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Pentagon Lets You Bid on Terrorism?
Elysdir writes "DARPA is creating an idea futures market, the Policy Analysis Market, to try to predict events in the Middle East. See Bloomberg article for more info." Read this article. I mean it. This is amazing.
Update: 07/29 14:45 GMT by J : The
NYT story
claims "The White House also altered the Web site so that the potential events ... that were visible earlier in the day ... could no longer be seen," but those example images are still being served:
Jordanian overthrow,
bidding on assassinations,
cool graphics... Update: 07/29 16:44 GMT by M : Looks like the publicity was too much.
Ny Times article (free reg, stop whining) says it's not just for the Middle East. In any event, while I support innovative ways of fighting terrorism (as opposed to wiretapping everyone and giving the president imperium, etc) the idea of making money off of death is exceptionally disturbing.
Says this is another idea from Admiral John Poindexter of, most recently, Total Information Awareness fame. Sounds like he might be a sick sick man.
Karma: T-rexcellent.
Remember Jim Bell? Posted comments to the effect of setting up a system where you can bet on who will be assassinated. He got into deep trouble with the courts who tried to censor any mention of it. Here is some more information.
Visit Long Bets if you want to read about and place money on more interesting wagers. And you don't have to worry about Big Brother looking over your shoulder!
by John Brunner, in "The Shockwave Rider", based heavily in Alvin Tofler's "Future Shock".
The principle is called Delphi Polling. It is based on the observed fact that the aggregate answers of a large number of people sufficiently knowlegeable to understand a question seem, empirically, to be more accurate than the anwers of any one expert. Even though the answers of any one non-expert may be wildly out, the errors cancel out to a good approximation of the correct answer. Futurologists have been using it for a while to predict trends, and it works better than tea leaves, crystal balls and just plain "informed opinion" i.e. guesses. The USN even tried it with flying a plane, and it worked there too.
Consciousness is an illusion caused by an excess of self consciousness.
Given that the PAM only allows 1000 people a day to sign up, it'd take just under 3 years for even one million people to sign up. I don't think that the economic impact of the PAM will have any statistical significance. There's a really good piece on information markets on the New Yorker's website.
Here's DARPA's FutureMAP website which explains a little more about the idea than the article did. Note that this is a follow-up to a previous, similar program.
"Share your knowledge. It's a way to achieve immortality." -- Dalai Lama
The chorus from the killer track "Domination" on the album "Uncivilization" by Brooklyn's finest hardcore act:
--
Forgotten fathers and long lost brothers
Who fought for freedom
Through piles of lies
It was for our rights
Our ancestors died
War brings profit
And profit breeds greed
For those who died in vain Godspeed
And to those who re-write the constitution
Fuck off and die motherfuckers
It's our revolution!
--
The whole album speaks volumes about our times.
Get it, open the windows, crank up the volume and blow up your neighbourhood.
Down for Life and peace out motherfuckers.
What?
Read The Tylenol Murders, and go down to motive. In fact a google search turns up nothing close to your assertion and all articles say that the cases in both 1982 and 1986 are unsolved.
Please site your evidence.
You might want to read this New Yorker piece on the effectiveness of information markets.
The book Blind Man's Bluff also gives a detailed account of how the lost submarine USS Scorpion was located. All the experts could only narrow it down to a 20 mile radius. With no other options, they resorted to taking real money bets from other submarine commanders on the probabilities of different scenarios. Result? The submarine was found within a couple hundred yards from where they guessed.
Can you imagine some Navy officer going to his superiors at the Navy and explaining that we're going to try and find a submarine by having a betting pool on it? It sounds completely insane, and personally I can't believe anyone had the balls to suggest it. But it works. When people have a skin in the game, they tend to give their best, most honest appraisal. If it was up to me, I would require intelligence analyst types to participate in this kind of thing.
This is the science behind it
I really, really hope this is a joke...
Even senators thought this was a joke so you can be excused for thinking so. See the bold text from the rejected submission below - it's from the NY Times article.
Poindexter's Middle East Terror Bookie Scheme
2003-07-29 08:16:21 Poindexter's Middle East Terror Bookie Scheme The NY Times reports on DARPA's latest scheme: an options and futures trading market where you can bet on assassinations, toppling governments, instability and war in the Middle East (Google). The $8 million program is under the control of Admiral John Poindexter who brought us Total Information Awareness. The Policy Analysis Market starts taking registrants this week and betting/trading begins in October. Senator Byron L. Dorgan of North Dakota, said the idea seemed so preposterous that he had trouble persuading people it was not a hoax.
I understand your point. May I play devil's advocate for a moment?
Wouldn't this market be the same thing as insurance? When you buy a fire insurance policy you're betting that your house will burn down.
Isn't it likely that companies with Middle East contracts might use this to hedge their exposure? Then there'd be a swarm of speculators, which would serve the function of making sure there'd always be somebody to buy or sell a futures contract.
The speculators would then have an incentive to study the region. They might even develop their own sources of information. They'd be a CIA with a profit motive. Maybe with many eyeballs, all events are predictable.
I was listening to a spokesperson from the Economist on BBC this morning, defending the Economist's involvement. She mentioned that there was a $100 limit (per bet, i believe?)
So, no one is going to make millions blowing up buildings...
The facts have a liberal bias. --The Daily Show
Wouldn't this market be the same thing as insurance? When you buy a fire insurance policy you're betting that your house will burn down.
I think anyone who's had their house burn down would most certainly disagree with you. While you might look at their charred house and payout of two times the house's value and see a good bet, they look at the charred house and see all their possessions destroyed. I don't think that's what they were in for when they signed up for the policy. Insurance is not a bet that the event will occur. It is protection in the unlikely case that the events do happen.
Note: If you are the insurance company, then you are betting, but you are betting that the event will not occur.
Why buy airline options *before* 9/11? The share prices for airlines fell after 9/11 if I am not mistaken which means that the price of options would have fallen after that date.
It is a *PUT* option. It is a promise to sell the buyer the stock at a given price on a given date. As the seller you are betting that the stock will be *lower* than the price you promised to sell at, the buyer is betting that it will be higher. If the stock plummets you make money.
As reported in Yahoo News The Pentagon has Abandoned its plan for the Terrorism Betting. My favorite quote from the story:
"The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it's grotesque," said Sen. Ron Wyden D-Ore.
The idea was proposed way back by John Brunner in his book "Shockwave Riser" (highly recomended -- also read "Standing on Sansibar"). It's called a "Delphi Poll" or "Delphi Pool" (both terms seem to be in popular use), and there have been numerouse attempts to implement this (which usually failed because auf lack of betters).
The Idea is quite interresting, especially with respect to the concept of self-fulfilling prophecy: if a number of people have bet a large amount of money on some future event, they will try to make it happen...
I have discovered a truly remarkable sig which this 120 chars is too small to contain.
Looks like the images are gone/slashdotd/censored... so here's a mirror
Jordanian overthrow,
bidding on assassinations,
cool graphics...
--
What is the sound of this sentence?
Some other poster mentioned put options on airlines in the wake of the 9-11 terror attacks. But if you saw the S&P 500 futures, you would know that when they reopened for trading after the attacks, the opening gap was tremendous, IIRC about 60 points. That's $3000 profit for a short Emini contract, which is traded electronically and requires less than $4500 margin (varies by broker). The big boy S&P 500 contract is $250 per point, so 60 points = $15,000 profit if you were short.
The important factor is the SIZE of the S&P futures market. It is huge and could easily absorb any short selling by Osama bin Laden without missing a beat.
The other Mideast futures lesson is what crude oil prices did during the outbreak of war in the first Gulf war. IIRC, the prices had been going steadily higher and when the airstrikes began, prices dropped $10 VERY QUICKLY. Crude oil futures trade 1,000 barrels, so you pocket a nice $10,000 if you were short. I've often thought the thing to do if you were Saddam was to go long on crude futures, do some sabre rattling, and then cash out with a nice profit...
pot.kettle(black);
This has been around for quite a while now...
http://www.ideosphere.com/fx/
Trust not a man who's rich in flax / His morals may be sadly lax
Actually, it's the other way around:
If A sells B a put option on American Airlines with a strike price of $10, A is giving B the right to sell one share of AMR to A at $10.
If the stock goes down, say to $3, B can go into the open market, buy a share at $3, and then immediately sell it to A for $10, netting $7. (In reality, options aren't settled this way - A just pays B $7 directly, B doesn't have to buy the stock and then resell it).
In the scenario described above, B is betting that the stock will decline, while A is betting that it will stay stable or rise.
You described selling a call option, which is also a bet that the stock will go down. If A sells B a call on American at a $10 strike price, then A has sold B the right to _buy_ a share of American from A at $10. If the stock drops below $10, the option is worthless (B would be insane to buy a share from A at $10 if he can buy in the open market at $5). If the stock goes up to $15, then B can buy the share from A at $10, and sell it in the open market at $15, netting $5. In this case, A is betting that the stock will decline, while B is betting that it will rise.
The both buying a put and selling a call are bets that the stock will decline, the two have different risk profiles - if you buy a put, the most you can lose is whatever you paid for the option; if you write a call, your losses are technically unlimited (i.e. you sell a call at $10, and the stock goes to $1 million a share - you're on the hook for $999,990 per share).
This graph shows that in absolute terms, the US is fourth, behind Japan, France and Germany.
Of course, overseas aid is a complex thing, and absolute numbers don't begin to to tell the whole story (for example, private charitable giving in the US waaaay exceeds the official government amount; for another, the "tied" aid I mentioned in my original post).
But whatever figures you use, I think it's hard to make the case that the US is doing well in its overseas aid.
My next sig will be ready soon, but subscribers can beat the rush
Informative?!? Are you on crack? The guys posted a bloody .doc file infected with a fucking Sircam virus! Gawd, please check those links...