Truly bizarre “-research”-.
Prediction markets in the pharmaceutical industry
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Tag Archives: prediction markets
Paul Hewitt on enterprise prediction markets
– Here, in response to Jed Christiansen. (Scroll down.)
– Here, on his own blog.
Interesting. (Paul should learn to pepper his posts with external links, though. Otherwise, a web visitor out of the loop can’-t get the background of an issue that is discussed. The foundation of the Web is hyper-linking, Paul.)
InTrades prediction markets on skyscrapers
– the opening date of the Freedom Tower in New York-
– the opening date of the Chicago Spire.
I like that. I remember requesting this kind of prediction markets two years ago, to another exchange —-to no avail.
Exchanges should create much more delivery date prediction markets —-about buildings, cars, software, etc.
Get Rich Quick – InTrades new marketing trick
Buy John McCain at the end of 2007 (at around 5), sell high in 2008 —-and get rich quick. That is what Bethan and her husband (Jonathan) did.
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Today, InTrade CEO John Delaney is trying to milk out this get-rich-quick story (or a similar enough story). His message: You, too, can get rich quick…- —-what it takes is just registering your credit card with InTrade. 
What the InTrade CEO doesn’-t tell you is that luck was a factor in Bethan’-s sudden enrichment. Nothing wrong with tapping chance —-but honesty should have prompted John Delaney to mention it. And you will notice the absence of information for the x axis (the time). Marketing and honesty are 2 words that don’-t mix well in Ireland.
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ADDENDUM:
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How to join Midas Oracle -and why.
How To Become A Midas Oracle Author
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The Uniqueness Of Midas Oracle
- We publish the best mutant ideas.
- We link out a lot to external resources.
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How To Join Us
#1. We are interested in recruiting you as a volunteer, if you have an interest in prediction markets (and collective intelligence). Be sure to read and understand (:-D ) the ABOUT, MISSION, CODE OF CONDUCT, and TERMS OF USE webpages. Guest blogging on Midas Oracle can help you get traffic to your website and increase its PageRank.
#2. You may either register yourself as a comment author, disclosing your full name (or not), or send your application (as a comment author or as a post/page author) to Chris Masse —-see our CONTACT page. When you register, do create your account using your first name and last name, such as “-john-doe”-. The login is at the bottom of the sidebar.
#3. Registered members of Midas Oracle will receive an e-mail newsletter once in a while —-only when important circumstances warrant. (There are e-mail options on your profile page, inside the Midas Oracle system, which allows you to opt out of mass e-mails, if you really need to.)
#4. To have your status upgraded from comment author to post/page author, contact Chris Masse.
#5. To have your name removed from Midas Oracle, send your resignation to the blog administrator (Chris Masse), and he will delete your profile from the blog database.
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How To Publish Your Ideas On Midas Oracle
– How To Publish
– How To Comment
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Who needs pundits track records when we have prediction markets?
Emile Servan-Schreiber:
Mr. Kristof, if you want to keep yourself accountable and track the success of your predictions in the long run and in real-time, why not simply participate in a prediction market such as NewsFutures?
You could suggest that particular stocks be listed in relation to particular new stories and their possible outcomes. Then, as you invest in particular outcomes, your prediction portfolio would either grow or shrink, providing us all with an objective measure of your foresight. You could feature on your blog a widget displaying in real-time the “-net worth”- of your various predictions.
Other advantages of this approach would include:
– Forcing a detailed specification of possible outcomes-
– Having you compete directly (bet against) the general public-
– Measuring how much your columns can influence price movements for various predictions-
– Leading by example to show other pundits how it’-s done.
There are various types of prediction markets out there, so you can pick the venue where you’-d feel most comfortable:
– Play-money only, like NewsFutures– [or HubDub ]
– Real betting (illegal) like Intrade-
– Charity-driven, like Bet2give.
If the idea intrigues you, please contact me at [email protected] and we can get you started right away!
Emile Servan-Schreiber
CEO, NewsFutures
Excellent.
Readers, do click on the link (which will bring you to the New York Times), and do click on “-Recommended”- under Emile’-s comment —-so that his pitch for the prediction markets will be more visible to all the people reading the comments there. Thanks. Appreciated.
American Civics Exchange = CFTC-regulated Exempt Board of Trade
American Civics Exchange is enabling what InTrade (circa 2006, when they applied for the eBOT status) couldn’-t…- —-getting the CFTC stamp of approval, and running a real-money prediction exchange from within the US territory (as opposed to offshore). The ACE does not have any direct domestic competitor, right now, but HedgeStreet could enter the political turf, later on.
American Civics Exchange is a play-money and real-money prediction exchange focused on politics. Its contracts pay out depending on whether given political outcomes (e.g. enactment of legislation, regulatory decisions, etc.) take place. The contracts are based on the idea of “-event derivatives”- —-pretty much like the weather derivatives that enable companies that are financially exposed to deviations in temperature (utilities, farms, etc.) to hedge that exposure. The ACE political contracts enable any commercial companies to hedge their financial exposure to things like increased tax rates, enactment of harmful legislation, and adverse regulatory decisions. Speculators are also welcome, of course.
The seven initial contracts are:
- Increase capital gains/dividend income tax rates-
- Elimination of the manufacturers’- tax deduction for oil companies-
- Enactment of “-card check”–
- Enactment of “-cap and trade”–
- The EPA granting California’-s Clean Air Act waiver-
- Increase in the minimum wage-
- Taxation of carried interest as regular income.
The future prediction markets might feature these topics:
- Various new financial services regulations-
- Additional industry bailouts-
- Major healthcare reform-
- FDA drug approvals-
- Windfall profits tax on oil companies-
- Renegotiation/dissolution of existing trade agreements-
- Resolution of major class action lawsuits.
The Delaware-incorporated American Civics Exchange will be operating as an “-exempt board of trade”- pursuant to CFTC regulations, the Commodity Exchange Act, and the Commodity Futures Modernization Act. Last week’-s launch consists solely of the play-money prediction exchange, with free accounts available to the general public. In the coming weeks, the real-money prediction exchange will open shop. Eligible contract participants [see 1(a)12] will then fund their accounts and begin live trading.
UPDATE: On February 10, 2009, the American Civics Exchange received an official acknowledgment from David Stawick, Secretary of the CFTC. The CFTC website, however, does not yet list ACE in their directory of eBOTs. It will, ultimately.
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What ACE says (in their media kit) about hedging:
To offset a hypothetical $100,000 negative exposure to a proposed increase in the capital gains tax rate, a market participant would place a bid on 1,000 contracts. If that order were filled at $30, the position would cost $30,000 (excluding transaction costs). Matching such a bid does not require a coincident order to sell 10,000 contracts. As with established exchanges, the liquidity of a robust marketplace of buyers and sellers will enable even large orders to be automatically matched to batched bids submitted by an unlimited number of participants, including both speculators and natural hedgers.
If the tax increase is enacted before 12/31/10, the contract holder would receive $100,000, offsetting the impact of the tax increase. The contract holder can also sell the contract back into the marketplace at the prevailing price at any time before the expiration date, provided another party is willing to purchase the contracts at that price.
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Online Futures Market Enables Participants To Hedge Exposure To Political Events
NEW YORK, March 20 /PRNewswire-USNewswire/ —- American Civics Exchangecorp, Inc. announced today that it has launched The American Civics Exchange, the first US-based commercial market for political futures. The Exchange enables traders to hedge and speculate on political risk through derivative contracts based on the outcomes of underlying events, including increases in tax rates, enactment of “-card check”- legislation, increases in minimum wage rates, enactment of “-cap and trade”- legislation, and other legislative, regulatory, and legal outcomes.
The ability to offset exposure to such events using contracts traded on the Exchange will enable risk managers and investors to reduce unwanted risk and protect themselves from adverse political outcomes. All contracts that trade on the Exchange are binary in nature, meaning they settle at $0 or $100, and are fully cash-collateralized, eliminating any counterparty, credit, or clearing risk.
The Exchange’-s initial launch consists of a “-play money”- market for prospective participants and interested members of the general public. This launch will be followed by the roll-out of the “-real money”- market, which will be open only to eligible contract participants (as defined in the Commodity Exchange Act). The play money market will continue to operate parallel to the real money market and will remain available to individuals not eligible to trade in the live market, members of the press, academic and policy researchers, and other interested parties. In coming weeks, the Exchange will phase in additional collaborative and community-based tools for trading and research.
Philip “-Flip”- Pidot, one of the founders and the CEO of the Exchange, said, “-The inauguration of a new Presidential administration and the unprecedented legislative and regulatory changes being considered in response to the financial crisis have only magnified the bottom-line impact of public policy decisions. For the first time, businesses and individuals have a market-based solution to hedge against these uncertain political risks.”-
The American Civics Exchange operates as an Exempt Board of Trade pursuant to federal law and CFTC regulations. Users can register accounts and trade through the secure online trading platform located at http://amciv.com.
Requests for additional information can be directed to [email protected] or (646) 257-2426.
For media inquiries, please contact Audrey Mullen at [email protected] or (703) 548-1160.
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UPDATE: The Hill on ACE…-
Patrick Young = The InTrade co-founder you never heard about
The greatest benefit of being the most popular blogger on prediction markets is the private e-mails I get from all the corners of the globe. I come to meet, over the Internet, the world’-s finest luminaries —-from the Academia or from the entrepreneurial world.
Now, try to guess who that guy is:
- He wrote about prediction markets (before that moniker was applied) and betting exchanges in his book “-Capital Market Revolution!“-, published in 1999 —-while Andrew Black was developing BetFair.
- He co-founded GSX/Tradesports/InTrade in 2000.
You have probably never heard of him…- but you should compute him starting today —-Patrick Young. And, of course, he blogs and twitters…- Don’-t miss his ultra-copyrighted podcast on the “-fascinating”- American Civics Exchange…-
The worlds #1 resource on enterprise prediction markets
– Do not waste $400 on a “-prediction market conference”- run by a San Francisco clown and attended by suckers.
– Quit listening to the Ivory Tower economic canaries who are over-hyping the prediction markets —-and have no experience whatsoever in the field of forecasting.
– Instead, do read this Inkling Markets resource, and do grill Adam Siegel on the phone. It is free, and he is the Real McCoy. [I hope that NewsFutures and CrowdCast will soon provide the same kind of EPM dossier on their respective website.]
Combinatorial Prediction Markets – David Pennock Edition
ACM:
[…] Prediction markets are gaining interest because the Internet allows greater worldwide access to them, as well as to the ever-increasing amount of data stored on any topic imaginable (which theoretically allows participants to make more informed predictions, individually and in aggregate). These factors, plus the enormous amount of computing power that will make it possible to instantly calculate exponentially small odds, are stimulating new research on advanced computational models in prediction markets. These models could be capable of analyzing entire events such as the annual NCAA collegiate basketball tournament, which begins a 63-game schedule with 263 possible outcomes by the tournament’-s end. […]
Growing opportunities in internal private-sector prediction markets are also revealing divergent philosophies among the markets’- designers. Many of the public markets feature price-adjustment algorithms built around answering discrete multiple-choice outcomes, such as which candidate will win an election or if a product will launch in month x, y, or z. […]
IEM steering committee member Thomas Rietz, a professor of finance at the university, says the aggregate zero-risk design of the IEM allows the markets to perfectly reflect the aggregate forecast opinions of its participants. By aggregate zero-risk, Rietz explains that when a trader enters a particular bilateral (either/or) market, he or she must buy one share of each choice, called a bundle, for a total cost of $1. If the trader holds the bundle until the market concludes, there is neither profit nor gain. If the trader guesses the outcome successfully, and sells the losing unit of the bundle to another trader while the market is running, he or she picks up the original $1 bet plus whatever price was agreed upon for the losing share that was sold. If the trader chooses to hold onto the loser and sell the eventual winner, however, they will incur the $1 loss at payout time. At any given time, the number of eventual winning shares and losing shares is equal and held by the traders. So, the university bears no counterparty risk and there is no need to provide hedging margins that irrationally affect outcomes. “-The price you would be willing to buy or sell for today is your expectation of its value in the future—the prices can be directly interpreted as a forecast,”- Rietz says. “-In ordinary futures markets, there is a long-lasting debate, going back to John Maynard Keynes in the 1930s, over whether prices can legitimately be used as forecasts, and it all hinges on whether or not people demand a return or face a risk in aggregate when they’-re investing in these contracts.”- […]
One enduring research problem on combinatorial markets is mitigating the effects a virtually unlimited spectrum of outcomes will have on creating markets that are so thin in trades they do not serve their purpose of aggregating information. In such markets, which might bear a resemblance to an enterprise prediction market in that there are not enough participants to provide a statistically valid spread of opinion, Pennock says a market-maker algorithm might serve as a price setter within widely acceptable limits. “-I believe that approximation algorithms will be fine for the market maker, because people don’-t really care about making bets on things that are incredibly unlikely, like 10?6 chance,”- Pennock says. “-But as long as you’-re betting on something with a 10% chance of happening, we’-ll be able to approximate pretty quickly with a market-maker price.”- […]
David Pennock’-s website and blog