Common pitfalls of enterprise prediction markets: participants who lack relevant information, too few participants, and too little trading.

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GOAL:

&#8220-Prediction markets seek information aggregation from a large group of diverse individuals by encouraging active participation.&#8220-

REALITY CHECK:

&#8220-The biggest challenge is getting people in the company to be active&#8221- [].

The Climate Gate scandal highlights the modus operandi of the academic mafia.

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Required reading this Friday:

How to Manufacture a Climate Consensus &#8211- About expelling the non-believers from the academic journals publishing on climate science

The Dog Ate Global Warming &#8211- About the destruction of raw temperature data of Planet Earth

More info on climate change.

P.S.: East Anglia e-mails (CRU)

Time-Series Forecasting

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The different kinds of forecasting software &#8212-including time-series forecasting.

Some forecasting startups make use of the open source and/or SaaS models. I need your feedback on all this. Please, comment below, e-mail me, wave me, or tweet me.

– Lokad &#8211- (concurrent time-series forecasting) &#8211- Video

– Data Applied &#8211- (neural network algorithm)

External Links: Lokad &#8211- Data Applied

How Business Insider got it wrong with the Tiger Woods divorce cost odds

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PaddyPower is a bookmaker, not a prediction exchange. Hence, the Tiger Woods divorce cost odds are computed by an analyst, not by the market.

1. It is not the &#8220-punters&#8221- who have fabricated the odds, but a PaddyPower employee.

2. It is not a set of &#8220-market odds&#8221-, but a set of bookmaker odds.

3. The bookmaker analyst does not have access to any confidential contract. So, the PaddyPower press release is aimed at suckers in the media.

The scientific consensus and the scientific minority

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Andrew Gelman&#8217-s post (How do I form my attitudes about scientific questions?) got me attracted to this Wikipedia page:

In a standard application of the psychological principle of confirmation bias, scientific research which supports the existing scientific consensus is usually more favorably received than research which contradicts the existing consensus. In some cases, those who question the current paradigm are at times heavily criticized for their assessments. Research which questions a well supported scientific theory is usually more closely scrutinized in order to assess whether it is well researched and carefully documented. This caution and careful scrutiny is used to ensure that science is protected from a premature divergence away from ideas supported by extensive research and toward new ideas which have yet to stand the testing by extensive research. However, this often results in conflict between the supporters of new ideas and supporters of more dominant ideas, both in cases where the new idea is later accepted and in cases where it is later abandoned.

Thomas Kuhn in his 1962 book The Structure of Scientific Revolutions discussed this problem in detail. Several examples of new concepts gaining acceptance when supported by accumulating evidence are present in the relatively recent history of science. For example:

* the theory of continental drift proposed by Alfred Wegener and supported by Alexander Du Toit and Arthur Holmes but soundly rejected by most geologists until indisputable evidence and an acceptable mechanism was presented after 50 years of rejection.
* the theory of symbiogenesis presented by Lynn Margulis and initially rejected by biologists but now generally accepted.
* the theory of punctuated equilibria proposed by Stephen Jay Gould and Niles Eldredge which is still debated but becoming more accepted in evolutionary theory.
* the theory of prions -proteinaceous infectious particles causing transmissible spongiform encephalopathy diseases– proposed by Stanley B. Prusiner and at first rejected because pathogenicity was believed to depend on nucleic acids now widely accepted due to accumulating evidence.
* the theory of Helicobacter pylori as the cause of stomach ulcers. This theory was first postulated in 1982 by Barry Marshall and Robin Warren however it was widely rejected by the medical community believing that no bacterium could survive for long in the acidic environment of the stomach. Marshall demonstrated his findings by drinking a brew of the bacteria and consequently developing ulcers, subsequently curing himself with antibiotic medication. In 2005, Warren and Marshall were awarded the Nobel Prize in Medicine for their work on H. pylori.

For every new idea that has gained acceptance, there are far more examples of new ideas that were shown to be wrong. Two of the classics are N rays and polywater. However, most new ideas that have gained consesus were shown to be correct. This is because new ideas are typically being put forth by an individual and acceptance involves a great many individuals verifiying and/or duplicating scientific results.

In my view, climate science (which promoted global warming due to human production of CO2) is too young for us to trust the scientific consensus.

Previously: Climate Stats = Sausage Making