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Chris F. Masse November 14th, 2008

- How Companies Are Using IT To Spot Innovative Ideas - (3 pages) - by Information Week’s David Greenfield - 2008-11-10

- An interview with InTrade’s Chad Rigetti and John Delaney - 2008-11-xx — Much smarter than the idiotic interview Chad Rigetti gave some time ago.

- Almost all final state polls were within the margin of error. Even the average of the national polls was spot on. - 2008-11-12

Tags: 2008 US presidential elections, Chad Rigetti, enterprise prediction markets, InTrade, John Delaney, links, news, polls, prediction markets, state polls

• Analysis (Data) - Prediction Accuracy (Absolute / Relative) & Prediction Precision , Analysis (Meta) , Business Cases & Case Studies , Consulting , Exchanges & Markets , Forecasting
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Chris F. Masse November 6th, 2008

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InTrade CEO John Delaney:

Our #1 untapped resource is the vast collective intellect that we have only started to use. Harnessing the “wisdom of the crowd” has a very big potential role in improving all of our lives. If we do it, we all have a voice and will feel part of the solution as well as the problem. We can solve some wicked problems, like climate, resource, growth, social, and economic challenges. In simple terms, there exists between us the best information on how we solve our key challenges. If our leader’s embrace and permission new systems like prediction markets to operate in a transparent prudent way I am convinced that we can contribute in no small part to the solution.

Recall, that US Department of Defence believed a prediction market could provide valuable information on growth, risks and social issues. Hundreds of academics, dozens of Fortune 500 companies, and millions of people believe that prediction markets can help provide valuable information on economic, financial, social and environmental issues.

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I have already expressed my deep skepticism for this kind of grandiose discourse.

Today, if I may, I would like to ask these questions to John Delaney:

1. We have just experienced one “wicked” problem, recently —the credit crunch crisis. Can you demonstrate that InTrade was “part of the solution”?
2. Speaking of the credit crisis, for instance, what makes you think that InTrade can be “part of the solution”, whereas it is now documented that the World Economic Forum (a.k.a. Davos), where 2,500 “global leaders” gather each year, have failed miserably in raising interest for the speakers who were talking about this (then, looming) financial crisis? Is InTrade really stronger than Davos?
3. Would you mind giving us specific instances, taken from the past 12 months, where the InTrade prediction markets were of high social utility to society?
4. Can you cite the names of some research scientists who are endorsing the idea that the real-money prediction markets (from either InTrade or BetFair) “can contribute in no small part to” the solutions to the world’s “wicked problems”?
5. What would you respond to those who say that, during the 2008 US presidential election campaign, the InTrade prediction markets sucked up to Nate Silver?

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Here are my thoughts:

1. I agree with InTrade CEO John Delaney that prediction markets are interesting, but I disagree when he suggests that they are radical tools —they are subtitle tools, actually.
2. I agree with InTrade CEO John Delaney that prediction markets are (somewhat, I would say) useful to society —but the demonstration should be done using Robin Hanson’s guidance.

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APPENDIX:

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What Nate Silver predicted:

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What InTrade predicted:

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Tags: BetFair, betting markets, event derivative markets, InTrade, John Delaney, prediction markets, social utility, solutions to world problems, world problems

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Chris F. Masse November 4th, 2008

CNBC = Entertainment

- InTrade CEO John Delaney is 15 minutes in.

- Tom Rietz of Iowa Electronic Markets is 1 minute in. - [PAY ATTENTION TO HOW PROF TOM RIETZ EXPRESSES PRICES AS PROBABILITIES.]

Tip via John Delaney Jason Ruspini.

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Tags: CNBC, InTrade, Iowa Electronic Markets, John Delaney, prediction markets, Thomas Rietz, Tom Rietz

• Exchanges & Markets , Market Prices & Probabilities
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Chris F. Masse October 29th, 2008

InTrade CEO John Delaney over-sells his prediction markets to a gullible journalist.

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Prediction markets are just an information aggregation mechanism (and also a collective anticipation mechanism), which highly depends on what the experts on the ground can discover. Prediction markets are not a magical tool. Event derivative traders are like bees; they harvest information and the expert consensus out there. Prediction markets cannot be a substitute for the credit rating agencies —that’s the biggest stupidity I have ever heard in my life. (How come a CEO can state such a crétinery, and how come Jason Ruspini can endorse indirectly such an imbécility.)

If the InTrade prediction markets had been so useful during the recent (and on-going) credit crisis and stock market crisis, then the Wall Street Journal and CNBC would have immediately reported on their magical prowess. These media didn’t put InTrade on the spotlight during the recent crises for a simple reason: the InTrade prediction markets have a low social utility at this time. It’s just a tool of convenience for people who don’t want to bother looking into the various polls. InTrade cuts time for the busy people. InTrade is like a shortcut. It is somewhat useful if you are busy, but you can live well without it if you are not. (Do read the very last line of this interview.)

Can InTrade be a substitute for the credit rating agencies? Even asking the question is preposterous. I disagree strongly with InTrade CEO John Delaney (“Prediction Markets Have a Big Role to Play“). In my view, it is wrong to overvalue the real social utility of the prediction markets. We should not lie. We should not over-sell. We should tell the truth. We should call bullshit on John Delaney’s grandiose statements.

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Tags: a tool of convenience, a tool of curiosity, betting markets, credit rating agencies, event derivative markets, financial crises, Forecasting, InTrade, John Delaney, Moody's, prediction markets, Standard & Poor's

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Chris F. Masse October 26th, 2008

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To the question asked in the title of this post, some have answered by the affirmative (“Prediction Markets Have a Big Role to Play”). In my view, it is wrong to overvalue the real social utility of the prediction markets.

As of today, we can plainly see 2 things. Number one, the prediction markets are a tool of curiosity. People have heard about InTrade thanks to numerous news articles (where some prediction market researchers who get the InTrade historical data for free pump up the prediction markets as God’s right arm on Earth). At crunch time, the people teased by all this publicity flock to the InTrade website to satisfy their curiosity about the state of the horse race. Number two, a subset of the general population (made up of educated people who believe in the virtues of markets) use the prediction markets as a tool of convenience. Instead of spending long hours reading the various outputs by the pollsters and the commentariat, these people just check InTrade on a daily basis, because they know that it is primarily (but not only) an information aggregation mechanism. InTrade sums up the news of the day, so to speak. Hence, these people (in the know about how to benefit practically from the wisdom of crowds) don’t have to spend time gathering and analyzing the news of the day.

To the question asked in the title of this post, I’ll answer “no” —unless one of my readers can educate me more about the following issues:

1. Did InTrade set up a set of prediction markets, in the summer of 2008, aiming at forecasting the (then) “upcoming financial crisis”? I am afraid that the answer is “no”.
2. Did the World Economic Forum (a.k.a. Davos) manage to open the eyes of the 2,500 so-called “global leaders” (a grandiose denomination that includes many of the Wall Street CEOs, and, yes, some financial bloggers like Felix Salmon, invited to that Swiss annual grand Mess of the capitalism) about the financial instability that was already perceptible in the recent years? I am afraid that the answer is “no”. Now, ask yourself: If Davos can’t, what makes John Delaney think that he can?
   
3. Is there out there at least one expert (by “expert” I mean any professional other than the so-called prediction market experts who are expert in nothing else than pumping up the prediction markets) who can demonstrate clearly that the prediction markets in his/her vertical have helped tremendously in his/her pursuit of creating long standing wealth? I am afraid that the answer is “no”.
4. How come nobody called bullshit on InTrade CEO’s grandiose statement?
5. How come Jason Ruspini, usually so critical, has become as servile as a poodle?
6. Is Robin Hason the only adult in the field of prediction markets?

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I Told You So.

by Ed Miracle

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Tags: a tool of convenience, a tool of curiosity, betting markets, Ed Miracle, event derivative markets, financial crises, Forecasting, I Told You So, InTrade, John Delaney, prediction markets

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Chris F. Masse October 20th, 2008

The anonymous blogger (probably the editor, Annika Mengisen) titles the post, “A New Kind of Campaign Advertising?”, and asks:

Will market manipulation for political candidates become the norm as ever-wealthier campaigns try to control the news cycle?

No…!!!…

John Delaney said that that firm has been hedging on InTrade —a normal and beneficial activity on the other (larger and more liquid) financial markets.

InTrade is not liquid enough to weather (quickly enough) the impact made by the hedging activities, at this time, but will in the future, if growth continues.

Manipulation is bad.

Hedging is good.

Tags: betting markets, event derivative markets, Finance, Freakonomics, hedging, InTrade, John Delaney, manipulations, market manipulations, New York Times, political hedging, political prediction markets, prediction markets, real-money prediction markets, risk hedging, US elections, US politics

• Analysis (Data) - Market Arbitrages , Analysis (Data) - Market Manipulations , Analysis (Data) - Risk Hedging , Ethics , Exchanges & Markets , Finance , Journalism & Prediction Market Journalism , Market Prices & Probabilities
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Chris F. Masse October 19th, 2008

“No Manipulation At InTrade“

Exactly.

John Delaney said that that firm has been hedging on InTrade —a normal and beneficial activity on the other (larger and more liquid) financial markets.

InTrade is not liquid enough to weather (quickly enough) the impact made by the hedging activities, at this time, but will in the future, if growth continues.

Manipulation is bad.

Hedging is good.

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As a way to thank Zubin Jelveh for his admirable coverage of the prediction markets, please do subscribe to his economics blog, Odd Numbers.

• Odd Numbers @ Portfolio — category: “prediction markets“
• Put that URL in your feed reader:
• http://feeds.portfolio.com/portfolio/oddnumbers
• Mister Zubin Jelveh, thank you.
  

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Tags: betting markets, event derivative markets, Finance, hedging, InTrade, John Delaney, manipulations, market manipulations, Odd Numbers, political hedging, political prediction markets, Portofolio, prediction market analysis, prediction market journalism, prediction markets, real-money prediction markets, risk hedging, US elections, US politics, Zubin Jelveh

• Analysis (Data) , Analysis (Data) - Market Manipulations , Analysis (Data) - Risk Hedging , Exchanges & Markets , Finance , Journalism & Prediction Market Journalism
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Chris F. Masse October 19th, 2008

The blogger titles the post, “Cheating the Spread”.

No…!!!…

John Delaney said that that firm has been hedging on InTrade —a normal and beneficial activity on the other (larger and more liquid) financial markets.

InTrade is not liquid enough to weather (quickly enough) the impact made by the hedging activities, at this time, but will in the future, if growth continues.

Manipulation is bad.

Hedging is good.

Tags: betting markets, event derivative markets, Finance, hedging, InTrade, John Delaney, manipulations, market manipulations, New York Times, political hedging, political prediction markets, prediction markets, real-money prediction markets, risk hedging, US elections, US politics

• Analysis (Data) - Market Manipulations , Analysis (Data) - Risk Hedging , Ethics , Exchanges & Markets , Finance , Journalism & Prediction Market Journalism
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Chris F. Masse October 18th, 2008

Alex Tabarrok writes that “someone was manipulating Intrade to boost John McCain’s stock price”.

No…!!!…

John Delaney said that that firm has been hedging on InTrade —a normal and beneficial activity on the other (larger and more liquid) financial markets.

InTrade is not liquid enough to weather (quickly enough) the impact made by the hedging activities, at this time, but will in the future, if growth continues.

Manipulation is bad.

Hedging is good.

Tags: betting markets, event derivative markets, Finance, hedging, InTrade, John Delaney, manipulations, Marginal Revolution, market manipulations, political hedging, political prediction markets, prediction markets, real-money prediction markets, risk hedging, US elections, US politics

• Analysis (Data) - Market Manipulations , Analysis (Data) - Risk Hedging , Ethics , Exchanges & Markets , Finance , Journalism & Prediction Market Journalism
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Chris F. Masse October 18th, 2008

Paul Krugman writes that “one large institutional investor was manipulating the Intrade presidential odds”.

No…!!!…

John Delaney said that that firm has been hedging on InTrade —a normal and beneficial activity on the other (larger and more liquid) financial markets.

InTrade is not liquid enough to weather (quickly enough) the impact made by the hedging activities, at this time, but will in the future, if growth continues.

Manipulation is bad.

Hedging is good.

Tags: betting markets, event derivative markets, Finance, hedging, InTrade, John Delaney, manipulations, market manipulations, Paul Krugman, political hedging, political prediction markets, prediction markets, real-money prediction markets, risk hedging, US elections, US politics

• Analysis (Data) - Market Manipulations , Analysis (Data) - Risk Hedging , Ethics , Exchanges & Markets , Finance , Journalism & Prediction Market Journalism
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