Why collecting and synthesizing the dispersed available information?

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Sean Park (after a long, boring introduction to the subject):

[…] The ‘failure’ of New Hampshire was the result of primarily two factors:

  1. It wasn’t a failure. No market is always right. More importantly markets reflect the information available to and the interests of their participants. Basically markets are very efficient mechanisms (I would claim the most efficient) for processing information. No more, no less.
  2. In this particular instance, the probability of the market producing an erroneous forecast was high due to the lack of liquidity. This is a problem of all political markets in the US. Show me a market on the New Hampshire primaries with tens of thousands of participants and millions of dollars traded and I will show you a market that creates more valuable information. BUT it would still on occasion be ’surprised.’

Basically I guess what I’m trying to say is the expectations seem to be set all wrong by many inside the community. I think “prediction markets” – creating markets in information and outcomes is a wonderfully important and valuable thing to do. Equally however I think that anyone that represents such markets as being able to predict the future is a charlatan. What they can do is collect and synthesize powerfully and efficiently all the dispersed available information – using money as the relevance filter. This is very valuable in its own right and is defensible. Promoting prediction markets to true sceptics (ie mainstream American politicians) on the basis that they are a Delphic Oracle is surely a path to certain tears and ultimately is almost guaranteed to fail. [*]

Markets don’t compute unknown unknowns. That doesn’t mean they are useless, just that they have to be understood in context.

[*] How to promote the prediction markets, then? As information collecting tools? Who should use these tools, then? Experts or ignorants? Sean Park does not elaborate further. None of the questions I have asked are answered.

The answer to any anti-prediction market backlash is quality, impartial, exchange-independent, science-based, diligent, pro-PM blogging.

No GravatarIs John Delaney the greatest psychic of all times (past, present, and future)?

Deep Throat is very impressed by how accurate the InTrade-TradeSports CEO&#8217-s 2005 prediction turned out to be. According to Deep Throat, the great Irish oracle &#8220-accurately predicted back in early 2005 in a PM conference in NY that someday the markets will make a horribly wrong prediction and that the [prediction market] industry will take a lot of s**t for it.&#8221-


Deep Throat is easily impressed. What about the prediction below, then:

  • One of these days, a powerful hurricane will land in one of the southern states, and make billions of dollars in damage.

Vague and obvious predictions are of little help, here. An interesting thought to have, collectively, is how to prepare well in advance to counter such a backlash &#8212-as it is sure to happen again in the coming years. Due to the readers&#8217- new behavior (using the Web to get their info), the conversational aspect of the Web (comments, bloggers responding to their peers), and the velocity of the bloggers (tempests in tea cups spread over one or two days, and then the bloggers move on), the answer is quality, impartial, exchange-independent, science-based, diligent, pro-PM blogging.

You will note that InTrade-TradeSports, BetFair, NewsFutures, and the other PM firms, are completely absent from the dialogue between anti and pro PMs. The BetFair blog has not published anything about the New Hampshire fiasco, and the InTrade bulletin has only put in writing, on a post, the post-NH market-generated probabilities &#8212-without adding any bit of analysis. Totally pointless and useless corporate publications.

As for me, I have worked hard to put our group blog, Midas Oracle, on the blogging scene. I will further this endeavor and announce new initiatives in the future &#8212-if I am able to do so.

Previous blog posts by Chris F. Masse:

  • NUCLEAR SCANDAL: HubDub allow their traders to bet on celebrities’ death.
  • APRIL FOOL’S DAY: This year, again, CNET makes fun of the wisdom of crowds.
  • Play-money prediction exchange HubDub is a phenomenal success.
  • BetFair Australia’s spin doctor tells all about their payments to the horse race industry.
  • Meet Jeffrey Ma (at right on the photo), the ProTrade co-founder, and whose gambling life is the basis of the upcoming movie, 21.