Slashdot Mirror
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.
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.
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.
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.
The society for a thought-free internet welcomes you.
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.
$8.95/mo web hosting
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?
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.
Integrate Keynote and LaTeX
This is *not* a good idea. Why? Because this kind of market is open to manipulation more than any other market. You can't prevent "insider trading." Who would stop individuals connected with terrorists from buying futures on the next suicide bomber? This idea simply gives them very easy access to money. This is the stupidest idea (and most disturbing) I've ever heard. Though the idea of buying future contracts on the date that Saddam will be ousted was funny when I first heard it, it's the same thing. It's not right, and is easy to manipulate.
Leave finance to the finance people. Bush should not mess with Wall Street, he's already given everyone down there a headache and no one needs this. Ha, is he expecting to be re-elected after this? I'm sure the Bible-belt approves of this idea...
"Time is long and life is short, so begin to live while you still can." -EV
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
Actually, one could argue that until weapons of mass destruction are found, this is a more credible line then the standard Bush/Blair one.
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.
By reading this sig, you agree to the terms of my sig license.
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
"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.
Online Starcraft RPG? At
Dietary fiber is like asynchronous IO-- Non-blocking!
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.
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 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