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.

Comments

Re:Whats to stop this

[tessaiga]

What's to stop this from becoming real? Why can't I bet on things like this in Vegas or Atlantic City?

Much of this is already "real". You can already go to the financial markets today to try to profit from what you think is going to happen to the price of commodities (via futures contracts), interest rates (swaps), stocks (options), etc. The key line from the article is:

Innovation Futures is a prediction game. Similar to fantasy stock market games, this one lets players trade on all kinds of events.

The point of this seems to be to take a "real" game (the financial markets) and apply it in a virtual form, not vice versa. I'm sure Vegas and Atlantic City both have stockbrokers sitting around somewhere that would be happy to take your cash.

What I disagree with is this statement later in the article:

Innovation Futures, like any speculative market, aggregates the individual expertise and opinions of well-informed and well-motivated traders into a single easily understood number: a stock's trading price. This number can be taken as indicating the collectively agreed-upon likelihood of a particular outcome in the real-world. Even non-participants may thus benefit from such market signals.

Real markets (and the "terror market" which the US proposed earlier) contain information because people work very hard to make sure their investments perform well and that they don't suffer financial losses. In stock market games, on the other hand, participants aren't penalized for losing money, only for winning huge amounts of it. (The article even prevents you from going bankrupt: "When your account's net worth is below a certain level ... you'll be given a choice of contracts that you can get for free and then resell on the markets against fresh cash.".) What tends to happen here (and I've seen it plenty of times in stock market games where they offer cash prizes to the winners) is that people start loading up on risky ventures, essentially turning the whole contest into a lottery rather than a reasoned investment strategy. I really doubt that under this sort of a situation any valid information can be read from the virtual prices.

Re:OK, get it straight

[Anonymous Coward]

Oh come on, you're misrepresenting and oversimplifying the issues and you know it.

The terrorist futures market (your "U.S.A" futures market) was to allow people to bet real money on when/where the next terrorist attack was going to occur. This creates an incentive for those trading in those futures to help make sure the attacks happen so as to cash in on their investment. People would literally be betting on other peoples' lives; a rather morbid idea, don't you think? Especially considering that the terrorists themselves could (if the program were expanded to allow more than just select govn't individuals) bet on their own plans.

MIT's futures market is not betting on human life, and for that matter, does not even involve real money. You might as well be playing Monopoly; the real value gained from participating is the same (except that with the MIT futures market, you might see cool new stuff developed as a result of the interest of people who think it likely that a given idea will come to fruition).

One market bets on life, using real money. The other bets on ideas/concepts, using fake money.

Look, I'm a seriously tax-hating, free-market loving, communist-hating "economics-drives-everything" libertarian, and still I oppose(d) the terrorist futures market on the grounds that it creates financial incentive to end human life.

I read a report in some business magazine (Fortune? Forbes?) about the creator of that market - a PhD economics professor. His intentions were excellent, but the problem is that he is so far out of the loop from the rest of society that he didn't realize that people would find such a market morally-repugnant.

"Get it straight"? Speak for yourself. Get your issues straight before committing them to /. first (yada yada, insert "you must be new here" and get +5 funny for it... I'm just too lazy to create an account, but if I did, you would get modded down hardcore-style)