Can Wall Street figure out the cause of a space shuttle crash faster than NASA's experts?

George William Herbert wrote:

Michael Walsh wrote:


Not only is there the diplomatic what you call non-PC, but
what if the prediction is correct? Fine, if it enables prevention
of the incident, but it might lead to backlash if things go bad.

The single best value is that there is clear evidence that a
large group of people allowed to 'vote' in the manner of such
a trading market on what they think likely odds are of events
are often significantly more accurate at predictions than
the report structure that comes out of the same set of
people in any heirarchical intelligence analysis group.

Economics seems to be a much better filtering method than
bureacracy for finding reasonable consensus spreads and
odds on longshot events.

As such, it probably provides a *much* better predictor for
the return value in investments in foreign policy, counterterrorism,
and security measures. And as fun as it is right now to be
throwing enough money to go to Mars several times over at
NASA rates at our national security, that will end sometime,
and I want to see the spending there made in the most
optimal manner possible that still reduces the odds of
Al Qaeda hijacking the jet I'm on or flying a plane into
the building I am in or whatever to down in the noise.

If the risks of possible terrorist activity include
attacks on the US president, other western allies
executives, etc. ... don't you want those risks being
considered and analyzed in the process?

Having something happen as predicted is *good*,
in a sick way. It validates the predictive value
of the idea / futures exchange. Even stopping something
that was predicted is a validation, so spending some
attention on stuff that's coming up in the exchange
is a good idea.

All of that said, it still is a major deal ethical
problem of global porportions, and needs a *serious*
thinksee, and is still un-PC as hell, but if the
most serious criticisms are simply objectively moral
and complaining that it might work, I say we should
get back to trying it.

It might not end up working, but it's at the very
least seriously worth a look.

-george william herbert


Well, I do have a fear of something called "Self fulfilling prophecy"
where
the market actually results in causing the incident.

My criticism was not about the objective morality, but rather what I
believe would be, most probably, bad diplomatic fallout from some
of the predictions.

I don't believe it is a good idea.

You and Rand have provided some thoughtful discussion. I expected
that from you, but I must admit that I thought Rand might take an
opposing ideological stand on it as opposed to reasoned discussion

I misjudged him and I apologize for the thought. I do believe he
should give some slack to the senators he disagrees with, but that
is very likely due to the political slant they put on it.

I think I will drop out on this discussion. It is a bit too far
off-topic and I believe the evaluations have to be subjective
right now.

Mike Walsh

Rand Simberg wrote:
On Tue, 12 Aug 2003 01:35:35 GMT, in a place far, far away, Michael
Walsh made the phosphor on my monitor glow in
such a way as to indicate that:

I wonder what the reaction would have been if the French
set up a market where people could bargain about the
likelihood of an assassination of George Bush?

It depends.

If that were the sole purpose of the market, I suspect that it would
be (appropriately) outrage. If, on the other hand, it included the

How come? The US is not in some way special - a market in if and when
the president of US is assassinated is in no way different from a
market in if and when the heads of state of arabic countrries are
assasinated.

odds on the assassination of Chirac, and other world leaders, and a
large number of other unfortunate events (as was the proposal here),
I'm not sure what the beef would be.


The proposal "there" did not involve any unfortunate events outside
a specific region and even so had a rather uneven distribution of what
was considered to be unfortunate.

--
Sander

+++ Out of cheese error +++

Michael Walsh wrote in message ...

snip

This is one of those things that is not particularly useful to
argue about because it isn't a matter of whether or not the
prediction process might not be useful, but whether the effects
of publically trading on future events was more damaging than
possible results.

I can't see much point in discussing matters with people who
don't see much harm in running a market on things like the
assassination of named foreign leaders, for example.

Actually, the proposed Policy Analysis Market (PAM) didn't trade
directly on the assassination of foreign leaders or on terrorism
events. It did however trade on such things as regime change in
country X which could be effected by terrorist attacks and
assassinations. They never got around to telling you that, eh? Also,
the amount you can invest is $100. That's not much to fund an
assassination on.

I wonder what the reaction would have been if the French
set up a market where people could bargain about the
likelihood of an assassination of George Bush?

You bet the Secret Service would be monitoring that market.

If we non-governmental Americans did this Homeland Security
would be right down on us.

And your point is?

The simple truth is that PAM is one of the most innovative programs
ever run by DARPA for the following reasons. First, the market trades
on
interests that are vital to the US. It is relevant. Second, the
resolution
of the market is extraordinary. One can trade on elaborate scenarios
derived
from the fundamental claims. Further, the market isn't restricted to
government employees. Is there another project out there that intended
to
insert the opinion of the outside world in such an intimate way with
the US
military, intelligence, and law enforcement? Finally, due to the
anonymous
trading, people who must espouse a dogma (eg, some government
employees) can
still trade in a way that represents their beliefs.

In summary, we have a market with an advanced design, trading on
matters of serious importance to the US, involving a wide range of
participants, and permitting those participants to trade anonymously
and avoid political conflict at their jobs.

Fortunately, it looks to me like the shooting down of the PAM is just
a setback. We'll see more of these markets created.


Karl Hallowell

Michael Walsh wrote in message ...
Rand Simberg wrote:

snip

Unlike, say, life insurance, which also used to be horribly un-PC...

Life insurance un-PC?

I like the idea of a major organization having a selfish interest in
keeping me alive.

snip

Unless as in the case of annuities or pensions, they have a selfish
interest in seeing you die.


Karl Hallowell

Michael Walsh wrote in message ...

snip

Well, I do have a fear of something called "Self fulfilling prophecy"
where
the market actually results in causing the incident.

My criticism was not about the objective morality, but rather what I
believe would be, most probably, bad diplomatic fallout from some
of the predictions.

I don't believe it is a good idea.

The phrase you are thinking of is "moral hazard" which normally is
used in a restrictive insurance sense. Namely, as a result of a
transaction, a person has incentive to increase their risky behavior
or engage in an act that will harm others. This is a known risk of all
markets and frankly we know how to deal with it.

You and Rand have provided some thoughtful discussion. I expected
that from you, but I must admit that I thought Rand might take an
opposing ideological stand on it as opposed to reasoned discussion

I misjudged him and I apologize for the thought. I do believe he
should give some slack to the senators he disagrees with, but that
is very likely due to the political slant they put on it.

I'm not sure about that. Perhaps it was just coincidence, but the two
senators (Democratic Senators Ron Wyden of Oregon and Byron Dorgan of
North Dakota) who made the initial misleading statement chose pretty
much as late as time as they could to make that announcement (ie, four
days before the market was to start registering users). If they had
waited any longer, then the market would have had a constituency of
sorts and be harder to kill (at increased risk to the senators). Plus,
they knew about the program months in advance (it apparently was
announced in early May). What gall!

I think I will drop out on this discussion. It is a bit too far
off-topic and I believe the evaluations have to be subjective
right now.

Conveniently subjective because no evaluation can be done now. If
those senators had waited six months, then we'd have hard data on how
well this market would work. It was an experiment that got killed
before it started. Think about that!


Karl Hallowell

Karl Hallowell wrote:

Michael Walsh wrote in message ...

snip

Well, I do have a fear of something called "Self fulfilling prophecy"
where
the market actually results in causing the incident.

My criticism was not about the objective morality, but rather what I
believe would be, most probably, bad diplomatic fallout from some
of the predictions.

I don't believe it is a good idea.

The phrase you are thinking of is "moral hazard" which normally is
used in a restrictive insurance sense. Namely, as a result of a
transaction, a person has incentive to increase their risky behavior
or engage in an act that will harm others. This is a known risk of all
markets and frankly we know how to deal with it.

You and Rand have provided some thoughtful discussion. I expected
that from you, but I must admit that I thought Rand might take an
opposing ideological stand on it as opposed to reasoned discussion

I misjudged him and I apologize for the thought. I do believe he
should give some slack to the senators he disagrees with, but that
is very likely due to the political slant they put on it.

I'm not sure about that. Perhaps it was just coincidence, but the two
senators (Democratic Senators Ron Wyden of Oregon and Byron Dorgan of
North Dakota) who made the initial misleading statement chose pretty
much as late as time as they could to make that announcement (ie, four
days before the market was to start registering users). If they had
waited any longer, then the market would have had a constituency of
sorts and be harder to kill (at increased risk to the senators). Plus,
they knew about the program months in advance (it apparently was
announced in early May). What gall!

I think I will drop out on this discussion. It is a bit too far
off-topic and I believe the evaluations have to be subjective
right now.

Conveniently subjective because no evaluation can be done now. If
those senators had waited six months, then we'd have hard data on how
well this market would work. It was an experiment that got killed
before it started. Think about that!

Karl Hallowell


I remain in disagreement with those of you that are in favor of this
plan, but I don't want to continue the discussion.

I have no problem with killing experiments before they get started,
sometimes that is a good idea. Incidentally, I am not claiming
that the experiment might have obtained some good information,
I believe that the possible bad side effects make it an idea
not worth pursuing.

Mike Walsh

h (Rand Simberg) wrote in message ...
On Mon, 11 Aug 2003 01:48:41 GMT, in a place far, far away, Michael
Walsh made the phosphor on my monitor glow in
such a way as to indicate that:

Very interesting, in light of the asinine decision to shut down the
DARPA initiative of a futures trading market on such events, due to
bloviations on the floor of the Senate of people who are utterly
clueless, but are ostensibly "leaders" of our nation...

Sorry, but that international terrorist futures trading market should
have been seen as idiotic from the start.

I strongly disagree.

The Senators who objected were quite wise to kill it.

In my experience "wise Senators" is an oxymoron.

It has international diplomatic problems that should be
apparent to almost everyone, except possibly Poindexter.

They're not apparent to me, and even if they were, it's not obvious
that negatives overcome the positive value of having a better handle
on the probability of future events.


Uh - if you can make money from correctly predicting terrorist events,
then terrorists will invest money, then go out and cause the events.
It's not like selling futures on the weather or something that is
beyond your control - it's selling futures on murder, basically, and
paying off the killers if they correctly predict who will be killed
and when. Since it was focused on foreign countries, those countries
would quite rightly complain.

The single best value is that there is clear evidence that a
large group of people allowed to 'vote' in the manner of such
a trading market on what they think likely odds are of events
are often significantly more accurate at predictions than
the report structure that comes out of the same set of
people in any heirarchical intelligence analysis group.

Unless, of course, there are people among those surveyed who can go
out and -cause- the very events under discussion. You offer people a
million dollars for an accurate prediction of which bridges will fall
down, you'll get people making bridges fall down.