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FT Predict = play-money InTrade by the Financial Times

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FT Predict – (ftpredict.com)

About FT Predict ™:

FT Predict™ is more than just a game. Predictive [*] markets collect the wisdom of the crowd* in a single dynamic price unit that can be far more sensitive to changes in the market than standard survey-based research. And a growing number of today&#8217-s leading companies embrace predictive market models in order to harness the wisdom of their own crowds to improve decision-making. Still, the fun part is playing the game and keeping up on what&#8217-s important to you at the same time. And if you like to play, we&#8217-ll keep playing.
We hope FT Predict interests you. Tell us what you think!
Looking for more information on Predictive Markets? Wikipedia&#8217-s entry is a good place to start.
* James Surroweicki&#8217-s book, The Wisdom of Crowds, offers insights into the dynamics behind predictive markets and why they work&#8230-and why sometimes they don&#8217-t.

[*] not &#8220-predictive markets&#8221-: prediction markets, please. (ALL markets are predictive.)

#1. Why not the full range of play-money contracts organized by TradeSports-InTrade (including the sports)?

#2. InTrade should unveil the purpose of its automated market maker. Here&#8217-s why. If there&#8217-s a linkage between the real-money contract prices and the play-money contract &#8220-prices&#8221-, then it might not be fun to trade on FT Predict with the hope of using the real-money InTrade prediction markets as advanced indicators. If the machine gives the right prices right away, then what would be the motivation to correct the prices?

Any comment, folks?

Addendum: What about the deal between Reuters and InTrade, as alleged by Deep Throat? Is that still on the front burner?

Addendum #2: I got Will Speck (FT&#8217-s R&amp-D director for the Americas) on the phone real quick&#8230-

a) FT Predict is a play-money prediction exchange (betting exchange) that will reward its best traders. Time period of the contest: April to June 2007. Current top prize is a cruise trip for two persons.

b) The aim of The Financial Times is really to go global with this play-money prediction exchange (betting exchange). Currently, FT Predict is only for US residents, over 21, and physically present in the U.S. They will propose the game to other countries later on.

c) There&#8217-s indeed a link between FT Predict and the real-money Intrade prices, in the form of an automated market maker. Its purpose is only to start off the exchange- the aim is to have 100% organic volume as soon as possible.

Addendum #3: Other info I found on the Official Rules page&#8230-

[…] You will receive an account with a starting balance of 10,000 FT$ to use to make trades. […] You may choose as many or as few of the approximately 250 contracts to trade each week using the available FT$ in your account. To simulate actual futures trading, a transaction fee of 0.05 FT$ per share will be charged for each trade you make. […]

To &#8220-simulate&#8221-??? To get play-money traders accustomed to the configurations of a real-money prediction exchange, rather. The idea here, maybe, is to offer a free version of a betting exchange in the hope of converting prospects into real-money traders, later on.

Addendum #4: One last thought. FT Predict gives weight to CDA in its battle against MSR.

ENTREPRENEURSHIP and MARKETING

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No Gravatar– You Tube streaming video (Feb. 2007): Larry Page speaks at the AAAS (The American Association for the Advancement of Science)

Larry Page - AAAS

by CNET

Larry Page&#8217-s main advice to the scientists in the room: take their scientific studies, market them better and make them readily accessible to the world.

– CNET: Google&#8217-s Page urges scientists to market themselves.

&#8220-Most of the works you guys have done are not represented in those searches. We have to unlock the wealth of scientific knowledge and get it to everyone. I don&#8217-t care what we do, but we need to do something,&#8221- he said. [&#8230-]

– Attila Chordash: Google’s Larry Page at the AAAS meeting: entrepreneurship and unlocking in science.

“Science has a really serious marketing problem and nobody pays attention to that since none of the marketers work for science. If all the growth in world is due to science and technology and no one pays attention to you, then you have a serious marketing problem.” [&#8230-]

&#8220-You need to have the right attitude about it, and you need to think that business and entrepreneurship are important parts of science.” [&#8230-]

– Richard Brandt: Larry Page at AAAS

Most importantly, he wants scientists to &#8220-try to change the world.&#8221- That means not just doing research in their labs, but taking control of and trying to commercialize their technologies. It worked for him. [&#8230-]

Google&#8217-s Larry Page&#8217-s set of advice given in a speech at &#8220-Triple A S&#8221- (AAAS) also applies to scholars and experts in the field of prediction markets.

&#8212-

Chris Masse&#8217-s advice (if I may):

#1. Publish as HTML or XHTML files with informative titles and URLs (as opposed to the bad, non-usable PDF files).

#2. Participate in popular group blogs (as opposed to publishing on individual blogs read by nobody) and, from there, link to your other files.

#3. Publicize your site feed, so people can subscribe to it and automatically receive updates (via their feed reader).

#4. Create your internet network and, once a quarter, e-mail them your most important URL.

#5. Help popular bloggers unearthing good stories, in the long-term hope of getting linked to, as an appreciation for your little aiding and abetting.

#6. Monitor how the main search engines rank your postings with some webmaster tools, try hard to understand the damn whole mechanism, and take action to improve the search engine results on your name or works.

#7. If possible, always favor free, open-source software, like FireFox, Open Office, Word Press or Compozer / Nvu.

#8. Own your vanity domain name (e.g., robinhanson.com, as opposed to a sub-website owned by somebody else, like hanson.gmu.edu) and, from there, link to all the other webspots (e.g., Robin Hanson&#8217-s profile page at Midas Oracle) where you publish your ideas.

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.

Deal Breakers John Carney interviewed Kynikos Associates Jim Chanos about Steve Romans Midas Oracle blog post.

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No GravatarAnd I have just discovered it five minutes ago, by total chance.

#1. Kynikos Associates&#8217- Jim Chanos did not respond to my e-mail at the time.

#2. Nobody from Deal Breaker tipped me about this follow-up story.

#3. The Deal Breaker&#8217-s follow-up story did not mention &#8220-Midas Oracle&#8221- or &#8220-Steve Roman&#8221-.

#4. The Deal Breaker&#8217-s follow-up story did not link to the offending Midas Oracle blog post (written by Steve Roman).

#5. The Deal Breaker&#8217-s follow-up story did not link to the previous Deal Breaker blog post (which reported and commented on Steve Roman&#8217-s take).

#6. The original Deal Breaker blog post did not link (in an update) to the following Deal Breaker story (which sides with Kynikos Associates&#8217- Jim Chanos, and puts the Midas Oracle story in the consipracy theory camp).

CONCLUSION: Deal Breaker, before you teach journalistic lessons to bloggers like us, try to learn Internet conviviality.

Anyway.

&#8212-

DealBreaker: Jim Chanos: The Oracle of the End Of Online Gambling

Jim Chanos of New York’s Kynikos Associates was bearish on internet gambling sights long before Senate majority leader Bill Frist “ambushed” the industry with a bill making most internet gambling illegal. Contrary to claims detailed on a website [= Midas Oracle] yesterday, it didn’t take an elaborate scheme of inside information about the Senate’s legislative schedule to tip Chanos off on the dangers to internet gambling. For Chanos, the writing was on the wall, in the online gaming companies’ prospectuses and already built into various state laws. [&#8230-] In an interview today, Chanos described to DealBreaker three reasons, in addition to possible legal risks, that underlay his view of online gambling companies. “First off, we all believed that it was a cut-throat industry with no barriers to entry. Second, there was the faddish nature of poker. Television ratings were already down. Third, there was the silliness of the whole concept of Americans sending their money to off-shore companies with very little assurance about the way these operations were run,” Chanos said. [&#8230-] (The story on the website [= Midas Oracle] also made a big deal out of Chanos’ connection to former Nevada Attorney General George Chanos, Jim’s cousin. “I have never discussed internet stocks with my cousin,” George Chanos told DealBreaker. “And I never discussed the legislation with Senator Ensign.”) This seems more than decisive to us. Chanos didn’t need a conspiracy to tell him that online gambling was in trouble. He just needed to keep his eyes and ears open. So there you have the answer we asked in yesterday&#8217-s headline, &#8220-James Chanos: Genius Shortseller or Politically Well-Connected?&#8221-

None of the three reasons to be short on internet gambling stocks, stated by Jim Chanos, was a determining factor in the 2006 internet gambling crisis. Indeed, the determining factor was the unexpected passing of the Internet Gambling Prohibition and Enforcement Act of 2006. So maybe Kynikos Associates&#8217- Jim Chanos was just&#8230- incredibly lucky.

Next: The political intelligence research shops gather information from Capitol Hill and retail it to hedge funds and other money managers.

Previous blog posts by Chris F. Masse:

  • “Annette 15”, the once-hot female poker star sponsored by BetFair Poker, does blog only twice a month on the official BetFair blog… when she blogs at all… if you call that blogging.
  • Inkling Markets bring in awards, honors, advisors, and new clients —leaving competition in the dust.
  • No need of enterprise prediction markets to boost intra-corporation communication
  • Inkling Markets is included in the 2008 list of “Cool Vendors” by Gartner.
  • BetFair-TradeFair has won its second Queen’s Award for Enterprise in its eight-year history.
  • Inkling Markets is one of the “Hot Companies To Watch In 2008”, according to Forrester.
  • Plenty of great news coming from Inkling Markets in the coming weeks

Keyword Of The Day: NETWORK EXTERNALITIES

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No GravatarFinance Markets (article written by Khurram Naik):

[&#8230-] Futures exchanges are no longer simply markets, but for-profit businesses, and unlike most for-profit businesses or even most exchanges special considerations must be made. Futures contracts are not like stocks, which can be bought at one exchange and sold at another. Most futures contracts are not fungible between exchanges, and so the survival of a futures contract depends not merely on their utility but their ability to attract market share. Liquidity attracts liquidity, this is the social phenomenon known as network externalities. [*] Interest in commodity exchanges has surged as hedge funds have poured money into these markets and as China announces one of the largest investment programs in history to invest in “strategic assets” such as mining and energy resources. [&#8230-]

[&#8230-] Also, the CME has been approved to offer a credit-event futures, which taps into the enormous over-the-counter credit derivatives market that these banks make handsome profits on. CME and the CBOT both have designs for providing access to real estate derivatives, another large asset class that needs risk management. [&#8230-]

[*] Same can be said of event derivatives traded on our real-money prediction exchanges (betting exchanges) &#8212-they are, of course, a simplified sub-kind of futures exchanges.

NETWORK EXTERNALITIES: Applies to eBay, BetFair, Zopa, CME, NYSE, Economic Derivatives, InTrade-TradeSports, etc. &#8212-any exchange that doesn&#8217-t mess with its traders&#8217- transactions (via automated market makers or else).

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.

Marketing the prediction markets is much more than just HOPE.

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The Quartet:

For example, suppose a policymaker seeks a forecast of the likelihood of an avian flu outbreak in 2008. [He/she] may float a security paying $1 if and only if an outbreak actually occurs in 2008, hoping to attract traders willing to speculate on the outcome.

&#8220-hoping&#8221-??

As I wrote yesterday (much to the despair of mister Bo Cowgill :) ), if nobody trades on your socially relevant prediction market, then it won&#8217-t elicit any forecast. Goal #1 is thus to satisfy the traders, not the final users of the price info &#8212-in this case, allegedly, the &#8220-policy makers&#8221- (as if only the politicians were interested in crucial information!!).

I&#8217-m all for the socially relevant prediction markets, but they are not a special category of prediction markets (and thus don&#8217-t deserve a special terminology). As with everything in business, the marketing approach is the cornerstone.

Don&#8217-t expect to hear the words &#8220-marketing&#8221- and &#8220-BetFair&#8221- (the most successful commercial prediction exchange) at the second workshop on prediction markets, in San Diego, CA, in June 2007.

Triple alas. :(

Ivory Tower, you said? :)

Bird flu (H5N1) to be confirmed in the USA ON/BEFORE 31st Mar 2007
Price for Asian Bird flu to be confirmed in the U.S at intrade.com

Avian flu will reach the EU before the US

Putting crowd wisdom to work

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by Google&#8217-s Bo Cowgill (Project Manager):

&#8212-

At Google, we&#8217-re constantly trying to find new ways to organize the world&#8217-s information, including information relevant to our business. Building on the ideas of Friedrich Hayek and the Iowa Electronic Markets, a few Googlers (Doug Banks, Patri Friedman, Ilya Kirnos, Piaw Na and me, with some help from Hal Varian), set up a [prediction] market system inside the company.

The markets were designed to forecast product launch dates, new office openings, and many other things of strategic importance to Google. So far, more than a thousand Googlers have bid on 146 events in 43 different subject areas (no payment is required to play).

We designed the market so that the price of an event should, in theory, reflect a consensus probability that the event will occur. To determine accuracy of the market, we looked at the connection between prices of events and the frequency with which they actually occurred. If prices are correct, events priced at 10 cents should occur about 10 percent of the time.

In the graph below, the X-axis indicates the price ranges for the group. The orange line represents the average price, which is how often outcomes in that group should actually happen according to market prices. The purple line is how often they did happen. Ideally these would be equal, and as you can see they&#8217-re pretty close. So our prices really do represent probabilities – very exciting!

Google - Accuracy of Prices

We also found that the market prices gave decisive, informative predictions in the sense that their predictive power increased as time passed and uncertainty was resolved. When a market first opens there may be considerable uncertainty about what will eventually happen- but as time goes on, some outcomes became more likely than others. The market prices should reflect this phenomenon, with the implied probability distributions becoming more concentrated over time.

Being geeks, we naturally used information theory to measure the entropy of our probability distributions:

Google - Decisiveness of Predictions over Time

In this graph, we have weeks before market expiration on the X-axis, and entropy (in bits) on the Y-axis. We&#8217-ve included some reference entropies to help your intuition, and you can see that in addition to accurate predictions, the distributions become steadily more informative and decisive (lower entropy) over time.

Our search engine works well because it aggregates information dispersed across the web, and our internal [prediction] markets are based on the same principle: Googlers from across the company contribute knowledge and opinions which are aggregated into a forecast by the market. Sometimes, just feeling lucky isn&#8217-t enough, and these tools can help.

&#8212-

Putting crowd wisdom to work – by Bo Cowgill – 2005-09-21 – Published originally on the Official Google Blog

CME – Hurricane futures markets 101

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No GravatarSouth Florida Sun-Sentinel:

[&#8230-] After a storm begins forming off the coast of Africa, for example, a buyer can obtain a contract covering the first storm to make landfall in Florida. The risk level of the storm will be determined by a sliding scale – the CME Carvill Hurricane Index – that takes into account the size of the hurricane, maximum wind velocity and damage potential. The scale starts at zero and rises as the storm becomes larger and more powerful.

If the storm approaches any part of Florida and becomes a higher category hurricane, the index rises. Thus, a contract purchased when the index was at 2, for example, at $2,000, would be worth $10,000 when the index rises to 10. The futures owner can hold onto the contract at $10,000, or sell it for a higher price if the risk increases.

If the contract is worth $10,000 and the hurricane strikes Florida, the holder can obtain $10,000 cash within a few days. This compares to traditional insurance policies where claims may not be settled for months.

However, if a hurricane does not strike land in Florida during the 2007 season, a contract – whether it cost $2,000 or $10,000 or more – is worthless. The hurricane season runs from June 1 through Nov. 30. [&#8230-]

Previous blog posts by Chris F. Masse:

  • “I’m very concerned with the international situation and what’s happening in Tibet.”
  • How to win $100 in play money at HubDub, regardless of any political outcome
  • Problem 17: Prediction Markets — USMA D/Math Problem of the Week — Submission Deadline: April 3, 2008 at 1600
  • Midas Oracle is now powered by WordPress 2.5 —and you should be too.
  • Would be fun to have the equivalent for event derivatives.

BoDogs Calvin Ayre Is Not In The Forbes 2007 List Of World Billionaires.

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And Forbes magazine has a streaming video posted on its website to explain why BoDog&#8217-s Calvin Ayre was listed in 2006, and why he was delisted this year. (Surprise, surprise: it has to do with the US executive government and the US Congress&#8217- crackdown on internet gambling and betting.)

– Forbes estimates that BoDog&#8217-s Calvin Ayre lost $500 million since last year. We pity him.

– BoDog&#8217-s Calvin Ayre has moved from Costa Rica to Antiga.

– BoDog&#8217-s Calvin Ayre will never come to the U.S. anymore.

Explainers on event derivatives (event futures), prediction markets (prognostic markets) and prediction exchanges (betting exchanges)

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Explainers on event derivatives (event futures), prediction markets (prognostic markets) and prediction exchanges (betting exchanges) – at CFM

If you are a prediction market expert and have written and posted on the Web an explainer on prediction markets (an overview, a technical essay, or a wiki), feel free to contact me to give me its URL. I will be happy to list it there (and to plug it on Midas Oracle, maybe :) ).

Previous: Conditional and Combinatorial Betting – by Chris &#8220-Zocalo&#8221- Hibbert

External link: Implementing Hanson’s Market Maker – by David &#8220-Odd Head&#8221- Pennock

Psstt&#8230- If you actively maintain a webpage or a full website listing the prediction market resources, I&#8217-m a taker, too. :)

That is all, folks. Read the previous blog posts by Chris. F. Masse: