1. – It is not such a great idea to call it a &#8220-prediction market institute&#8221-, for the reasons that it excludes the non-market mechanisms and the other collective intelligence mechanisms. (See Daniel&#8217-s comment on the Pennock blog, here.) That said, it should focus on prediction markets &#8212-do you feel the nuance, doc?

– #2. – It shall not be a pure academic endeavor. It shall be a mix between academics, exchange operators, and other participants in the field of prediction markets. The term &#8220-applied research&#8221- conveys it. It is &#8220-applied&#8221- in the sense that it is not research eggheads bottling up in yet another Ivory Tower. The outputs of this PMI should be useful for the prediction exchanges and the software vendors.

– #3. – One of the purpose of regrouping the prediction market forces into a grand consortium would be to seek external alliances with some foundations, think tanks or educational organizations that might share our ideology &#8212-yes, I said &#8220-ideology&#8221-.

– #4. – It is not such a great idea to set up our own organization from scratch. It is more pragmatic to seek out the creation of a &#8220-unit&#8221- or &#8220-department&#8221- within an already existed organization that has a larger purpose than ours &#8212-for instance, one focused on &#8220-derivatives&#8221-, &#8220-wisdom of crowds&#8221-, &#8220-digital business&#8221-, &#8220-knowledge management&#8221-, &#8220-forecasting&#8221-, or whatever meta keyword you can think of and that encompasses the prediction markets and their cousin mechanisms.

– #5. – It shall have a clear strategy, game plan, and way to assess the results.

– #6. – It shall have David Pennock on top. That guy is our common denominator. He is our most sociable element. He never slammed anyone. (The only time he went on being bombastic is when, being a boy, he told his mother, &#8220-I don&#8217-t like broccolis, they taste like fractals.&#8221-)

The HHS-Sebelius prediction market might be (yet) another case-in-point for documenting velocity.

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It is only today (February 19) that the New York Times emerges out of hibernation and headlines:

Kansas Governor Seen as Top Choice in Health Post. &#8212- Gov. Kathleen Sebelius is emerging as President Obama’s top choice for secretary of health and human services.

Now, look at the red line in the HubDub chart below: the prediction markets nailed her since the beginning of February 2009.

Of course, a scientific comparison would have scrutinized more closely than I did all the news articles from the New York Times (and from other mass media). That&#8217-s what we are going to do with the &#8220-Open Institute Of Prediction Markets&#8220-. To this end, I will set up a portable and distributed &#8220-Prediction Markets Consortium&#8221- in the coming days. Then, I will try to anchor it in an institution of higher education, and, after that, I will try to gather support from think tanks and foundations. Not an easy task, but I know now that I can count on many prediction market people and companies. It should be an industry endeavor &#8212-and it should deliver results, in the end (demonstrating the social utility of the prediction markets by documenting velocity, and, from there, following a logical thread which I will talk you about later on).

PS: About velocity&#8230- Remember that we are about the prediction markets versus the mass media (The New York Times, The Times of London, NBC News, BBC News, etc.) &#8212-as opposed to the vertical media (, Nate Silver&#8217-s blog,, etc.). The distinction is very important to keep in mind.

UPDATE: The only stuff I can find about Sebelius for HHS is that February 9 piece from the Associated Press (which didn&#8217-t get a mass audience since it was not-republished in the New York Times or other mass media), saying that she was &#8220-near the top&#8221- for the job. Well, &#8220-near the top&#8221- is not like saying she was &#8220-on top&#8221-.

UPDATE #2: The Sebelius story is picking steam in the mass media. See Nate Silver&#8217-s take.

ADDENDUM: Andrew Gelman tells me that he thinks that &#8220-the Associated Press is a mass medium. It is a cooperative organized by a bunch of newspapers.&#8221- I think that the AP news articles do indeed reach a big audience when they are re-published or cited in the mass media. But in the Sebelius case above, it was not the case.

Previously: The truth about prediction markets

Who will be the next nominee of the HHS, now that Daschle has withdrawn from consideration?

No HHS contract on InTrade, BetFair or NewsFutures. :(