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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.
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? I thought the balanced budget was a lot to be sacrificing for a stable economy, with these refund checks, but now, we're staking our relations with the world? Like the article points out, ``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." I really, really hope this is a joke...
perhaps the /. paranoia bug has rubbed off me a bit too much, but what are the chances that your "bets" could be used against you in the war on terrorism?
you hit three or four correct terrorist acts and the next thing you know you're in an orange jumpsuit overlooking guantanamo bay.
Mike
I just read this on the BBC. I guess they will automatically arrest the people who get the best predictions as the perpetrators!
Omnis amans amens
If you're a trader, what about paying someone to kill the king of Jordan to cash in on your bets? If the economic incentive is there, what's to prevent someone from doing it?
Or actually a bit more like Jim Bell's Assassination Politics, which is a scheme that allows murder for hire under the pretext of a lottery.
Holy Crap.
That's disgusting.
And, on a lighter note: Think of the money you can make taking exotic vacations and causing havok! Insider trading laws be damned, this could be a wonderfully abusable system.
God, I hope this is a joke.
I assert that my comment is only my opinion, not that of any employer, past, present or future.
The 2004 elections could not come quick enough.
Whats the non-US slashdotter's take on this kind of crap? curious...
Our government is basically doing a large scale dead-pool of sorts, classy!
Sehr geehrter Toilettenbenutzer!
by John Brunner mentioned something like this. The hero made huge amounts of money playing the 'market' because the government manipulated it to give the citizens the impression that things where the way the gov wanted them to be. If you haven't read it do so.
The idea behind how it's supposed to work is if you ask a buch of people a question about the past or present who do not know the answer the answers they give will none the less average out close to the truth and so supposedly it works going forward as well. I have no idea whether the first part of the proposition is true, nevermind the second part.
On the other hand 3 million dollars? This much entertainment for the price of a few hammers and toilet seats has to be worth it.
But, really there seems to be nothing people are not prepared to gamble on these days. I watched a program recently about a company the other day who took bets on whether the stock market would go up or down, same with the housing index in the UK. Despite the disclaimers this sort of gambling is tailored to those with high level insider knowledge.
I want you all to know though then you may feel free to 'invest' as much as you want on a middle eastern state declaring me to be a messianic figure and bringing peace to the region as the first step of my journey to world domination
Do not try to read the dupe, thats impossible. Instead, only try to realize the truth
What truth?
There is no dupe
there is a similar idea already running online:
http://www.tradesports.com
you can buy/sell futures for most current events- for example, you can buy saddam futures based on when/if you think saddam will be captured, or you can bet on what kobe bryant will be charged with. this is a real site where you can make lose money- crazy stuff.
This is an interesting idea, and it should stay that way.
I'd be afraid that if I were to bet on a longshot terrorist strike and it paid off for me, that the FBI might come knocking on my door (with a battering ram).
This creates an incentive for terrorism by insane individuals.
Remember the case where someone tried to manipulate the stock market by putting cyanide in Tylenol?
I might not have the facts exactly right, but the idea is the same. The potential exists for someone to use this to make money, by finding a way to encourage the terrorist acts to come true.
Holy shit, is Philip K Dick writing American foreign policy form the grave? A paranoid guy is set up in an artificial 1950's town and fed hallucinogens while trying to solve crossword puzzles that are actually complex tables used to predict future actions of foreign governments?
woo hoo.. gotta keep the yanks safe in their own yard - even if it means killing everyone else's grass in the process...
With media consolidation and trading of event outcomes what will happen to CNN and Fox News prospects for financial growth via "market manipulation". What would an "Enron event" look like with this system in place? I like a good analogy (just look at my handle) but this one better stay inside the Pentagon with the cast of Dr Strangelove.
When the people fear their government, there is tyranny; when the government fears the people, there is liberty.
That would actually help the system because the more demand for something, the more likely something would be perceived to be. Insider trading in that respect would be encouraged! The real trick is sinking money in the counter-possibility in order to create a false sense of security.
Maybe someone at the Pentagon is trying to learn from this? Remember, greed makes people do stupid things. If some low-level operative knew of an impending attack, s/he might be tempted to make a quick buck on this "futures market".
Theoretically, it seems like an interesting idea (aside from the various moral/political aspects).
The question is: why the Pentagon? Couldn't they have just used a shell company to do this, and accessed the realtime data?
You just nailed one of a major benefits of this system.
.
At the very least, this system would provide statisticians with a massive, currently relevant pool of opinions on the likelihood of any particular kind of terrorist attack occurring. The statisticians may not find anything, but honestly, for the price of running a single secure website, they're gathering an insane amount of valuable data.
That's at the very least. If it does just what it is intended to, and no more. At best . .
At best, it is a honeypot. If something major is in the works, like 9/11, what are the odds that someone, somewhere along the line wouldn't have placed some serious bets? Maybe not the terrorist himself, but what about his family? The people he stayed with in the US? Not everyone involved is going to be a Q'ran-thumping martyr. This scheme plays the self-interest of individual terrorists against the greater secrecy of terrorist proceedings, and it has the potential to be extremely revealing in that respect, simply as a massive, relatively cheap method of adding to ordinary intelligence information.
I mean, honestly, I know it sucks that they might tap your phone because of a $1,000 bet, but if you were just some guy exercising free speech, and proclaimed to the world that you would bet anyone $1,000 that there would be a major biological attack in Israel within the next week, and it got bandied about in a newspaper, your phone would be fuckin' tapped. Nothing happens, they intrude your life a little, and realize you're a crank or a nut or just a weirdo, and they leave you alone. It sucks, but at least this is something you can avoid and expect -- I mean, you do know who is running this thing, right?
Check out this site (german only, sorry). It describes a similar system, Wahlstreet, which was used to predict voter opinion during the 2002 Bundestag elections in Germany. People traded shares of the parties taking part in elections.
The idea of these types of markets is that stock trading does in fact give a really good image of people's opinion. After all, it is about YOUR money if you voice your opinion.
The results of the Wahlstreet project support this theory: The final poll results were consistent with the election results. In fact, Wahlstreet scored second place in a comparison of the difference between election and survey results of this and some other (conventional) survey institutions.
The "R" in DARPA is for Research.
From the article: "They have this notion about the predictive capabilities of intelligence,'' he said. ``We think it's absurd; we think when you look at what happened in 9/11. You ought to go on the basis of real evidence from the real world. They have these ideas about markets and predictive capabilities which are more of fantasy land"
It may be fantasy land but DARPA is supposed to research ADVANCED defense related topics. I think this is a good idea and worth investigating. It doesn't mean it should be deployed.
I'm guessing that the parent post got marked "flamebait" because it's a vicious satire of the intelligence, personality, and decision-making style of the people currently running the US government. But guess what? It's also dead-on accurate. This is pretty much a true-to-life portrayal of how Rumsfeld at al. have dealt with the intelligence community since 9/11, if not before.
Sometimes, pointing out the foibles of those in power isn't just flamebait. Sometimes, it's called telling the truth.
The correlation between ignorance of statistics and using "correlation is not causation" as an argument is close to 1.
How ridiculous is this? Study after study shows that so called "stock pickers" never do any better than random chance on the stock market. Do you think this is going to be any better? Do you think anyone is capable of making predictions better than chance in this situation? I think not. What amazes me the most is that even though what DARPA is doing flies directly in the face of all the research, they are still investing money in this project rather than spending it in developing statistical models and regression equations which have been shown (by research) over and over again to have more predictive power than humans.
Flame me if you want. But isn't it strange that the US was decrying the Iraqies "inhuman actions" for "bringing out our dead" to show on TV, and then hauling out the dead sons of the enemy.
Remember after Sept. 11th there were reports that the terrorist probably made money betting against the airline industry, and how aweful that was of them (it really was disgusting, don't get me wrong), and now the Pentagon is acting even worse.
I went to battle MC Escher, but drew a blank
Actually I would like to see a checkbox on a 1040 form (just as there is one for presidential election campaign funds) for Terrorism funding.
I would like to see voting for tax dollars spent anyway. This would tell how truly popular/provisional government programs are:
Give a multiple choice at the end of each state and federal 1040:
I would like my first 10% of taxes paid to go towards the ________ fund
I would like my second 10% to go towards the _________ fund
and so on.
Yell & scream & rant & rave... it's no use... you need a shaaaave ~ Bugs Bunny
Magritte was a Belgian artist.
So here's my problem: If I invest and the government uses my "vote" that something will happen to prevent it from happening, I lose my money, because the event didn't occur.
If the event actually happens and I have predicted it, I get my phones tapped, a visit from the FBI, probable interrogation and possible imprisionment for having "terrorist ties." What exactly is the incentive for an investor to enter this market?
Head down, go to sleep to the rhythm of the war drums...
I think what you're not understanding is that this is designed to be a useful way for intelligence analysts to prevent attacks. This isn't supposed to be entertainment. It's supposed to be profitable for the participants and informative for the analysts. We've got an anti-academic pro-markets administration. We shouldn't be surprised by this.
Interesting.
See my journal, I write things there
Not exclusively, but as a terrorist you would have to be daft to try and make any kind of serious money off of this.
Integrate Keynote and LaTeX
This would an open market. Therefore, you get more than just legitimate experts, you get everybody who wants to participate. Given the rather transparant nature of this data-mining effort, there is a very real possibility that this data could be obfuscated or otherwise manipulated by a coordinated effort. Its always easier to destroy than to create and borking this data pool would be a destructive act.
I'm sure DARPA has experts by the boatload. Furthermore, there are more secure/reliable ways to gather this information in my opinion.
A goal is a dream with a deadline
I find this akin to Hari Seldon's theory of psychohistory. A statistical measure of future trends in human behavior. This could be a vary primitive form of that science, or a key device in its theory. A very efficient way to model large, turbulent systems is to use a statistical representation of the system.
.COM IPOs and SCO stock would not be rising. A few years ago, the IRA would have had even stakes with the Middle East. You would have lost your shirt with a speculation on the Shamrock Isles. Of course, longterm speculators are still camping in the desert.
The problem is contaminating the with the notion of money. Bias such as a monetary gain will skew the results of this framework and make the statistics unreliable. If this were a purley academic persuit, I would jump at the chance to participate. I would love to work on a project like this.
Consider: How many times have you had a discussion with a group of people and either one person came up with an odd ball idea or as a group you decided on some conscensus on an idea. Say that idea was a speculation on a future innovation or maybe it was just a guess on the next person to kick off in a death pool (I think those are creepy.) That would be with maybe 10 people. Consider 1,000,000 people doing the same thing. But how for them to all communicate and what about the lone oddball idea that may never make it above the din? Give them a market in which to speculate.
A market is like a conglomeration of thoughts and ideas. It takes on a life of its own when people speak of the market. While individual investing schemes may seem choatic, the overall market has a general trend. In the 90s, a surge to tech stocks and telecom. Now, a trend away from those to more stable options. Here is the most important part. While the stock market is money driven, this prediction market would have to be idea driven. Make a good speculation and you have the satisfaction of supporting the system, getting it right and helping the DOD. A bad speculation only means you are still supporting the system.
Making this nebulous, allocating speculation points instead of dollars, removes the problems I have seen people sight so far. It is no longer betting, you cannot have terrorist insider trading and people on the inside will not sit on inside information (CIA) to turn a quick buck. Why is this like Psycho History? Its a statistical conglomeration of speculation on the future. If you think it will not work, you need to review how much the Stock Market has grown since its inception. Growth translates to correct predictions in the Stock Market. Its alteast worth a try.
Of course its not perfect. Otherwise, nobody would have fallen for inflated
The cancel button is your friend. Do not hesitate to use it.
"The Shockwave Rider" is probably one of the most far sighted books ever written. It is really spooky what John Brunner envisioned in 1973. He predicted the PC, the Internet, Worms and Viruses, Online Identity Theft, Gene-Engineering etc. It always gives me a shudder to read that book.
If you ever see a copy around: buy it! It gets reprinted only very rarely. Look on ebay. Just got a "first edition" print for 5 bucks.
Bye, Martin
I dunno, how is betting on a futures market like this any different from betting on, say, Northrop Grumman to produce the next generation of B-2 stealth bomber for the US military? Both terrorists and stealth bombers have been known to kill innocent children.
True, when you buy stock in Northrop Grumman, you're not betting on a terrible tragedy like a suicide bombing -- I'm exaggerating for effect. But if the moral outrage on /. is that this money is used to bet on the death of innocent people, then perhaps we should all re-examine the nature of the US's stock exchange with regard to weapons manufacturers and other companies that make products that kill people (Philip Morris maybe?).
It occurs to me that since international events often impact stock prices, people interested in mitigating the risk to their investments could use this market to hedge. For example, if I have a big stake in a company whose fortunes would be adversely affected by terrorism in Israel, I could place a bet *for* terrorism in Israel. That way if it happens, my losses in the stock market will be partially offset by my profits from this futures market. If it doesn't, I'm out the money I put into the futures market, but that's the nature of a hedge.
My bet on terror in Israel will probably also alter the odds on that issue, which may encourage the U.S. (and others) to work harder at preventing incidents in Israel, which is good for my investment. As such, a market like this will probably encourage the U.S. to work harder to manage threats which are financially dangerous, rather those which are dangerous to people. I'm not sure that's where we really want to go, but then again I doubt this market would be used as the sole basis for decisions, and it could be useful as long as its biases are understood.
As others have said, the real problem here is what happens when bettors have the ability to influence the outcome of their bets. Terrorists could potentially fund their operations by betting on long-shot attacks and then carrying them out. The dynamics of that would be interesting in an intellectual sense:
The answers to those questions might be interesting, but the potential cost of "wrong" answers, in terms of lives and property, could be huge. Speculators trying to make a quick buck voting against terrorism or investors trying to hedge against terror-derived risks could actually end up *funding* the mayhem.
I suppose one way to mitigate this risk would be to carefully vet all potential bettors and verify that they have no potential ties to terror. This wouldn't be completely foolproof, but if done right it would pretty much eliminate the risk of terrorists profiting from the market in a big way. The cost of doing it right, however, especially if the pool of bettors is worlwide, would be staggering.
There are so many implications and counter-implications that it seems impossible to predict with any accuracy what the effect of this system will be.
Perhaps we should bet on it?
Note to ACs: I usually delete AC replies without reading them. If you want to talk to me, log in.
If I invest and the government uses my "vote" that something will happen to prevent it from happening, I lose my money, because the event didn't occur.
Do you really think that's likely? I mean, seriously, despite how funny that comment sounds - a large number of people will be using this system. A lot of them are going to have all kinds of weird contracts open at any one time. One or two people moving in a certain direction is not going to set any alarm bells ringing. Its if a whole load of people suddenly move a lot of money in a particular direction that they'll get worried.
If the event actually happens and I have predicted it, I get my phones tapped, a visit from the FBI, probable interrogation and possible imprisionment for having "terrorist ties." What exactly is the incentive for an investor to enter this market?
And a few weeks later the government having run their extensive background checks on you decide that you aren't a terrorist, couldn't possibly have had anything to do with the incident, and that they have no evidence whatsoever to hold you with and release you. You gain your $200,000 or whatever you made. It's also very unlikely that you'll be investigated more than briefly, because a whole load of other people will have made the same contract you did, and most of those'll be innocent too.
You see, this _isn't_ actually about catching terrorists, however appealing that might sound. They may get one or two particularly stupid ones, but I doubt it'll add up to much in that direction. The real value is that it will help iron out the economic costs of terrorism.
Take two situations.
1. You run a travel company which specialises in holidays in Israel. You make a fair sum of money off of this, but you realise that any terrorism in the area puts off large numbers of your clients. Through past experience, you know that a major terrorist attack costs you $15,000 in lost business. However, due to the ratios in the market, you can place a contract which only costs you $10 per month to keep open which will compensate you for this cost in the event that this does happen. It'll give you peace of mind, so you do it - its definitely worthwhile.
Of course, because this is a derivatives market, somebody has to be offering to make those contracts with you, which brings us on to situation 2...
2. You're a defense contractor. Global unrest is generally good for you because when middle eastern countries are more nervous about terrorist threats they tend to buy more up-to-date equipment for their armies. But you don't like the fact that you feel like a celebration every time somebody blows up a car outside an embassy. So you've been looking for years for a way of balancing the good times and the bad, and here it is. There are hundreds of companies who are willing to pay a small price every so often in exchange for a bigger payout whenever there is a terrorist attack. You look at your books, work out what you can offer whenever anything like that happens, and feed your offer into the market... it comes back telling you that it has sold a number of contracts on the terms you suggested. Now you have a steady stream of income rather than one that jumps around all the time.
Good, isn't it?
Of course, it might not work in practice (I'm thinking there might not be enough people in category 2 to fulfill all the contracts that category 1 people would want), but the theory is excellent.
bshanks writes "apparently, markets are the best way known for large groups of humans to aggregate their information and make predictions. Information markets are (i think) markets designed to elicit various types of predictions. Successful information markets include the Iowa Electronic Market, which predicts political events more accurately than major news polls, and the Hollywood Stock Exchange, which predicts box office revenues and Oscar winners." Paul Johnson appears to have verified this experimentally (if informally):
So it
It shows that the stock market had effectively decided which shuttle contractor was responsible for the Challenger disaster within minutes of seeing the explosion come across the news wire.
Here's the citation:
Michael T. Maloney and J. Harold Mulherin.
The complexity of price discovery in an efficient market: the stock market reaction to the Challenger crash, Journal of Corporate Finance, Volume 9, Issue 4, September 2003, Pages 453-479.
http://dx.doi.org/10.1016/S0929-1199(02)00055-X
I'm considerably more Libertarian than the next guy, but you need to take the tin foil hat off for this one.
A futures market like this is just an efficient, effective tool for measuring the likelihood of something happening. It's essentially a datamining technique where you have a large number of intelligent actors processing information for you and coming together to find a market-clearing price. From this price, you can back out the likelihood of the event occuring.
This is nothing more than an application of sports betting or like the Iowa Electronic Markets, which I understand are good predictors of election results.
Alas, I'm afraid some of the more fanciful suggestions here will not come to pass. Do you really think a terrorist would be foolish enough to trade large on a DoD futures market right before committing some act? It would seem silly to do that with your DoD account when you could just sell airline and insurance stocks instead.
A market like this is not going to be sufficiently liquid for someone to either hedge the risk of an event or profit much on one.
That is, if you came to the market and tried to buy $3 billion worth of "Chippewa Falls destroyed by fire and brimstone SEP '03" futures, you'd probably spook the market and wouldn't find any profitable edge.
If I were the King of Jordan and I found out people were willing to pay $97 for a "King overthrown by December" I'd be pretty damned greatful for the head's up. It's like a free opinion poll.
And...except that it might be government sanctioned (though it would be easy enough to have an outside firm run the market), this is not different than betting sites making markets on whether Saddam will still be in power.
TIA sucks. But I think this is a not-so-novel, but pretty ingenious thing that really doesn't trample anyone's liberties.
When the futures fluctuate dramatically due to the new 'interest,' the Pentagon won't be the only one who knows. This system essentially lets terrorists know the probability of success of a given terrorist action before they launch it. They can see which of their plans have leaks and which do not, and use that data to organize more effectively.
This is an idea which Has Not Been Thought Out.
He who refuses to do arithmetic is doomed to talk nonsense.
But that's exactly where this hare brained scheme fails...someone puts up "japan subway bombing", but do they do that on the basis of knowing such a plot exists? No! It's sucked right out of their ass! It's pure conjecture....and the DoD is hoping pure conjecture will somehow magically change into fact!
/and actually thinks it will work!/ doesn't deserve your confidence.
And their mechanism for that is a bunch of idiots betting on randomly selected plots. Not actual intelligence, ears on the ground, but pure fiction mixed in with some intel and voted on by people who think they can make some money!
I mean, how dumb can you get? The poor programmers working on this must either be laughing or crying...and I'd hope the latter.
This is wrong on so many levels I'm struck into incoherence just trying to organise all the points which are wrong/dumb...so many are forming in my mind that I can hardly put them into order.
And this was voted through! Shit, just run a plane into the whole DoD/Darpa/Pentagon and the House (of Representatives?) and restart the whole system from scratch...a system which brings forth something like this
And as an aside, I wonder how long it will take until the first 'bet realisation contracts' [=pay us and we'll make it happen] are up on ebay...
-- Waht? Tehr's a preveiw buottn?
I'm only going to say this once, but I'm going to say it loudly.
You sure as fuck weren't watching the implied volatility and put/call ratios on airlines the week before 9/11.
If you don't know what that sentence means, you need to do some research. A lot more research. The story has since been picked up by conspiracy theorists, and the signal-to-noise ratio is pretty much nil. Dig back to September and October 2001, and read the financial press instead. You can find a lot of good starting points in the comments of this Slashdot article.
For the record, I believe (on circumstancial evidence - namely the rapidity with which the story was buried, leaving only conspiracy theorists to increase the noise-to-signal ratio,) that the SEC did the Right Thing - turned their conclusions over to other organizations who could ensure that the Right Thing (namely, outside of SEC jurisdiction) would eventually get done.
Also for the record, as I don't have a need to know, I can only hope that my speculation outlined above is correct. I do look forward to finding out when it's all declassified some decades hence. Gonna make for some damn interesting reading.
the problem i see with this is as follows (forgive me if someone has already pointed this out):
lots of bets are placed on 'assassination of the president'. if this is actually being treated as intelligence then something will be done to prevent it from happening and nobodies bet will pay off. wising up, they bet on 'prevented assassination attempt of the vice president' the next time around.
for occurances such as this, only 2 parties will know about the event: the people who hatched the scheme, and the people who prevented it from being thwarted.
so only the government and the assassins can say that this bet should have paid off.
assuming that we don't listen to the assassins (theyre just saying things at this point, nothing would keep them from saying anything they want) then all we have is the government telling us what 'prevented' bets paid off and which ones didn't. of course, the government can also say whatever it wants, but they're on 'our side' so we'll be more likely to listen to them.
with a government that is ridiculously tight-fisted regarding information on events that actually DID happen (sept. 11 anyone?), to assume that they would be any more lax in disclosing events that might have happened is silly.
there are plenty of reasons they could supply to justify not divulging info that would have profited a speculator (national security would be the first one they'd use), but the consequence of this is that the market would reflect on whatever the government wants it to reflect, rather than the real world.
that, and it's barbaric.
to bet against things that you know most people would bet on? For example, if one of the questions were "Will New York city fall victim to a terrorist attack in the next 5 years?" I would think that most of the "investors" would vote "Yes" on this. The government would see this, flood New York with FBI agents, and probably prevent an attack from happening. Knowing this would be the sequence of events, I would bet against this happening...easy money.
For the record, the Conspiracy Theorists (a simple Google search will confirm) have made the connection between Deutsche Bank, who processed these transactions, and our current Executive Director of the CIA, A B Krongard - who founded A B Brown, which was bought by Deutsche Bank, he remained on as a director.
Now, while this has a distinct odor, it's nowhere near "smoking gun". I'm just wondering what a big invenstment banking director has, in the way of experience with the Spy Business, such that he lands a cushy job with the CIA? I mean, what are they teaching these bank directors anyway? Is it the fancy sports cars, or what?
These are my friends, See how they glisten. See this one shine, how he smiles in the light.
And I think they will probably do just that eventually.
Or - they won't even have to. Someone else will and they will get all the intel they need by monitoring the prices.
Foresight Exchange uses play money for betting on real world events, including politics and catastrophies.
In early September 2001, they estimated a (around) 40% probability of a major act of terrorism in the US.
__
Men with no respect for life must never be allowed to control the ultimate instruments of death.
GW Bu