Robin Hanson:

To me, an ideal paper first clearly and concisely states a claim it will defend, in its title and abstract. The introduction quickly reviews the context and restates the claim, summarizing its supporting argument. The body of the paper makes good on those promises, filling out the detail, clearly flagging all required assumptions. And then the conclusion restates the claim and argument and points to further implications.

Author Profile&nbsp-Editor and Publisher of Midas Oracle .ORG .NET .COM &#8212- Chris Masse&#8217-s mugshot &#8212- Contact Chris Masse &#8212- Chris Masse&#8217-s LinkedIn profile &#8212- Chris Masse&#8217-s FaceBook profile &#8212- Chris Masse&#8217-s Google profile &#8212- Sophia-Antipolis, France, E.U. Read more from this author&#8230-

• Are David Pennock’s search engine prediction markets the worst marketing disaster since the New Coke?
• Midas Oracle is incontestably [*] the best vertical portal to prediction markets.
• Comment spam paid by Emile Servan-Schreiber of NewsFutures-Bet2Give
• BetFair Games needs a Swedish provider to develop its gambling offerings.
• When Markets Beat the Polls – Scientific American Magazine
• Robin Hanson has some fanboy in India. Great. Tiny caveat: The parroting Indian writer does not acknowledge Robin Hanson by name.
• Molecular Nanotechnology

Prof. Bainbridge on Burton Malkiel on the efficient capital markets theory (ECMH):

The second pillar of Malkiel&#8217-s analysis is the efficient capital markets theory (ECMH). The fundamental thesis of the ECMH is that, in an efficient market, current prices always and fully reflect all relevant information about the commodities being traded. In other words, in an efficient market, commodities are never overpriced or underpriced: the current price will be an accurate reflection of the market&#8217-s consensus as to the commodity&#8217-s value. Of course, there is no real world condition like this, but the securities markets are widely believed to be close to this ideal. There are three forms of ECMH, each of which has relevance for investors:

Weak form: All information concerning historical prices is fully reflected in the current price. Price changes in securities are serially independent or random. What do I mean by &#8220-random&#8221-? Suppose the company makes a major oil find. Do I mean that we can&#8217-t predict whether the stock will go up or down? No: obviously stock prices generally go up on good news and down on bad news. What randomness means is that investors can not profit by using past prices to predict future prices. If the Weak Form of the hypothesis is true, technical analysis (a/k/a charting)-the attempt to predict future prices by looking at the past history of stock prices-can not be a profitable trading strategy over time. And, indeed, empirical studies have demonstrated that securities prices do move randomly and, moreover, have shown that charting is not a long-term profitable trading strategy.

Semi-Strong Form: Current prices incorporate not only all historical information but also all current public information. As such, investors can not expect to profit from studying available information because the market will have already incorporated the information accurately into the price. As Malkiel demonstrates, this version of the ECMH also has been well established by empirical studies. Implication: if you spend time and effort studying stocks and companies, you are wasting your time. If you pay somebody to do it for you, you are wasting your money.

Strong Form holds that prices incorporate all information, publicly available or not. This version must be (and is) false, or insider trading would not be profitable.

Previous blog posts by Chris F. Masse:

• Is that HubDub’s Nigel Eccles on the bottom left of that UK WebMission pic?
• Collective Error = Average Individual Error – Prediction Diversity
• When gambling meets Wall Street — Proposal for a brand-new kind of finance-based lottery
• The definitive proof that it’s presently impossible to practice prediction market journalism with BetFair.
• The Absence of Teams In Production of Blog Journalism
• Publish a comment on the BetFair forum, get arrested.
• If I had to guess, I would say about 50 percent of the “name pros” you see on television on a regular basis have a negative net worth. Frightening, I know.