Tag Archives: wisdom of crowds

APRIL FOOLS DAY: This year, again, CNET makes fun of the wisdom of crowds.

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No GravatarCNET: Edit wars come to spy agencies&#8217- Intellipedia.

Intellipedia

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The full listing of all the April Fool&#8217-s Day jokes&#8230-

Previously: The 2007 CNET joke&#8230-

Previously: The 2008 Midas Oracle joke&#8230-

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Previous blog posts by Chris F. Masse:

  • Thanks to enterprise prediction markets, senior management can move faster to deal with problems or exploit opportunities.
  • NOTE TO SELF: Set up customized e-mail alerts for brand-new, hot Midas Oracle stuff.
  • DAYS OF RECKONING, PART TWO: Matt Drudge features the prediction markets. + Reuters has the right terminology (“traders”, “prediction exchanges”) but ignores BetFair.
  • DAYS OF RECKONING: The New York Times is telling the business world that enterprise prediction markets are an essential management tool.
  • HubDub will soon distribute a continuously-updating chart widget displaying the state of their prediction markets.

Last years best April Fools Day joke had something to do with the wisdom of crowds.

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No Gravatar2007’s April Fool’s Day

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CNET:

Wikipedia founder&#8217-s bold experiment

Diagnosed with cataracts, Jimmy Wales invites first 100 people who show up at his home to perform surgery. &#8220-There may be some trial and error, but I&#8217-m confident the community will make the right decisions,&#8221- Wales said.

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MIDAS ORACLE&#8217-S 2008 APRIL FOOL&#8217-S DAY JOKE: BetFair-TradeFair hire Bo Cowgill in an attempt to improve their ranking in Google web search results.

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Previous blog posts by Chris F. Masse:

  • Play-money prediction exchange HubDub is a phenomenal success.
  • BetFair Australia’s spin doctor tells all about their payments to the horse race industry.
  • Meet Jeffrey Ma (at right on the photo), the ProTrade co-founder, and whose gambling life is the basis of the upcoming movie, 21.
  • Independent production company seeks deep throats to spill beans on online poker industry and BetFair Poker.
  • BetFair-TradeFair hire Bo Cowgill in an attempt to improve their ranking in Google web search results.

New Hampshire fiasco blamed on lack of InTrade traders diversity

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On A Limb

Mister Kirtland:

[&#8230-] I’m going to go out on a limb here and say that the traders on InTrade may not be the most diverse group of people we could assemble. I would bet, for example, that not many people from New Hampshire – who would have more direct knowledge of the situation “on the ground” – bet on InTrade. [&#8230-]

As I already wrote here, I don&#8217-t buy the argument, but let&#8217-s put that aside.

In public prediction exchanges, traders are self selected. Nothing can be done to change that. Am I correct?

Read the previous blog posts by Chris. F. Masse:

  • Davos – World Economic Forum
  • CME Group = Chicago Mercantile Exchange + Chicago Board Of Trade
  • Democratic and Republican caucuses in Nevada + Republican primary in South Carolina
  • The BetFair blog is not a serious publication.
  • MICHIGAN PRIMARY @ BETFAIR: Niall O’Connor asks the very pertinent question.
  • One thing John Delaney and his Irish employees at InTrade-TradeSports can learn from the BetFair-TradeFair folks at HammerSmith.
  • BetFair compound chart on the Michigan primary

GIGO and prophets, tears and markets

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Prediction markets failed to accurately predict the unexpected effect a few tears had on the New Hampshire primaries- and some analysts rushed to blame the tool and undermine its reliability and applicability. Let me restate some fundamentals and my view, in a snapshot:

  • Markets are not prophets, prophets do not exist.
  • A mechanism&#8217-s forecastability should not be judged against a virtual fool-proof prophet- we&#8217-d better compare it with other existing or widely-used mechanisms and -to my partial and context-bound knowledge- markets outperform all those.
  • Markets are the only tool that intrinsically suggests their probability of failure. If Obama&#8217-s stock is traded at 70 cents, this suggests that there is a 30% probability of Obama losing- I&#8217-d say markets are by character modest and no fanfare has any place in describing their suggestions.
  • Markets are primarily an aggregation/meta mechanism- as such, garbage-in-garbage-out effects are expected to happen, so we&#8217-d need to keep focus on minimizing garbage rather than blaming the market/compiler.
  • Maturity of the mechanism and its use, as long as trading volume (in real-money intrade for example), have not yet reached a fully efficient level (more on this to come soon), but these result in significant profit opportunities, so I expect things to just keep getting better.

cross-posted from my blog

Who did best in explaining the prediction markets to the lynching crowd?

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After the New Hampshire fiasco, 16 18 people came to defend the prediction markets, so far. So far, the best takes are from:

  1. George Tziralis
  2. Robin Hanson
  3. Jonathan Kennedy
  4. and I&#8217-ll give the 4th spot to a combo, mixing takes from John Tierney, Adam Siegel (surprisingly pertinent &#8211-I bet he is on a fish diet, post Christmas :-D ), and Steve Roman.
  5. UPDATE: &#8220-Thrutch&#8220-, Emile Servan-Schreiber and Panos Ipeirotis.

AWOLs (so far): PMIA, AEI-Brookings, InTrade, TradeSports, BetFair, TradeFair, NewsFutures, Emile Servan-Schreiber, Jed Christiansen, Koleman Strumpf, Bo Cowgill, Richard Borghesi, Chris Hibbert, David Perry, Ken Kittlitz, Paul Tetlock, David Pennock, Mike Linksvayer, Brent Stinsky, David Yu, Mark Davis, David Jack, James Surowiecki, Tyler Cowen, Greg Mankiw, Donald Luskin, John Delaney [*], etc.

[*] Steve Bass tells us that John Delaney&#8217-s pre-NH CNBC appearance was awesome. I was up that day, waiting for that CNBC segment, but failed to spot it. If somebody sends me the YouTube link, I&#8217-ll publish it here.

THE SILICON ALLEY BLOG COMES TO THE RESCUE OF THE PREDICTION MARKETS.

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Silicon Alley&#8217-s Jonathan Kennedy:

[…] In denouncing prediction markets as &#8220-wrong,&#8221- however, many pundits miss the point. Prediction markets do not provide accurate predictions of the future. (How could they? They simply represent the consensus guess of a group of people who aren&#8217-t prophets). They merely provide the most-informed guess as to what that future is likely to be.

As numerous &#8220-collective wisdom&#8221- studies have shown, the consensus guess is always better than the majority of the individual guesses that are factored into it (not sometimes&#8211-always). The collective wisdom, moreover, is often more accurate than that of ANY individual. Why? Because the market collectively incorporates far more information than is available to any one individual.

Like the stock market, prediction markets don&#8217-t get it right every time. They do, however, provide a useful window into the collective expectations of others&#8211-one that is often the best available estimate of the future. And they do sometimes get it right. Just as they did with Mr. McCain.

Bravo, mister Jonathan Kennedy.

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Take that, Barry Ritholtz. :-D

In an upcoming post, we will review the strengths and weaknesses of these thinly traded prediction markets&#8230-

We are holding our breath, Barry. Hurry up.

Prediction Markets = the greatest time-saving invention of this century

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John Tierney (and again this morning):

[…] Keeping up with a presidential campaign used to require at least an hour a day of wading through punditry, and much more time during the peak primary season. But now, with a few clicks on Intrade, you can see the accumulated expertise of thousands of people betting on the campaign. […]

That&#8217-s what I mean by &#8220-Prediction markets are forecasting tools of convenience that feed on advanced indicators&#8220-.

I will have another post on John Tierney&#8230- if Barry Ritholtz delivers on his promise to write up on prediction markets.

Please, make WordPress a bit like Wikipedia.

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Folks, here is my proposal to the WordPress developers:

Assign a great number of editors to some specific pages

Right now, if you are an editor in WordPress, you can edit any posts and pages. Hence, the administrator of a big group blog would not have many editors &#8212-because the blog posters would not like the idea that their colleagues can edit their posts.

But it would be great to be able to have a great number of editors for some specific pages. That way, any group blog powered by WordPress would be able to tap in the &#8220-wisdom of crowds&#8221- (see James Surowiecki book by the same name) &#8212-the same way Wikipedia does. For more on Wikipedia, see these two posts.

Collective intelligence (a.k.a. wisdom of crowds) is a mechanism at the heart of Google PageRank, Wikipedia, open-source software, prediction markets, etc. It is very powerful. WordPress could tap into that very easily, by allowing a page-by-page editing role.

The WP admin would set who are the editor(s) of a particular page &#8212-one registered person, two, a bunch of blog authors&#8230- or any internet citizens like in Wikipedia.

Thanks a lot for your attention. Contact me for more info, or leave a comment below.

NEXT: WordPress is a bit like WikiMedia (the software powering Wikipedia), now.

Previous blog posts by Chris F. Masse:

  • The definitive proof that FOR-PROFIT prediction exchanges (like BetFair and InTrade) are the best organizers of socially valuable prediction markets (like those on global warming and climate change).
  • Fairness Doctrine prediction markets
  • 2 MILLION TRADES LATER: Inkling’s play-money prediction markets are accurate —too.
  • Web Forums on Prediction Markets
  • Jason Ruspini will answer SOME of these CFTC questions. — 12 days left, Jason.
  • QUIZZ OF THE DAY: Which blog is the most open minded?
  • Prediction Markets TV — Will the controversial but indispensable Max Keiser (ex-HSX) stay true to his purpose, or will he f*** it up?

Amateur Journalists (Bloggers) Vs. Professional Journalists (Media) Vs. Wisdom Of Crowds & Collective Intelligence (Wikipedia)

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And the wisdom of crowds won, of course. That&#8217-s the conclusion I draw from reading Rogers Cadenhead at WorkBench, who assessed what would be the settlement of the LongBets wager on:

In a Google search of five keywords or phrases representing the top five news stories of 2007, weblogs will rank higher than the New York Times&#8217- Web site.

AGREE
Dave Winer

Stakes
$2,000
($1,000 each)

DISAGREE
Martin Nisenholtz

For Rogers Cadenhead, Dave Winer will win the bet. But he also says that the overall winner is&#8230- WIKIPEDIA.

[…] So Winer wins the bet 3-2, but his premise of blog triumphalism is challenged by the fact that on all five stories, a major U.S. media outlet ranks above the leading weblog in Google search. Also, the results for the top story of the year reflect poorly on both sides. In the five years since the bet was made, a clear winner did emerge, but it was neither blogs nor the Times. Wikipedia, which was only one year old in 2002, ranks higher today on four of the five news stories: 12th for Chinese exports, fifth for oil prices, first for the Iraq war, fourth for the mortgage crisis and first for the Virginia Tech killings. Winer predicted a news environment &#8220-changed so thoroughly that informed people will look to amateurs they trust for the information they want.&#8221- Nisenholtz expected the professional media to remain the authoritative source for &#8220-unbiased, accurate, and coherent&#8221- information. Instead, our most trusted source on the biggest news stories of 2007 is a horde of nameless, faceless amateurs who are not required to prove expertise in the subjects they cover.

So the real winner is Wikipedia &#8212-a news and knowledge aggregator&#8230- using anonymous volunteers. But Wikipedia is only an information aggregator&#8230- it feeds on both media and blogs to gather the facts. Wikipedia is the common denominator of knowledge &#8212-not the primary source of reporting. Just like prediction markets feed on polls and other advanced indicators.

External Link: See a previous assessment of the bet by Jason Kottke.

NEXT: Amateur Experts (Yahoo! Answers) Vs. Wisdom Of Crowds &amp- Collective Intelligence (Wikipedia)

UPDATE: An empty comment from Read &#038- Write Web.

Meet again James Surowiecki, author of The Wisdom Of Crowds.

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James Surowiecki

James Surowiecki, author of The Wisdom Of Crowds

Previously: James Surowiecki’s The Wisdom Of Crowds… still stands.

Previous blog posts by Chris F. Masse:

  • A second look at HedgeStreet’s comment to the CFTC about “event markets”
  • Since YooPick opened their door, Midas Oracle has been getting, daily, 2 or 3 dozens referrals from FaceBook.
  • US presidential hopeful John McCain hates the Midas Oracle bloggers.
  • If you have tried to contact Chris Masse thru the Midas Oracle Contact Form, I’m terribly sorry to inform you that your message was not delivered to the recipient.
  • THE CFTC’s SECRET AGENDA —UNVEILED.
  • “Over a ten-year period commencing on January 1, 2008, and ending on December 31, 2017, the S & P 500 will outperform a portfolio of funds of hedge funds, when performance is measured on a basis net of fees, costs and expenses.”
  • Meet professor Thomas W. Malone (on the right), from the MIT’s Center for Collective Intelligence.