Over the past few days several friends have mentioned their shock and outrage over what one called ‘the stupidest thing he’d ever heard of,’ regarding DARPA’s now cancelled FutureMAP (Futures Markets Applied to Predictions).
After wading through endless big-media ‘me-too’ stories, there are a few points about the concept of ‘Idea Futures’ which are worth considering. Idea Futures Theory is not new and apparently has a surprising record of accuracy. Considering that connecting disparate intelligence data is still a problem at the Pentagon, it should be a good thing that they’re looking towards unconventional data models.
“Senator Byron Dorgan, Democrat of North Dakota, asked what would happen if another country set up a betting parlor where people wagered on the assassination of an American political figure. I am sure he is right that there would be public outrage. But let’s turn the question around: If such a market were put in place, should the Secret Service monitor it? If there were an assassination attempt, should the authorities look for suspicious prior trading activity? And the most important question of all: If the market indicated that the probability of an assassination attempt had gone up, should the target take extra care? If you were a potential target, wouldn’t you want the best possible forecasts of possible attempts on your life? I would.”
Hal R. Varian writing for the International Herald Tribune/New York Times, Aug 1, 2003: Pentagon’s futures-market idea deserved a better response
“Economists believe financial markets do a pretty good job of aggregating information in part because they offer strong incentives to those who make good predictions.”
Hal R. Varian reprinted from the New York Times, May 7, 2003: A Market Approach to Politics
“This is just an alternative institution that tries to aggregate intelligence information… It’s a research project and it might not work, but there is a lot of history and data showing how effective markets are at predicting events.”
Ronald Baily quoting Idea Markets creator Robin Hanson in Reason, July 30, 2003:
Betting On Terror
Why futures markets in terror and assassinations are a good idea
“In declaring that anyone may make their voice heard in intelligence analysis if they are willing to put their money where their mouth is, Poindexter and the Pentagon would have gambled that their futures market will attract enough great minds thinking alike that patterns will emerge that are recognizable even at a view from the top.”
Greg Linsday writing for Black Table, July 30, 2003: That Whole Pentagon Futures Thing Ain’t Such A Bad Idea
“Our policy-makers and media rely too much on the “expert” advice of a self-interested insider’s club of pundits and big-shot academics. These pundits are rewarded too much for telling good stories, and for supporting each other, rather than for being “right”. Instead, let us create betting markets on most controversial questions, and treat the current market odds as our best expert consensus”
Robin Hanson, creator of Idea Futures and Prediction Markets
What’s most unfortunate about this program ending is that it closes the door on the potential for thousands of arm-chair policy analysts to contribute to national and world security. While this would be the market where one most wants to be proven wrong, those who do accurately predict negative events should have their predictions taken more seriously. To posit this proposal as the AP reported ‘allowed traders to profit by correctly predicting assassinations and terrorist strikes’, just completely misses the point and reflects sloppy or non-existant research. This could have helped guide more conventional intelligence towards unexpected or underestimated targets while self-managing an enormous amount of data.
Several of the above articles mentioned TradeSports.com (site is currently flooded), which introduced the idea of Poindexter’s resignation the day before it was announced.
TradeSports is also pointing towards no WMD in Iraq by September, Howard Dean overtaking John Kerry for the Democratic nomination and Bush decisively winning about 40-42 states in 2004. I guess we’ll see.
