Slashdot Mirror
Cashing in on Online Prediction Markets
garzpacho writes "BusinessWeek takes a look at the use of prediction markets to forecast business success. These markets have been taking the form of games online--the Hollywood Stock Exchange, for example, allows players to bet on the success of movies. Hollywood is currently one of the largest consumers of prediction market data, in part because movies' broad appeal leads to a large number of players, but also because the markets have been surprisingly accurate--92% in picking Oscar winners over the last three years. Because of this success, other industries are taking a look; pharmaceutical and tech storage businesses are currently working to set up their own markets."
Only 92%? I'm sticking with The DaColbert Code.
I predict that this approach will cause the movies to get worse and worse.
I predict that Pirates of the Caribbean III will suck something awfull and this is a very good prediction judging from the Pirates of the Caribbean II, which sucked pretty bad.
I predict that movie directors who pay more attention to the story will create much better movies than those, who only care about money/visuals.
You can't handle the truth.
The Oscars are a popularity contest, so of course a prediction market will be accurate. Plus everyone knows if you throw in a mentally challanged main character or uglify a hot actress you're 10 times more likely to win the Oscar.
Developers: We can use your help.
The Hollywood Stock Exchange
When Google went IPO, I wanted to join in but had no idea what price it was going to emerge at and didn't want to overbid. Then I found out an exotic derivative was being marketed, betting on Google's IPO price. I watched the price of the derivative over the next few weeks; it stayed fairly stable, and I used its value to choose my price. The end result? I placed several bids at different values, and the lowest value I chose was $4/share over the final IPO price, meaning my entire order was executed (though neither I nor anyone else got the full boat).
Maybe we should do this for Source Forge projects? Then we know which ones we shouldn't waste or time on.
Or, we could do this with Linux Distros so we know which ones we should just abandon before wasting all our efforts.
Distrowatch does this... shows the popularity of different distros. It sometimes influences me to try knew distros that manage to make it to the top of the list even if I have never heard of them.
Or, if the market because large enough, producers could use it as a hedge against failure and do more innovative things, not less. Although betting on your own movie to fail when everyone else also thinks it will fail probably isn't much of a hedge.
Who do you get to be an expert to tell you something's not obvious? The least insightful person you can find? -J Roberts
Plus everyone knows if you throw in a mentally challanged main character or uglify a hot actress you're 10 times more likely to win the Oscar.
Yeah, I was hopping mad when I saw how Ron Howard used CGI to digitally reduce Jennifer Connolly's bountiful bosoms in "A Perfect Mind". Anyone who saw her in "The Hot Spot" and "Career Opportunities" knows that something big was missing in Howard's film. Look, it was kinda neat how they removed Gary Senise's legs digitally in "Forest Gump" but removing the breasts of the most wonderfully stacked actress in Hollywood today was crossing the line in unnecessary CGI effects. I can't believe the Academy falls for such cheap tricks.
The BBC have been running Celebdaq for years now. They used to have a weekly show for it on BBC3. That is based on media coverage over the past week though.
I find these games entertaining on some small level. I've played Tradeover a little bit while I'm at work, that's a more realistic stock game. It would be stupid though to base the actual markets on the game, it's meant to work the other way around.
Big money moves the markets. Wherever the big money goes at the point of sale is what matters most.
Can they possibly get any worse? I guess they could start making "reality movies," not in-depth commentaries on society like documentaries, but more along the lines of the vacuous dribble on MTV, Fox, et al.
insert inflammatory anti-microsoft comment here
I predict:
A:
the gullibility of the american public, the inability of business groups to decide anything for themselves and the first step to trashy AI created and produced movies for mass consumtion.
Q:
What do computerized predictions really predict?
May the dung beetles from 1000 camels crawl up your man-dress!
(Apologies to Johnny Carson and American Dad)
-What's the speed of dark?
It occurs to me that these markets are based more on popularity vs. actual knowledge.
...
So it's no surprise to me that they could pick which movie star many think is the best (after all, the judges do the same thing, in a sense--they pick whichever movie star they like best).
But if you did that, say, with drug research or things most people know nothing about, I'd have a hard time believing that you could get any useful information out of a market. Instead, you'd most likely only get data on which drug names sounded better, or which diseases people most wanted a cure for (something you could likely figure out from how many had those diseases to begin with)
StrategyPage runs a prediction market on geopolitical events, with a similarly high success percentage.
One difference between the Hollywood Stock Exchange and the conventional stock market is that insiders are encouraged to play.
No wonder the accuracy. People who might actually get to be Oscar voters should be good at guessing what they will vote for as well as what other insiders do.
And the market as defined as the movie-going masses are pretty dismal at picking oscar winners.
I think when it comes to predicting something as subjective as movie sucess, William Goldman's "Nobody Knows Anything!" quote still rings true. A recent special had many interviews with insiders that boiled to to that quote. None of the testing really revealed what the collective audience was going to react to and many surprises insued. I guess movie prediction science will give economists at least one science to look down on in the accuracy dept.
If you'll recall, a similar terrorism futures market was planned by DARPA; it fell victim to political pressure, got deep-sixed, and the proponent, John Poindexter, resigned in a cloud. But the truth is that the idea works well. Here's a summary of the controversy: http://www.wired.com/news/politics/0,1283,59818,00 .html.
You are no doubt correct. The movies will get shittier. That has been the case for decades now, however. The fact remains that in today's America, dumb and shitty movies can often pull in a lot of cash. That is just because many people are convinced that they need to have seen the latest flick. Otherwise, they mistakenly think that their "social life" will "suffer".
So this sort of data collection does work, and it does have the effect that you describe. The American movie industry is about putting out a shitty (unnecessary) product, convincing enough of the unwashed masses that they need to spent a fair chunk of change go to see it, and then repeating the process over and over again. As long as they keep convincing people to go see the shitty movies they put out, they'll keep making money.
This sort of data is more checking whether or not people will continue to buy into their shit ploy. And yes, it no doubt will lead to the shitty films becoming even shittier.
Shit, this reminded me to check HSX, and it looks like I lost almost $300,000 just this month! Despite being excellent movies, Clerks II and A Scanner Darkly aren't helping me at all. FSM bless Indiana Jones 4 and Pirates III though!
Is 92% "surprisingly accurate"? Only if Oscar winners are somewhat hard to pick, which they aren't. I'd bet I can pick more than half of the big categories correctly, despite never actually watching the movies; the surrounding hype is enough. Any competent film critic should achieve 90%.
I just did a search and found two but I am not sure if they are any good:
http://www.intrade.com/ where you can in many political, entertainement and world events
http://www.tradesports.com/ Mostly sports but also a bit of world events
Yahh, hiii haaaaa! -Major Kong, from Dr. Strangelove
This is actually a fairly old field of statistics. The story goes that a mathematician at a state fair saw there was a contest to see who could guess the weight of a pile of recently slaughtered beef. Everyone was allowed to guess at it: farmers, house wives, butchers, etc. In the end, the experts (i.e. the butchers) didn't win, and their answer was off by about 10%. However, the total of all the answers, averaged, was off by only .2 lbs.
This sparked the idea that the knowledge of the whole group can lead to better answers than the knowledge of a select group of experts. It's also been shown to be true with things like artificial intelligence and mathematical proof programs.
So it seems like hollywood and the like have just finally realized that the entire group of people can do better at predicting movie success than just some panel of marketing experts.
Perception and hype are not the same as reality. For instance, TB kills more people than AIDS, yet which is perceived to be more important to treat? There's a lot of discussion and hype about breast cancer, yet prostate cancer is more serious.
Perception drives our irrational thinking.
Engineering is the art of compromise.
How is this offtopic?! TFA is about the sucess of market forces and the original AC is commenting on that, whether you agree with the politics or not. Pass the crack pipe, crazy moderator.
Anyway, RTFA. It's not about using the market predictions to determine whether effects or story will dominate in a film production.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
Even without groups of people, individual predictions of phenomena for which there is a common intuition can be surprisingly accurate. See "Optimal predictions in everyday cognition", reviewed in the Economist.
...is that BusinessWeek's webserver is about to burst into flames!
...discussed here where you can buy stock in your favorite flu virus. Apparently it performs well in predicting flu outbreaks.
Doesn't it make you feel good to know that our freedoms are protected by politicans, lawyers and journalists.
This is a well known phenonena, and has been used for a long time now. If you ever read the book "The Shockwave Rider" by John Brunner, and shame on you if you haven't, you will recognize the "Delphi Boards". They were basically a legalized betting system that allowed you to wager on the possiblity of something happening...for example, a cure for cancer. I won't go more into the story, but you can check it out for yourself!
It is technically known as the Delphi Effect, and you can read more about it here:
http://en.wikipedia.org/wiki/Delphi_effect
ttyl
Farrell
CAN-CON 2019 - Ottawa's only book oriented Science Fiction Convention! October 18-20, Sheraton Hotel, Ottawa, Canada h