Tag Archives: prediction markets

HubDub takes home the Gold at the Oscars.

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Well the Oscars have come and gone and although most pundits are chattering about Slumdog&#8217-s amazing 8 wins and Hugh Jackman&#8217-s dulcet tones, I&#8217-m more impressed by Hubdub&#8217-s amazing success.

Out of the major races, we got EVERY SINGLE ONE RIGHT. We were also the only major prediction exchange to correctly predict the Best Actor race (Betfair, HSX, InTrade, Newsfutures and even Nate Silver all gave the gold to Mickey Rourke). Also, in five of the big 6 races, we showed higher confidence than InTrade predictors.

HubdubInTrade
Best Picture98%90%
Best Director76%90%
Best Actor63%33.5% (wrong)
Best Actress87%85%
Best Sup Actor100%95%
Best Sup Actress64%58.8%

From the complete 24 award lineup, we nailed 19, generally by impressive condifence margins. Check out all of our settled markets here.

Not only have Hubdubbers had a successful night, each of my personal Oscar predictions were correct and I added another 40 thousand Hubbucks to my coffers. Award season is now finally behind us, but American Idol is just getting started!

Crossposted from Newspundits

Boom and Bust of Prediction Markets

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The boom of public and private prediction markets started after the 2004 US elections. InTrade claimed to have nailed &#8220-all 50 states&#8221-. InTrade&#8217-s performance in the 2008 US elections was less stellar, and in line with polls. Hence, the bust we are in.

If true, the good performance of HubDub in the Oscars 2009 forecasting race could lead to a small boom. We will see. We should first analyze the HubDub data. Nigel, care to share?

Velocity + Inaccuracy

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One bit of criticism about my pamphlet (The Truth About Prediction Markets) goes like this: Velocity without accuracy is dumb.

That is not true.

Let&#8217-s imagine, for the sake of the exercise, that Barack Obama does not pick up Kathleen Sebelius to head HHS. The velocity argument remains valid: Fed by the vertical media (in this case, Yahoo News republishing the Associated Press), the prediction markets integrated expectations (informed by facts and expertise) much faster than the mass media did.

Any argument about the velocity of the prediction markets cannot be contradicted. No way.

The HHS-Sebelius prediction market might be (yet) another case-in-point for documenting velocity.

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It is only today (February 19) that the New York Times emerges out of hibernation and headlines:

– Kansas Governor Seen as Top Choice in Health Post. &#8212- Gov. Kathleen Sebelius is emerging as President Obama’s top choice for secretary of health and human services.

Now, look at the red line in the HubDub chart below: the prediction markets nailed her since the beginning of February 2009.

Of course, a scientific comparison would have scrutinized more closely than I did all the news articles from the New York Times (and from other mass media). That&#8217-s what we are going to do with the &#8220-Open Institute Of Prediction Markets&#8220-. To this end, I will set up a portable and distributed &#8220-Prediction Markets Consortium&#8221- in the coming days. Then, I will try to anchor it in an institution of higher education, and, after that, I will try to gather support from think tanks and foundations. Not an easy task, but I know now that I can count on many prediction market people and companies. It should be an industry endeavor &#8212-and it should deliver results, in the end (demonstrating the social utility of the prediction markets by documenting velocity, and, from there, following a logical thread which I will talk you about later on).

PS: About velocity&#8230- Remember that we are about the prediction markets versus the mass media (The New York Times, The Times of London, NBC News, BBC News, etc.) &#8212-as opposed to the vertical media (Politico.com, Nate Silver&#8217-s blog, PoliticalBetting.com, etc.). The distinction is very important to keep in mind.

UPDATE: The only stuff I can find about Sebelius for HHS is that February 9 piece from the Associated Press (which didn&#8217-t get a mass audience since it was not-republished in the New York Times or other mass media), saying that she was &#8220-near the top&#8221- for the job. Well, &#8220-near the top&#8221- is not like saying she was &#8220-on top&#8221-.

UPDATE #2: The Sebelius story is picking steam in the mass media. See Nate Silver&#8217-s take.

ADDENDUM: Andrew Gelman tells me that he thinks that &#8220-the Associated Press is a mass medium. It is a cooperative organized by a bunch of newspapers.&#8221- I think that the AP news articles do indeed reach a big audience when they are re-published or cited in the mass media. But in the Sebelius case above, it was not the case.

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Previously: The truth about prediction markets

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Who will be the next nominee of the HHS, now that Daschle has withdrawn from consideration?

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No HHS contract on InTrade, BetFair or NewsFutures. :(

Prediction markets didnt revolutionize decision-making -and will never do. However, they are a nice condiment to the classic forecasting toolkit.

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I have spent several hours re-reading the 2004 AEI-Brookings book, &#8220-Information Markets&#8221- (by which they mean &#8220-prediction markets&#8221-). It is a collection of un-enlightening research articles &#8212-except for the IEM article, which is outstanding, both on the factual and theoretical sides.

In the conclusion of their introduction, Robert Hahn and Paul Tetlock wrote that they want their readers to contemplate the idea that prediction markets could make a &#8220-big&#8221- difference and &#8220-revolutionize public- and private-sector decision-making&#8221-. Well, 4 years later, it is clear that those big dreams didn&#8217-t pan out. Not a single mass media outlet has praised the public prediction markets for their work on the 2008 US presidential election (I am taking about a post-mortem analysis about Election Day, not the primaries). Not a single one. (Not even Justin Wolfers.) And the number of corporations using enterprise prediction markets is still minute. The thinkers who wrote this book (&#8220-Information Markets&#8221-) all made the mistake to put the emphasis on accuracy instead of efficiency. That was the foundation flaw. We should reset and reboot the field of prediction markets.

Previously: The truth about prediction markets

Velocity is such a potent argument. Why dont we use it more, for Christs sake?

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I am re-reading a 2007 scientific article from Region Focus’ Vanessa Sumo:

– Ask The Market – Companies are leading the way in the use of prediction markets. The public sector may soon follow. – (PDF)

Here is what I see on the frontpage:

– &#8220-one or two weeks in advance&#8220-

– &#8220-even up to five weeks in advance&#8220-

Marketing-wise, velocity is a much more potent argument than the argument on accuracy. Who cares about an added accuracy of +2.7% (and that&#8217-s debated)? If any, that&#8217-s peanuts.

You cannot make a case against velocity. Impossible.

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UPDATE: Put the PDF link in the address box of your browser (as opposed to clicking on it, or right-clicking on it).

http://www.richmondfed.org/publications/research/region_focus/2007/spring/pdf/feature1.pdf

BetFairs Mark Davies, the last man standing

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Andrew Black:

Most of the original [BetFair] team have moved on now. Ed Wray is now Chairman, Mark Davies is still there and I’m still on the board and going in from time to time – I have three [BetFair] days this coming week but it’s normally much less than that. The other four members of the foundation team (such as it was) have moved on, but I’m in regular touch with all of them.

Two of them work full time for charities. One isn’t working at all at the moment. John, who had his 40th on Saturday, tried working in a couple of startups after Betfair, but after a fair bit of soul searching he recently decided to become a maths teacher. I had a chat with him about it.

He said that Betfair had been an amazing experience, but it had ruined him for anything else in business. Other ventures had been disappointing by comparison and just weren’t satisfying, so he had moved on to the next stage in life – giving it back.

He was very happy and very positive, just as he was during all the years I worked with him. The early years of Betfair were tough and very stressful, but it was exhilirating and also great fun at times.