Intrade Shutdown Hurts Academics 131
New submitter jader3rd writes "Intrade, a popular Irish website that lets people bet on anything, has shut down. In addition to being used by gamblers, Intrade has been used by academics and pundits to track public sentiment. '"... broad crowds have a lot of information and that markets are an effective way of aggregating that information," says Justin Wolfers, "and they often turn out to be much better than experts."' Being forced to lose their U.S. customers couldn't have helped.
The question (Score:5, Insightful)
The question isn't whether other people "should have" the right to gamble.
The question is whether YOU should have the right to employ violence (meaning physical force or threat thereof) against other people in an attempt to stop them from gambling.
Now that the question has been properly rephrased, it can be properly answered.
Re:The question (Score:5, Funny)
Come see the violence inherent in the system!
Re:The question (Score:5, Insightful)
It is actually a more general question. The question is whether the government has the right to use force (i.e. the police busting into your house with a SWAT team and shooting your dog) to prevent a person from doing an act that harms nobody but themselves or another fully consenting and knowledgeable adult. Drugs, polygamy, gambling, legal age prostitution, etc., could all be arguably classified under victim-less crimes. And not surprisingly, all of these are crimes against morality (except when there in a financial interest such as the lottery or alcohol sales).
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Only if one is willing to disregard non-victimless crime that is often correlated, specifically with drugs and gambling. Even if violent crime, burglary, embezzlement, and the like don't occur on a 1:1 basis with, say, drug use, gambling, or gun ownership, that isn't to say that those practices are completely harmless. Indeed, a civilized society that cares about the health and well-being of
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That's a slippery slope that ends with 100% government control over everything you do because everthing you do affects your breathing rate, which affects the air, which affects other people.
This analogy is stretched, but history shows it isn't stretched as far as you'd like to believe.
It is the core of sophistry in government expansion.
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Shut up! You must be a terrorist! If we don't molest everyone at airports, the terrorists will get us!
Re:The question (Score:5, Insightful)
What a stupid argument. Make something criminal and then complain that it gets associated with other criminal activities, so it's alright it's criminal. Complete circular nonsense.
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I think drunk driving should be 100% permissible. However I also believe that any accident that can be tied to that impairment should be considered willful and premeditated. Have an accident? It's now willful destruction of property. Hurt someone? It's now premeditated assault. Kill someone? 1st or 2nd degree murder.
Punish the crime, not the potential for crime.
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The real question for you is whether that non-1:1 correlation is with those particular activities or with the prohibition of those activities. There are many proponents of legalization that are not enthusiasts of the substance/activity but, instead, believe that the black market created by prohibition is to blame for the majority of the problems.
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That's not a "civilized society", that's a totalitarian society.
It's none of your business, and in fact, you have no idea what is "responsible" or "desirable" for me. Just because you think that reducing risk and extending your life is th
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Polygamy isn't illegal, unless you want the government involved in the marriage.
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Actually, the state governments of the U.S. perform raids [wikipedia.org] on polygamist organizations from time to time. Not all of which are associated with other crimes.
Re:The question (Score:4, Informative)
While this is true, nowadays they tend to restrict their raids to organizations where they get evidence or a tip that teenage girls are being 'married' to adult men, and usually charge the perpetrators with statutory rape, sex with a minor, or suchlike (depending on state laws, etc). The organization itself also gets slapped with aiding/abetting and similar.
Your specific cite occurred in 1953, which was probably the last time they could simply tear into a polygamist group just on that one charge alone. (the April 2010 raid was on misuse of public funds, not polygamy).
I suspect nowadays that if they tried making arrests on mere polygamy charges, it would wind up in the Supreme Court, which would likely strike it down (and open a somewhat smallish can of worms). Another part of it is the loopholes (legal marriage versus "spiritual" marriage) that polygamists use to skirt the law. As further evidence I present that stupid 'reality' TV show Sister Wives [wikipedia.org], where that behavior is paraded openly on television.
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Yeah, I'm inclined to agree that it doesn't happen anymore, but to say that moralizing crusades to punish people doing no harm to others aren't without a ton of precedent in the U.S.
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As further evidence I present that stupid 'reality' TV show Sister Wives, where that behavior is paraded openly on television.
There are a lot of 'reality' shows today that show criminal activity openly. Moonshiners [discovery.com], The Devils Ride [discovery.com], and Amish Mafia [discovery.com] to name just three. (All on Discovery, it appears. Hmmm...)
I wondered how these people could allow TV crews to come and tape their illegal activities without worrying that the police would just use the tapes in court. Tim the Moonshiner made a comment during an episode that for some reason the cops cannot use this material, they have to actually see them break the law. He said he had
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If you're going to ask that question, you might as well ask does the government have the right to use violence against people who have harmed neither themselves nor the others. If you think the answer is obviously no, then I hope you are in favor of abolishing the income tax.
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The Harm Principle doesn't negate a person's duties. If you don't pay income tax but still take advantage of the services the government provides, like police, roads, and schools, then you have failed in your duty. If you are the rare individual who was homeschooled (or raised by wolves) and lives out in the middle of Alaska and in no way takes advantage of government services, then sure, pay no income tax (which will be easy since you won't have any income). Failing in your duty does harm actually people,
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If you don't pay income tax but still take advantage of the services the government provides, like police, roads, and schools, then you have failed in your duty.
Isn't that like the people who don't pay for movies, pirate them anyway and or use Adblock on websites then say something like
http://slashdot.org/comments.pl?sid=3532567&threshold=0&commentsort=0&mode=thread&cid=43130289 [slashdot.org]
So what? Most Dutch investments in 1636 were in tulips. They didn't have a god-given right to make money, either.
Another popular analogy is BUGGY WHIP MANUFACTURERS who also DON'T HAVE A GOD GIVEN RIGHT TO MAKE MONEY.
Though apparently slashdotters do have a god given right to use stuff without paying.
Re:The question (Score:5, Informative)
Drugs, polygamy, gambling, legal age prostitution, etc., could all be arguably classified under victim-less crimes.
That's not the issue here at all. http://tippie.uiowa.edu/ [uiowa.edu] and other futures markets run without CTFC interference.
It's not gambling that's the issue here. The investigation at hand is about undocumented payments from the company to its (retired) founder and others, and whether there's potential investor fraud--a crime with an actual victim--going on.
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An acquaintance of mine whose husband snorted both of their entire retirement funds up his nose might question that. So might a friend whose father consistently gambled away most of his take home pay. There's more to consider than just the direct participants.
Re:The question (Score:5, Insightful)
An acquaintance of mine whose husband snorted both of their entire retirement funds up his nose might question that. So might a friend whose father consistently gambled away most of his take home pay. There's more to consider than just the direct participants.
Yes, but you are using today's drug math. If cocaine wasn't illegal, it wouldn't be so expensive. And if it was well regulated, the dosage could be monitored.
But what if he blew his money on the stock market or a crazy investment? There are a million stupid ways people lose their retirement savings. You can't put people in plastic balls to protect themselves from everything in the world and you don't need to burn down crops and indirectly fund insurgencies in Colombia because some asshole snorted cocaine. It is amazing that you talk about considering people other than the direct participants while supporting the War on Drugs.
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Yes, because after all.. alcohol, which is well regulated, hasn't caused any collateral damage. No, I'm not using "today's drug math", I'm pointing out reality - there is rarely any such thing as a 'victimless' crime. (Otherwise, what you're proposing is a system of legalization that is so regulated that it won't work like you think it will. If the
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Compared to prohibition? Be real.
You're the one who brought it up! Jesus H. Christ!
As far as the effect of victimless crimes, sure there may be an effect. But it is a second order or third order effect. Do people steal cigarettes
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Compared to prohibition? Be real.
Um, swoosh? DerekLyons' first sentence was fairly obviously sarcastic.
Re:The question (Score:4, Insightful)
>The topic here isn't "ways to blow retirement savings", the topic is "the effects of so called victimless crimes". That you feel the need to change the topic tells me all I need to know.
So it is ok to "blow retirement savings" if the thing it is blown on is legal? It isn't changing the topic, the topics are the same.
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I didn't say they were did I? Nor does the existence of other ways to waste money change the fact that there crimes that the OP claims are victimless - aren't.
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An acquaintance of mine whose husband snorted both of their entire retirement funds up his nose might question that.
Making the entire substance illegal isn't the answer. That's just collective punishment. Same for the rest.
There's more to consider than just the direct participants.
Just about everything you do affects other people indirectly, but just because they think something is harmful or could be abused in some cases doesn't mean it should be illegal.
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Are these people incapable of making decisions for themselves? If you're married to a creep, leave him. And if you're an adult and your father gambles his money away, that's none of your business.
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An acquaintance of mine whose husband snorted both of their entire retirement funds up his nose might question that. So might a friend whose father consistently gambled away most of his take home pay. There's more to consider than just the direct participants.
So the answer is making gambling illegal, because the father gambled the money away? What if he gave it all to charity, or tossed it out the window? Or tried to start a business that failed?
Yes most "victimless" crimes have collateral damage, but so does almost everything else.
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While I agree, mostly, I should point out that Polygamy causes similar harm to society as a whole as selective abortion of female children. It causes an excess of unattached (and frustrated) young males, which increases local violence and society's predilection for violent resolution of disagreement... ie, war. [reason.com]
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Or not.
Depending, of course, on whether you're using the correct definition of polygamy (marriage involving more than one wife OR husband), as opposed to say, polygyny (more than one wife) or polyandry (more than one husba
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> (i.e. the police busting into your house with a SWAT team and shooting your dog)
This is Ireland we're talking about, they may have their own dysfunctions but this isn't a common one.
All this is just pointless hyperbole. Your basic question is: does a state have the right to regulate economic activity? and just about everyone except "libertarians" agree that they do. The money you make and how you make it is the government's business. If you're engaging in not for profit activity you get quite a bit mor
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Government has the right to do so, and has always had the right to do so. They can ban anything they like, and have the means to enforce it.
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The answer is always "I want the government to step in and act violently on behalf of what I want them to do, but not for anyone else." Lets see if that holds true this time (I find the answers more amusing when I add in the previous answers).
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Clearly, the violence we are talking about (the violence required to outlaw gambling) is offensive violence, not defensive violence.
Clearly the analogy used didn't address offensive vs defensive violence. And Is there a difference if the defense is in response to a non-violent act?
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Your definition of violence appears to be defective.
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After that, we are discussing the probability of a hit that determines a "high likelihood". And interestingly, most people who disagree with my stance on violence disagree if I use that definition, beca
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The answer is always "I want the government to step in and act violently on behalf of what I want them to do, but not for anyone else."
I assume you mean to say "I want the government to force everyone to do what I want"? The alternative reading, "I want the government to do what I want the government to do" is a meaningless tautology. So you think everyone wants the government to use force, up to and including violence, to make you live as they want? Most people do NOT think that way. Most people value freedom.
For example, I want you to get health coverage. I do not want the government to arrest you if you refuse to get governmen
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So you think everyone wants the government to use force, up to and including violence, to make you live as they want?
Every Libertarian I've ever met believes that. They want the government to step in and initiate violence when they have a dispute (suing someone is a private person enlisting violence from the government). They'll try to re-word it millions of ways to hide/confuse the issue, but it all comes back to, at the minimum, the government is there to (at a minimum) enforce contract law. That, and initiate violence against women who want abortion, and other such edge cases.
For example, I want you to get health coverage. I do not want the government to arrest you if you refuse to get government approved coverage or pay them a penalty. I want you to work hard, generate a lot of wealth, and give away as much as you can. I don't want the government forcibly taking what you earn and giving it away to their voters. Nor do I want the next logical step - the government physically forcing you to continue working 60 hours a week despite the fact they are taking 60% of your pay.
Where do they physically force you to wo
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Most people value freedom.
Most people? I'm just not seeing that.
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That rephrasing cleverly hides a different question, of whether anyone has the right to bind their own fortune to another's, without all parties' full awareness and consent.
This is the heart of many of gambling's problems, especially those involving professional sports. Once someone has placed a large enough wager, it is in their best interest to try to affect the outcome, which usually involves breaking other laws and restricting others' freedom. Not every wager can be rigged effectively, but enough can be
Re:The question (Score:4, Insightful)
If a woman marries a rich man it is often in her interest to kill him and inherit. Perhaps we should make marrying rich men illegal so that women won't be tempted to murder their husbands in their sleep.
Making an activity that many adults do responsibility a crime just because some adults who do the same things also commit crimes that may or may not be related is dumb.
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Legal marriage is done with full knowledge and consent. If a woman were to unilaterally declare herself married, and somehow produce the appropriate papers, the fraudulent marriage itself wouldn't be legal. On the other hand, a man entering into marriage is (or at least should be, and this is aided by varying laws) aware that his fiancee's fortune depends on his own, so he may wish to take certain precautions as he sees fit, such as a pre-nuptual agreement or a legal will.
My point is not to advocate for or
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Only half? She's aiming low.
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If a woman marries a rich man it is often in her interest to kill him and inherit.
Wow... no it isn't. The options are, be free and have money, or risk life in jail for more money. It isn't in her interest. It might be in her interest if he died, but not for her to kill him.
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This is the heart of many of gambling's problems, especially those involving professional sports. Once someone has placed a large enough wager, it is in their best interest to try to affect the outcome, which usually involves breaking other laws and restricting others' freedom.
Down the slippery slope we go...
"Gambling should be against the law because someone might want to effect the outcome in ways that break other laws."
I have a house painting addiction. I put a new coat of paint on my house every 6 months. Unsurprisingly this turns out to be very expensive and if I continue doing it I will end up in serious financial trouble. I wish the government would make house painting illegal so that I wont turn to crime to support my house painting habit.
Statistically, a significa
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In my opinion you absolutely have the right to gamble, and lots of others such as drug use, engaging in prostitution, self-mutilation, suicide, driving without a seat belt and more. However you also have the right to starve, freeze, die of disease, or to spread your brains all over the wall behind you because you wondered what it looked like down the gun barrel. An example of this is the moron Aron Ralston, who had the right to "gnaw" his own arm off because he had the right to go climbing alone without tel
The Answer - Yes (Score:2)
And the answer, as it always is when twisted in that libertarian way, is yes. Society has the right to set rules and enforce them. And I, as a part of society, can support such rules. Not as an individual, but as a society.
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Just reframing the question makes a world of difference.
In fact, my definition of a 'free society' is simply one where the DEFAULT position is freedom.
Forget a second about details about what regulation is best... and just phrase all your questions in respect is 'freedom' the default position.
If freedom is the default position, then it is up to the government to prove that the freedom granted to individuals is too great for the society that the government must use violence or threat thereof to stop the acti
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Comment removed (Score:5, Informative)
Comment removed (Score:5, Informative)
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"The moves followed concerns raised by the companyâ(TM)s auditors over more than $1.5 million payments to Intradeâ(TM)s founder, John Delaney,
He's one of the Q, what does HE need human money for?
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That money was just resting in my account!
Shit! (Score:3, Funny)
I bet this wouldn't have happened!
Good job, whoever is against online gambling (Score:1)
If neither the bible pounders nor casino semi-organized
Re:Good job, whoever is against online gambling (Score:4, Insightful)
Err, bad news... I doubt the shutdown was religiously motivated.
Even outright atheists in government would happily close the site. Why? Because government doesn't get the huge 'vig' [wikipedia.org] off of it, like they do with lotteries and suchlike. Now state lotteries on the other hand (especially as they expand into casino territory, with "video lottery" slot machines [oregonlottery.org], keno, etc)? Well, the governments get their take in way bigger chunks. This in turn raises a huge incentive to keep competition from private industry to a minimum.
After all, if folks are going to gamble anyway, you may as well make it a levy on idiocy while funding government coffers at the same time...
I'm against money laundering (aka gambling) (Score:2)
Does that make me a bible thumper? Wow. Amazing to find that out.
Seriously, anonymizing money transfers (which is one of the main functions of gambling and casinos) makes for easy money laundering and
Think of it this way: passing money through a casino or betting venue (online or offline) is effectively a one-way function - you can't trace the money to it's source. Ever wonder why James Bond is always hanging around casinos? Because that's how he gets paid to do his dirty deeds (at least that's the real
just use social media (Score:1)
popularity seems to be measured by retweets lately
Intrade Unethical (Score:2, Interesting)
The summary left out the an important part of the about why Intrade is closing.
According to www.Intrade.com
" With sincere regret we must inform you that due to circumstances recently discovered we must immediately cease trading activity on www.intrade.com.
These circumstances require immediate further investigation, and may include financial irregularities which in accordance with Irish law oblige the directors to take the following actions: "
In 2005, Intrade specifically made an agreement with the CFTC not
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Doesn't really tell me much aside from they probably should have asked anyone in the financial industry whose palms they needed to grease.
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In 2005, Intrade specifically made an agreement with the CFTC not to trade options on commodities and futures. Then in 2011 they broke that agreement by offering options on commodities and futures, thus resulting in the CFTC filing a lawsuit against them.
So, it was a territorial dispute. Like what goes on with the Mob.
The CFTC didn't do squat to regulate the CDO/CDS markets surrounding mortgage debt. So it looks like their only function was to keep competitors out of the business. If this was garbage pick up in New Jersey, they would have sent a couple of enforcers over with iron pipes. Thank goodness we have the courts to take care of that for them.
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The CFTC didn't do squat to regulate the CDO/CDS markets surrounding mortgage debt.
Probably because mortgages are not commodities, and thus outside their purview (just as they would not have arrested any bankers or stockbrokers if they had robbed someone with a gun, but would have left that to the appropriate police force).
Obviously, the "Unethical" in the title is a bit of a stretch. The ethical violation was to violate their 2005 agreement, which only covered a regulatory matter.
ObCarAnalogy: It is as if they broke their agreement to no longer drive without a valid license and sufficie
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Probably because mortgages are not commodities, and thus outside their purview
Collateralized mortgages are a form of derivative and should have been under their purview [wikipedia.org]. Except that Congress allowed these to be traded off exchange and bypass CFTC oversight. So it isn't the CFTC's fault that these remained unregulated.
Blame Congress. And Alan Greenspan
So... (Score:1)
Anybody do one of these in Bitcoin yet?
I was gonna say I bet it's just a matter of time, but, well...
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Yeah, it's here: http://betsofbitco.in/ [betsofbitco.in]
Also, the Iowa Electronic Market is still up in the US (and has CTFC approval) if you prefer dollars: http://tippie.uiowa.edu/ [uiowa.edu]
Dammit! (Score:1)
Why do I only ever find out about these things, when it's too late?
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Because you haven't been following the line on Intrade getting shut down.
There's Foresight Exchange (Score:1)
If trading funny money and a bare-bones web interface is OK, there is Foresight Exchange (aka Ideosphere) which has worked almost flawlessly since 1994.
http://www.ideosphere.com/ [ideosphere.com]
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IEM's been running real-money prediction markets since 1988. They're still up and running fine (and their FAQ links to their CTFC approval letter).
http://tippie.uiowa.edu/iem/ [uiowa.edu]
Not the only one around, nor the oldest (Score:5, Informative)
I never understood why Intrade got so much press--the Iowa Electronic Market has been doing the "online futures trading" thing for far longer. They're still up and running at: http://tippie.uiowa.edu/iem/ [uiowa.edu]
And they have approval from the CTFC: http://www.cftc.gov/files/foia/repfoia/foirf0503b004.pdf [cftc.gov]
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The political prediction markets at IEM aren't limited to academics. From their FAQ:
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A market where money isn't at stake is no market at all
I agree, but I don't see how it's relevant to my post. The IEM markets are real money markets and you cannot participate without putting money in:
100% of Intrade users (Score:1)
Should have seen this coming. Results strikingly accurate among computer savy individuals who understand how prediction markets work.
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don't live in the US? elsewhere you still can. or you could set up a bank account out side of the US
Re:What difference between gambling and insurance? (Score:5, Informative)
In general terms its called "insurable interest". If you are exposed to a loss and you hedge against it, its insurance. If its not your house (or football team*), its gambling.
*The league has their own regulations prohibiting "insurance" against a loss by those with financial exposure to sporting outcomes like team owners.
Good (Score:3, Interesting)
The problem I have with futures trading is that it creates incentive for things to go one way or another.
What if I were to bet 500k that ${ASSASSINATION_TARGET} was not going to die by getting shot and then thrown in the east river tomorrow?
Someone who sees that would then have incentive to make that happen.
Even in more limited ways it can still be a problem. Sports history has instances of people throwing games in order to make large amounts of money. I could see the same causing sabotage in industry. You cant publicly bet on things without changing the probability that they will happen.
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So now we understand why allowing "investors" to purchase naked credit default swaps [wikipedia.org] at a rate of 5 for every single derivative covered caused the market collapse. More people stood to make a profit by a failure of the underlying security. No collusion needed. That's how the 'wisdom of the markets' is supposed to work.
Why AIG and half of Wall Street wasn't thrown into prison for operating a numbers racket, I'll never know.
Stay tuned. The investment community wants regulations on "insurable interest" lif
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A decent analogy is buying fire insurance on your neighbor's house if you can't buy insurance on your own, because your neighbor is likely to catch fire if you do.
A better analogy is that the market wrote 5x the insurance coverage for your aggregate neighborhood. So if you didn't buy insurance for your house, 5 other people bought policies on it anyway. Or 10 people bought policies on every other house, etc.
The idea that risk hedging instruments can be traded separately from their underlying asset is crazy enough. But to allow companies like AIG to generate multiple policies on selected assets is far worse.
Often if you own the ref ob but don't want the credit risk, it makes more sense to sell the ref ob than to buy CDS on it.
Lets take this idea one step further: If you don't like inve
If the adademics find it so useful... (Score:2)
Let them find a way to fund it themselves. The Hollywood Stock Exchange has been doing just fine for over a decade on ad revenue. [wikipedia.org]
Prediction Markets (Score:2)
The CIA actually run a prediction market for a while until public outcry caused them to shut it down.
http://www.forbes.com/sites/andygreenberg/2011/04/20/cia-investors-aim-to-build-a-pseudo-gambling-market-for-data-security-predictions/ [forbes.com]
The CIA has long been intrigued by the intelligence potential of prediction markets. A 2006 paper the agency published cited examples like betting markets that predict election outcomes more accurately than polls, and orange juice future markets that predict weather better than meteorological organizations. It also pointed to the use of prediction markets within corporations like Google and Eli Lilly, which have sometimes skirted gambling laws by supplying their employees with âoeinvestment fundsâ and given them an opportunity to make wagers based on their knowledge.
The Defense Advanced Projects Research Agency (DARPA) even launched its own prediction market known as FutureMAP for intelligence purposes in 2001, though the program was canceled for political reasons in 2003. As the CIAâ(TM)s paper notes, Senators Byron Dorgan and Ron Wyden called such experiments âoeterrorism betting parlors,â and argued that âoespending millions of dollars on some kind of fantasy league terror game is absurd and, frankly, ought to make every American angry.â
What's interesting is that prediction markets seem to have advantages over opinion polls. E.g.
http://www.lewrockwell.com/rozeff/rozeff88.html [lewrockwell.com]
In an article in support of rational markets, Mark Rubinstein relates this story:
"At 3:15 p.m. on May 27, 1968, the submarine USS Scorpion was officially declared missing with all 99 men aboard. She was somewhere within a 20-mile-wide circle in the Atlantic, far below implosion depth. Five months later, after extensive search efforts, her location within that circle was still undetermined. John Craven, the Navy's top deep-water scientist, had all but given up. As a last gasp, he asked a group of submarine and salvage experts to bet on the probabilities of different scenarios that could have occurred. Averaging their responses, he pinpointed the exact location (within 220 yards) where the missing sub was found."
James Surowiecki in his book The Wisdom of Crowds tells the story of the game show "Who Wants to be a Millionaire" in which a contestant could ask an expert for help with a question or ask the audience. The experts were right 65 percent of the time, and the audience was right 91 percent of the time.
Jude Wanniski related a story told to him by Jack Treynor, a finance guru. Treynor had his class guess the number of jelly beans in a jar holding 850 beans. The average guess was within 3 percent of the total. Wanniski, by the way, correctly realized that this supported the efficiency of financial markets. He also, in my opinion incorrectly, construed this as proof of the efficiency of political markets, an opinion he expanded upon in The Way the World Works.
Prediction markets in general perform exceedingly well compared to individual forecasts. In his article on prediction markets, Philip O'Connor writes: "In fact, studies of prediction markets have found that the market price does a better job of predicting future events than all but a tiny percentage of individual guesses. The analysis below of the Virtual Super 12 shows the average selection, an average or constructed market price, to be better than 99% of participants' selections."
He continues: "A short list of other evidence includes the following:
Markets that predict elections have been shown to outperform the predictions of opinion polls.
Prediction markets on movie box-office receipts and more obscure events have been shown to correspond closely with actual outcomes.
Sports gambling markets are excellent predictors of actual outcomes.
Laboratory experiments demonstrate that markets do the best job of aggregating information across participants in a controlled setting."
The bits of information possessed by independently thinking individuals are aggregated into market price, just as they are averaged into consensus judgments about jelly beans or correct multiple choice answers. The resulting outcomes tend to be more accurate than those of the individuals in the group and often more accurate than experts.
To make this happen, the individuals should make independent assessments. If they all get together as a committee, talk things out, and reach a consensus opinion, we probably will not find this result. People on committees influence each other in many ways, as anyone who attends such meetings knows. Anonymity is absent, and information and independent opinion often are suppressed.
Hayek's 1945 paper on knowledge and prices begins to explain why prediction markets predict accurately. Hayek pointed out that knowledge is diffused among many individuals. It is hidden throughout society and changes according to particular circumstances of time and place. Prices aggregate this information. Hayek observed: "We must look at the price system as such a mechanism for communicating information if we want to understand its real function..."
Each person guesses at the outcome of a future event with error or noise. Some guesses are too low, and some are too high. In a sample of such independent guesses, the errors tend to cancel out when an average is struck. And if the outcome depends on many variables that no one person can assess but which many people might know a little about, the average will incorporate more variables than any single person might be aware of. In markets, if some people have better information than others, they are more willing to bet and bet more because they are more sure of the outcome. The bottom line is that prices tend to aggregate and therefore communicate information, although of course not perfectly.
Markets get it right, usually better than individuals do. Noise cancels out. Markets are on target, as much as anyone can be. Submarines get found. Winning horses get picked. Candidates who win get picked ahead of time. Predictions markets ignore a good deal of noise.
The market is a subtle beast - like evolution it is devoid of conscious intelligence but like evolution it is also devoid of blind sp
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Don't say stuff like that on the internet.
For all you know it might cause some agent dressed as a Rastafarian to read if, conclude OPERATION DREIDEL-YAMULKE [ocn.ne.jp] has gone live, snap their laptop shut and go off to kill someone.