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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.
This seems like a sleazier version of a 'dead pool'....
There are no commodities being purchased, and unlike the stock market there is (hopefully) no relation between the actions these countries are going to take and the investors "investing" in the liklihood of them occuring. However, right there is a huge flaw. It seems like a $1,000,000 investment in terrorists bombing isreal could potentially be a good enough reason for someone to bomb isreal.
Visualize the world of wine
Look at how unpredictably the stock markets behave already. When was the last time a major drop or surge in the NYSE or NASDAQ was accurately predicted by the majority of investors?
At best this kind of analysis helps you see trends over a long time period, but I don't see how that can help the pentagon except when they ask for more funding (See! Carbombings will increase by 50% over the next 5 years! Please give us money).
I think this is all a plot to make sure that the forthcoming film "Trading Places II" is a big box-office draw due to inclusion of lots of explosions, related to this new film being about bidding on military incident futures.
Don't blame Durga. I voted for Centauri.
Capitalism is a disease that has made America very very sick.
The reason players and coaches can't bet on sports is because they're in a position to manipulate the system for their benefit. Since every person on earth is capable of such terrible deeds, why should anyone be allowed to wager on them? Doesn't this just promote the things they're (supposedly) trying to prevent? Or is it just capitalizing on an already existing market? (I forget the URL but there is already a site that allows betting on world events - it peaked during the Iraq conflict.)
Rock!
I wonder if everyone simply voted that someone would be assasinated, if some crazy man would say he was obliged to kill him?
I think it could get interesting...
``How would you feel if you were the king of Jordan and learned that the U.S. Department of Defense was creating a futures market in whether you're going to be overthrown,'' said Dorgan, a member of the Senate Appropriations Committee.
I for one applaud this idea. Recent events have shown us that conventional intelligence agencies are out of their depth in the modern world; the CIA utterly failed on September 11th. When lives are at stake, bold thinking is needed. USD 3M is a tiny price to pay if the system enhances the military's ability to anticipate threats to American civilians.
Remember that the Pentagon will already be planning for the eventuality that the King of Jordan is overthrown; that's what militaries do when they're not actually fighting, they make plans. The only difference is that now the military is inviting opinions from third parties, some of whom may well have a better idea of what's going on.
Reminds me of the old joke about two efficient-market economists walking down the street. Economist one: "Look - there's a $50 bill on the sidewalk" Economist two: "Don't be stupid, if it was somebody would have picked it up already" I reckon that's about the predictive power of this initiative.
The author of this post asserts his moral rights.
It is not April First, is it?
This dogmatic idea that the market is the best model for almost anything in western society is creeping into subjects where the economics laws don't apply. The other side of this is would it be insider trading violation to bet a few mil that Jordan would be overthrown and then spend a few mil backing Jordanian rebels to overthrow Jordan increasing your turn. Capitalism is good, free markets are good, but for a market in statistical data to work the participants need to be involved in the creation of the data have complete intelligence on what they are betting or trading on and have some control of their goods. The subject matters broached do not seem to give them a full free market and not being a fully free market the data will be flawed.
It is not April the first or have I slept through atumn and winter this is just crazy.
I was thinking of the immortal words of Socrates, who said: "I drank what?" - Chris Knight (Val Kilmer)- Real Genius
This is moderated "funny", but it's less funny, and probably more true. Someone might be tempted to bet a lot if they had "insider information", and then the government would track them down to see what they know, and why they know it. Some might be false leads, but if the King of Jordan is assassinated 2 days after CmdrTaco bets $10,000 on it, I'd definitely question CmdrTaco if I were a fed.
Ceci n'est pas une sig.
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Ok, our stock markets are filled with lies, greed, and wild speculation. Let's fix that before we apply the same model to something that could take us to war!
"The new approach is to set up, as it were, a `market' in two kinds of futures contracts -- one pays $1 if an attack takes place; the other pays $1 if there is no attack, DARPA said."
I mean, holy shit dude! Rich guys putting bets on whether we'll go to war, then working behind the scenes to make sure it happens, so they get some profit! Christ, every day, I don't understand why I still live here.
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The reason why this is sick is because next time you read that some coward terrorist decided to blow himself up on a Tel Aviv bus, killing him/herself and 15 schoolchildren, a gambler somewhere will go make himself a cool $50 because he "bet" on this.
It is indeed a sick world when the response to a suicide bombing is "YES!"
I think any organization bright enough to pull off a major terrorist act would also be bright enough not to make a bet with the pentagon about when and where it would happen.
The stupidity involved in designing this system is amazing.
Isn't that a little like Greenspan running a pool betting on when and by how much the interest rates will change?
This is Futures trading. And just like most other non-equity based trading (Bonds, Convertibles, Options) you are simply buying a contract or some sort, not the actual equity (stock), so yes, this is an "investment" but then again, the entire market is gambling really, isn't it?
But of course the implications of something like this are just insane. Because someone put 1MM into a WMD going off in Isreal doesn't mean someone is going to do it. Someone will invest 1MM into this because they are going to do it themselves in the future. Market manipulation. Just like they did pre-9/11.
"Time is long and life is short, so begin to live while you still can." -EV
The Iowa Electronic Markets operated by the University of Iowa Tippie College of Business has been n operaton since 1988. It has offered real-money futures contracts for U.S. and other political markets including"Control of Congress" as well as the Democratic & Republican Presidential nominee and the popular vote share, Senate seats, Russian and French Presidential contests, etc.
Speculation can be strictly distinguished from gambling.
The speculator makes a bet on the outcome of a risky event which would exist in the absence of speculators, such as bad weather and natural disasters.
The gambler, finding nothing satisfactory for betting, sets up a slotted wheel, makes six-sided dice, designs cards which are identical from the back but different from the front, and then bets on what happens when these devices are randomized.
Speculation shifts existing risk. Gambling adds to the universal total of risk.
The Pentagon site is speculative.
This is a way for the government to tap the expertise of people who do analysis of the middle east and other areas of the world. It is essentially opening the field to experts who, while they might not have insider information, might have a good "gut instinct" for what's going on.
The Pentagon believes that knowing the probabilities that these people assign to different events will help them predict the likelyhood of those events (if I am reading this correctly)--there is something to be said for that.
As another poster pointed out, this is a kind of gambling. What the Pentagon is interested in, however, is not making money off of it: they want to know the probabilities that people are going to assign.
Will it be useful? Who knows. It has the potential to be and they think it is worth the cost of running such a service, I say let them. I'll be as interested in anyone in seeing how closely these predictions matrch reality.
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What a great way to fund future terrorism! All you have to do is load your bets on a target, then go blow it up! Talk about your self-fulfilling prophesies!
"Times have not become more violent. They have just become more televised."
-Marilyn Manson
I am now offically embarassed by the actions of my country.
I wasn't totally behind Gulf War II as my opinion is that if it's UN sanctions, then it needs to be a UN call. OTOH, I am totally willing to acknowledge that there is probably a lot about this I don't know and, therefore, chose to try and keep an open mind.
This however, is basically a country-wide "office-pool" on tragedy. At absolute best, its a ham-handed attempt at data-mining the population and even that is ethically "iffy" in my opinion.
Have we really sunk that low? Damn, I can't even watch prime time TV anymore because lately its all "reality game shows" where people are encouraged to screw each other over for fun and profit. This move by DARPA makes all that look like episodes of "Father Knows Best".
Sorry for the rant, it's just my initial reaction to this article. Maybe there is something about this I'm not understanding....I sure the hell hope so.
A goal is a dream with a deadline
Actually, one could argue that until weapons of mass destruction are found, this is a more credible line then the standard Bush/Blair one.
Unfortunately this is not funny. AC seems to fail to recognise that any criticism comes from the fact that the proposal in question is just freaking insanely, not because it is made in USA[1].
There is nothing wrong with defending your country, but uncritically doing so at any prize is.
[1]
Of course insinuations that there are very strong connections between proposals being freaking insanely and coming from USA would rightfully classify as "american-bashing statements", however I doubt that AC had only this in mind.
When you are sure of something, you probably are wrong (search for "Unskilled and Unaware of It").
So morticians shouldn't be able to profit from death either?
Mac OS X and Windows XP working side by side to fight back the night.
Aren't you just so glad that Poindexter is in charge of the department that comes up with such useful ideas?
LE
This could work as an anonymous bounty pool.
Think about it, you're a terrorist or just someone who's heard about some terrorist act. Sure, you could walk to the closest US embassy and tell the CIA representative what you know. But this option has many drawbacks. You don't know how the CIA guy will reward you; and if someone sees you entering the US embassy, you're history.
Now with this system, you just connect to the net, bet $100 on "suicide bomber blows Knesset" (for instance); and anonymously reap your 10 or 100 thousands.
But since the purpose of this program is to prevent terrorist attacks, they have an issue here. What happens if your bet on "suicide bomber blows Knesset" warns Israeli security and enables them to prevent the attack? Do you still win? If so, what defines the ocurrence of the attack that you predicted? Who decides? If not, the system won't work since betting on some event will reduce its probability.
But the main issue is anonimity. You need to be sure that you can place your bets and collect your cash anonymously. Nobody wants his house to be targeted by a tomahawk missile. And who will trust the Pentagon's terms and conditions?
It would be nice to be sure of anything the way some people are of everything.
It's amazing how the majority of /. readers miss the point of this system.
Futures-type markets are remarkably good at predicting future trends because they are essentially the consenses of thousands of people, who are confident enough in their outlook to put money on it. Because of this, the Pentagon launched this research project to see if they could harness that power in predicting terror. The point is not to make people rich off of terror attacks or assassinations, the point is to try to know where to focus your efforts in preventing such an attack.
Now as to whether it will work, who knows? If the investors know that the goal is the prevention of the events, therefore no payoff, will they put up the money? How will individual investors know the likeliness of various scenarios if they don't have access to top-secret intelligence, so therefore how accurate can they really be? It remains to be seen.
But again, this is only a RESEARCH project, to see if such a system is feasible, it isn't like we're betting the future of terror prevention on this.
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The problem is, what I would want to happen is not often what I expect will happen. Give me a real way to influence policy makers instead, and I'll be much more happy.
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the same type of people who try to get there deposit back on the van they blew up?
The Kruger Dunning explains most post on
For any given attack, there are going to be a lot of people who know about it beforehand. Some of those people are going to be stupid enough to try to profit on it.
When the futures fluctuate dramatically due to the new 'interest,' everyone at the pentagon knows that something is going to happen. The SEC uses it to catch insider trading, the NCAA uses it to catch game fixing. Q: Why can't the government use futures to catch terrorists?
A: Great idea, bad diplomacy. Hello! This is the US government we're talking about! We don't care how the rest of the world feels anymore.
I once saw an episode of COPS where they sent out contest-winning announcements to people they'd been trying to arrest for awhile, but never seemed to get able to get their hands on. The people gladly showed up to claim their prize where they were promptly arrested.
... shares were repurchased at a drastically lower price ... and terrorists probably gained financially from information they had about the upcoming events.
... waiting for the terrorists to come claim their prize.
Post 9/11 there was a lot of evidence indicating that there had been a great deal of activity short-selling holdings in the airline industry. 9/11 happened
Translate that to this futures market. The very nature of this market can serve as an indicator for future terror events. Every major investments will serve as a lead for investigators to track where the money is coming from to see if there are terrorist ties. The feds may be allowing the average Joe to gamble on terrorism, but they're also opening the door
your missing the point, this system isn't about insider information or profiting off terorism, its about gather intelligence upon the risk of terrorism / risk happening. This entire future market model is a risk assessment model where a market of thousands predicts the odds at which events happen. Here's what most people miss about this idea; when people have money, they always consider risk vs gains. Not many people are going to put a million down on France declaring war on the UK unless they're fine with throwing a million away. Inverselly, many people would hedge bets on Iran becoming a nuclear power because there is less risk in that issue (but smaller returns).
DARPA is running this program, think how valuable it would be to DARPA if thousands of analysts all started hedging bets on Iran. The use of money makes the bet relevent because people act more objectivelly with their true beliefs with real money.
This entire project seems to me like it was dreamed up by an economist because it does make sound economic sense. Have people who know the most about certain topics put future investment in to issues that are most likelly to happen. The best way to gauge the amount of risk in any issue is through money.
The most troubleing thing about this article to me is that it suggests the US goverment isn't doing enough in gathering adequete foreing intel to prevent international disasters from happening. ie International terroism
Would the Pentagon have been happy with a system allowing people to bet on where and when a terrorist attack happens in NY and how many civilians get killed there? Or is this a `we can do it to people with brown skin but they better not do it to us` thing?
Why does this sound eerily like a government-sponsored version of Assassination Politics, the piece written by cypherpunk/crypto-anarchist Jim Bell, who is now suing the government under RICO to get his freedom because they conspired against him?
Basically, his idea is the same thing, except people would be buying futures on the death of political personalities. It's strange, it's a bit fringe, it's not liked by the government except for when they use it for their own plans.
I do what the voices on my console tell me to do.
"a massive, currently relevant pool of opinions on the likelihood of any particular kind of terrorist attack occurring"
What are you talking about? Massive, yes. Relevant, probably not. The only way this could work is if the people investing the money had access to all the information. CNN and FoxNews are decent news sources, but their coverage of world events is clearly limited by our (and foriegn) governments.
For other markets where this has been a success, there was adequate information provided mandated by law. How open do you think the DoD will be with information relating to national security? (And if you don't think foreknowledge of a possible coup would be classified, you're living in a fool's paradise!)
When investors don't get adequate (or they are provided with incorrect) information, investors make inacurate (or just plain poor) choices. Look at corporate/market scandals like Enron and Arthur Anderson. With all the proper information, nobody would have invested in those companies. And look at everyone who lost big, because they didn't have all the information.
Imagine if the government had acted based on how the markets percieved Enron. They might have forced other energy companies to close (in darwinian fashion) to let Enron continue its successes.
At best its a honeypot, but thats all it is. At worst, it will ruin our already poor relations with other nations. But please don't think for a moment that there will be any correlation between this "market" and the real world.
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I agree, 100%.
There are a million benefits. The fact of the matter is that the data won't lie. The terrorists could try to ignore this, but someone in their ranks might not be able to. Ok, right there you've got the stated purpose.
If the terrorists try to play the system, they are giving themselves away, planting records, leaving data trails. If they try to corrupt the data (place misleading bets to screw with the data), use it for misdirection -- they are still doing this! It's all in the data.
A lot of the purported capability of this system might be shroom-induced statistical mumbo-jumbo. Statistics are the science of imprecision. But it's better to have a system like this, gathering this data, than NOT to have it. And I MUCH prefer this to other "ooh, data!" ideas -- like the TIA -- which would gather an enormous baseline of data on people that are not necessarily interested or involved with the Middle East, terrorism, or anything that is in any way relevant to the "War on Terror"!
Yes a predictive tool. Basicially, this a way to measure the current "worth" of a particualar idea by using a market-type game theory. As ideas become more likely, their worth rises so they will be bid-up by the masses (of analysts). The most likely will float to the top. The theory is that no one person has perfect (or infinite) insight and information, but thousands of people - each acting independently in a common market - will distill some insight by their collective action. That is classical political-economic theory.
Take the "money and morality" part out and you can see the academic value in a theory like this. Can anybody suggest a better option? Perhaps a bunch of ivory-tower professors and analysts making wild-a** guesses (WAGs) around a conference table? Which WAG is more "valuable" than the others?
They have never released any information on the parties who purchased the put options on the airlines and the company that covered the insurance on the WTC. Info is just sitting there waiting to be discovered on this. It would be very simple to track down, but it has never been done. This cover story that the options have never been claimed is rubbish. The options had to be bought from a trading account or brokerage somewhere in the system. It's like saying you have a check in your hand that hasn't been cashed and claiming that you can't look at the account number on the bottom of the check and tell who wrote the check.
There isn't any "science" in that article. Just unsubstantiated claims.
They ignore the most basic factor in this equation.
The people with the most knowledge may have an interest in hiding that knowledge.
The easiest way for them to do so would be to artificially inflate a completely different scenario to focus attention on that item.
Like bidding up an attack on Egypt on a certain day. When the actual event will be the assassination of an Israeli government official.
Omigod! Predictive tool, my ass! How desperate have we gotten to keep our economies stable in times of despair? A way to instantly give people an economic boost when tragedy strikes?
The ability to hedge against disaster has kept America strong for many years. Farmers use futures to protect against natural disasters and other problems, locking in profits regardless of crop yields. Insurance companies use futures to protect against natural disasters and partially fund payouts for hurricanes and other catastrophes.
The economic need for such a tool is real and not in the least bit evil. The fact that this could also have powerful, tangible benefit to those in a position to stop these disasters from happening is an awesome second advantage.
I see no reason why this isn't perhaps the most sane and intelligent thing that our intellligence agency has ever tried to do. Even if they are doing the "Dr. Evil" about it, it will still be a powerfully benign force.
The reason that it can be true that 1+1 > 2 is that very peculiar nonzero value of the + operator
it was originally slated to become a piece of TIA.
This is interesting if only because funding for the TIA was cut by Congress in the 2004 Defense Appropriations Act and killed by the Senate's 2004 defense appropriations bill recently.
Does this mean that TIA will be built through the back door with many much smaller projects instead of one massive project? The smaller projects could be linked and analyzed via a separate piece of analysis software. Commercial business intelligence and data-mining tools could probably do the job with a little modification.
It sounds a little like the title of that old Don Henley song, Building the Perfect Beast.
I think any organization bright enough to pull off a major terrorist act would also be bright enough not to make a bet with the pentagon about when and where it would happen.
The stupidity involved in designing this system is amazing.
RTA - You are missing the point. It's NOT about getting a stupid terrorist to make a bet on his own actions (though I'm sure that is a potential bonus). It is about getting honest, objective analysis of all the existing data from a wide range of professional and amateur analysts. We have more data than we know what to do with, any Joe with a TV and a computer with an internet connection has access to a vast universe of data that is simply too vast to be subjected to meaningful analysis by the experts employed by the intelligence agencies. This "market" is a way to not only do a massive amount of honest and objective analysis but also get honest and objective judgement on the quality of that analysis. Right now a few highly trained (and prejudiced by their training) experts with all sorts of conficts of interest and axes to grind, operating in a highly political atmosphere are being paid to write "insightful" analysis but NOT on whether their predictions come true. This market subjects a wide range of international political issues to the judgement of huge number of analysts who because they are putting their own money on the line will make honest bets about the probability of various outcomes, out of that mass of tiny individual bits of analysis a cohesive, widely (and more importantly) honestly held concensus of all those peoples best analysis emerges.
The main thing is that the "market" would be pretty good at analysis itself. But the system I'm sure would also be able to identify those traders that consistently do better than the market as a whole, not because of "insider trading" but because those traders are smarter, better researchers, more knowledgeable about particular issues, etc. Identifying those people, and noting what they are betting on would give the CIA access to both the broad, honestly held, concensus view but also the potentially contrarian views of the truly insightful.
So think about it for a minute -- what would it look like if they hadn't tried to get it back?
Trying to get the deposit back, claiming the van was stolen, etc may be ballsy, but it isn't necessarily stupid. To do otherwise would practically be admitting guilt.
-ZK
I disagree. If people want to invest their money solely on the basis of CNN and Fox, they are more likely to lose it. That will improve the market because these investors will have less money to invest and be more interested in research. There are tons of information available about the countries of interest - most of us don't have time to keep up.
Remember, intelligence agencies have a very bad track record at predicting future events. That may be because the incentives affecting an individual employee reward political conformity rather than correctness. The Cold War was largely shaped and perpetuated by the flawed intelligence of the CIA and KGB.
The proposed system creates a class of analysts with an incentive for accuracy. And having their own money at stake will harness the analytical powers more effectively.
In the big picture, Enron-type disasters are needed to discipline the market. Likewise, this events market would make some mistakes. Maybe after losing a few thousand dollars people would learn not to predict events based on their political beliefs or what they saw on TV.
Meanwhile, the plans for a biological attack on Israel proceed apace.
It amazes me that anyone take the efficient markets hypothesis seriously after the dot com boom/bust. Bubbles are not compatible with the efficient markets hypothesis. Bubbles exist. Draw the obvious conclusion.
foldplay your photos won't know what hit them.
As we New Yorkers like to say: fuckin' A.
... the trail went to a German bank, and I couldn't find any more info than that.
In the week before 2001-09-11, the volume of options traded on UAL (United Airlines) and AMR (American Airlines) was 500% of normal. 500% is not a blip. It's a huge freaking spike.
I didn't get these numbers from some.conspiracy.theory.org, I got them from cboe.com: the Chicago Board of Options Exchange, the official clearinghouse for options in the USA.
As for who did it
I agree with the parent. This was the smoking hot $40 million money trail and it dropped off the news radar within days.
"Follow the money" -- Deep Throat