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Technology Review Launches Futures Market
prostoalex writes "MIT Technology Review launched a futures market, allowing people to bet on ideas. A similar concept was at some point introduced by the Pentagon, but later the project was shut down. Currently you can bet on major stock indices, on answers to yes/no questions ('Will Oracle acquire PeopleSoft Inc before March 31st, 2004?') and technological achievements ('When will there be a commercially available electronic device using ultrawideband technology?')" Although the game doesn't use real money, the prizes are pretty swell. I like to think of it as the nerd's version of sportsbook.
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Also of note is Foresight Exchange, a long-established play money market. It seems a lot of people are interested in it being real, but unfortunately it seems difficult at present (and the few there are charge high comissions).
The Foresight Exchange online game has been doing this since 1994. It was invented by economist Robin Hanson, who was also the mastermind behind the ill fated Pentagon effort.
One of the big problems with these "funny money" based games is the possibility of cheating. Sine it doesn't cost anything to register, you can create as many accounts as you want, for free. What you do is create multiple accounts under different names, and arrange to funnel money from one account to another. You have one account make bad trades so it loses money, which then goes into the other accounts, building up their scores. Since this MIT game is offering valuable prizes, they can expect problems with this kind of cheating.
It looks a lot like Long Bets, which has been around for quite some time. It was launched as a spin-off of Danny Hillis's Long Now Foundation. Other interesting projects of theirs include the Rosetta Project and the 10,000 year clock.
siener's youtube channel
An amusing idea. Supposedly one can get a correct answer to an unknowable question, simply by polling enough people with enough knowledge of the subject to have an opinion. I loved Brunner's description of it:
"Even though nobody knows what's going on around here, everybody knows what's going on around here."
The Iowa Electronic Markets at the University of Iowa has had this for a long time. And it does use real money, and is fully legal.
From what you say, it sounds as though this kind of thing is much less common in the US than in Britain (where I am). Here in the UK, where gambling is much more legally, and socially, acceptable, bookies (high street gambling shops) take bets on most things that can be bet on. Huge amounts of money change hands during the general elections. And in political reporting, for example with the recent leadership challenge to the leader of the opposition, it's very common for the reporters to quote the odds given to various outcomes by the big bookies.
Other non-sports bets include:
Celebrity and royal marriages / breakups.
The Booker Prize (a bit like your national book award, I think)
Outcomes of television programmes such as Big Brother
The weather on Christmas day (snow / not snow).
I even heard a science programme about SETI on the radio where they got a big bookie to give odds on the discovery of alien intelligence.
evil math within Nature's Cubic Creation!
The way this works on FX is this: You want to move money from player A to player B. You find a thinly traded claim, say currently trading at a price of 50. Player A offers to sell a bunch at 20. Immediately, most of the other orders on the board will execute, but you picked a thinly traded claim, so they should represent a relatively small fraction of the ammount you wished to move. Now there is a big offer to sell on the board for 20, which player B scoops up. Then the process is reversed, with player A offering to buy at 70. Player B then unloads the claims he bought at 20 for 70 to player A. There are a lot of variations on this theme with multiple accounts and such, that you could think up.
In the stock market, it's a lot harder to do this type of thing, because of several factors. First, there aren't any stocks that are as thinly traded as the thinnest claims on FX. Second, even if you pick the smallest stock off the pink sheets, you will be dealing with a broker. If you offer to buy at a very high price or sell at a very low one, the broker may just execute the transaction for himself, or with another market maker. If you execute on an ECN, someone else may snag the trade before you have a chance to yourself. Furthermore, in its pure form, you need to be able to sell short. You usually can't do this on a penny stock. Furthermore, these transactions are logged, and this type of transaction would be likely to arouse suspicion if you were way out of line with the market. Therefore, it would be tough to do this with good efficiency, because the other traders and commissions would eat into the money you were trying to transfer.