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Link via Jason Ruspini
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Previously: The InTrade predicton markets on the viability of InTrade won’-t reveal *ANYTHING* about the future of InTrade.
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It is impossible for any InTrade trader to know whether the financial accounting of InTrade is sound or not. Any commercial company surrounds itself with secrecy. Let alone an Irish company that illegally (from the DOJ’-s standpoint) exports its services to Americans.
UPDATE: See the comment #1 there.
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It was impossible for the InTrade traders to divine whether Yahoo! CEO Jerry Yang would step down.
(In passing, note that InTrade has expired this contract hours after the breaking news hit the wires.)
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It was impossible for the InTrade traders to divine whether Unlawful Internet Gambling Enforcement Act of 2006 would be voted and enacted.
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The InTrade predicton markets on the viability of InTrade won’-t reveal ANYTHING about the future of InTrade. It will just aggregate InTrade’-s PR output.
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As for the “-business development initiatives”- planned by the InTrade executives, I wish them the best of luck. However, I remain skeptical, since I don’-t see what can replace the 2008 US elections in terms of attractiveness —-now that the SuperBowl has been sacrificed.
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My post about the sudden closure of TradeSports was the #2 most downloaded webpages, yesterday —-even though that post was published late yesterday. And this morning, I am receiving tons of e-mails from the InTrade and TradeSports traders (they are often the same people).
My reasoning:
TAKEAWAY:
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Chris F. Masse
Here are the screen shots of their posts —-before they get removed.
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Previously: on TradeSports death – on InTrade’-s viability
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TradeFair, soon.
Not a bad idea, but not the best idea they could have.
The EPS prediction markets were a better idea, because they have many more primary indicators.
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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:
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Here are my thoughts:
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APPENDIX:
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What Nate Silver predicted:
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What InTrade predicted:
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PollTrack:
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I like the way they color this electoral college map —-with 5 colors only (simplicity is good). It is very clear and usable, I believe. You can see 6 states in gray (”-too close to call”-). I am heavily betting on Barack Obama for Florida and North Carolina. There will be a good payoff, next Tuesday —-maybe. 
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Who will win Florida in the 2008 Presidential Election?
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Who will win North Carolina in the 2008 Presidential Election?
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Explainer On Prediction Markets
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A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 60 times out of 100, the favored outcome will occur- and 40 times out of 100, the unfavored outcome will occur.
Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism —-with or without an automated market maker.
Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that the traders bring when they agree on prices. These event derivative traders feed on the primary indicators (i.e., the primary sources of information), like the polls, for instance. (Garbage in, garbage out…- Intelligence in, intelligence out…-) Armed with these bits of information, the speculators then trade based on their anticipations, which will be either confirmed or infirmed. Hence, the prediction markets (which are more than just an information aggregation mechanism) are a meta forecasting tool.
The value of a set of prediction markets consists in the added accuracy that these prediction markets provide relative to the other forecasting mechanisms, times the value of accuracy in improved decisions, minus the cost of maintaining these prediction markets, relative to the cost of the other forecasting mechanisms. According to Robin Hanson, a highly accurate prediction market has little value if some other forecasting mechanism(s) can provide similar accuracy at a lower cost, or if very few substantial decisions are influenced by accurate forecasts on its topic.
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More Info:
– The Best Resources On Prediction Markets = The Best External Web Links + The Best Midas Oracle Posts
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More Charts Of Prediction Markets
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These traders are talking down the newly redesigned Hollywood Stock Exchange website.
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[They guy above has misspelled, two times. He meant: “unusable“.]
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Previously: #1 – #2 – #3 – #4
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UPDATE: Traders talk on Twitter about HSX.
Thanks to the HubDub guy for the tip.
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Whiskey Kilo (a Hollywood Stock Exchange trader):
Change is one thing, breaking the whole site and acting like its nothing happened is another. The whole concept of trading movie stocks, movie bonds and options have taken a backseat to making sure you can blog, add friends, and “Schmooze”.
The old portfolio page was color coded and extremely easy to understand, you instantly knew if you were making H$ or losing your shirt. Now the current portfolio page is a small box, one colour, light grey on a white backround and the type is half the size of the font here, also you can only see 12 stocks at any given moment. Whoever OK’d this part of the site has to have never traded any shares online before.
From what I can gather, there was a beta version of this 3rd generation of the game, but no one paid any attention to the any of the feedback, two days after this new rollout, HSX.com started calling this new version a beta game, and what HSX staff there is say that portfolios are now their priority. However the only things that really work right now are the blogs, which pay H$10,000 a posting, adding friends pays traders H$1000, Online Polls, and Schmoozing. which paid initially H$1000, but now pays H$100 per reply. The only reason I see for paying traders to blog is to bring more eyeballs to the garish 728?90 and 300?225 ads on each page to pump the number of advertising views on HSX. But if this is part of the grand scheme here, I can’t see Gold coin or Forex advertisers closing sales from a bunch of 13 years because all the veteran traders have left in disgust.
I welcome Jed [*] to read the HSX Support page: http://www.hsx.com/cms/forums/support and look around, I shudder to think this all is going to be a B-School case study on how to kill a successful site in under a week.
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[*] Jed Christiansen, who put up a comment in defense of HSX (Jed systematically defends the people I slam on Midas Oracle) —-and who has just begun an MBA education.
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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:
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I Told You So.
by Ed Miracle
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