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Some good news on Iran

by Jerome a Paris Fri Apr 14th, 2006 at 05:05:50 AM EST

The above is the price, on Tradesports, at which the contract which pays you 100 dollars if a US or Israeli attack on Iran has taken place by March 2007 has been trading over the past few months.

The "prediction markets", as they have called, which have a pretty good track record, do not seem to believe all the noise about the US attacking Iran.

Via Econbrowser, which has more on the topic.

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Some good news on Iran | 5 comments (5 topical, 0 editorial, 0 hidden)
Re: Some good news on Iran (none / 0)
Interesting.

Are there any studies of the track record of the prediction markets?

The theory of them contains some obvious caveats, or rather "known unknowns" about the participants in the market. An examination of the track record could answer a lot of those questions. And indeed, point more closely to how much credence this prediction is.

by Metatone (metatone [a|t] gmail (dot) com) on Fri Apr 14th, 2006 at 05:14:37 AM EST
Re: Some good news on Iran (none / 0)
There is as usual a writeup on this at the Wikipedia.

Perhaps the example that has gotten the most press in the past is when the U.S. DoD tried to set one up, and got blasted for it (by the leftist mob, incidently), resulting in the resignation of retired Admiral John Poindexter.

"In July 2003, the U.S. Department of Defense publicized a Policy Analysis Market and on their website speculated that additional topics for markets might include terrorist attacks. A critical backlash quickly denounced the program as a "terrorism futures market" and the Pentagon hastily cancelled the program."
http://en.wikipedia.org/wiki/Prediction_market

"The presumption was that in many cases, intelligence derived in this manner would be more accurate than that obtained through traditional means (see Figure 1, from the original PAM web site). Initially the site was to be confined to political economic, civil and military futures of the key Middle Eastern countries of Egypt, Jordan, Iran, Iraq, Israel, Saudi Arabia, Syria, and Turkey, and the impact of U.S. involvement with each. A typical bet would involve issues such as whether the United States would pull its troops out of Saudi Arabia (Coy 2003), or whether the Egyptian currency was likely to fall by 20% by the end of the year."
http://www.ccc.nps.navy.mil/si/sept03/terrorism.asp

by asdf on Fri Apr 14th, 2006 at 08:39:26 AM EST
[ Parent ]
Re: Some good news on Iran (none / 0)
The Pentagons market resembled in large parts an assassination market in the sense that those how could really benefit was the perpetrators...

http://en.wikipedia.org/wiki/Assassination_market

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by A swedish kind of death on Fri Apr 14th, 2006 at 08:59:00 AM EST
[ Parent ]
Re: Some good news on Iran (none / 1)

Unfortunately, this still does not really answer the question.

Jerome has implicitly cited that this PAM has a good track record. However, it's important to know what that track record consists of. In particular, predictions about some kinds of events are not necessarily indicative of predictive power about other kinds.

The big problem with predictive markets is all about how many people (and of course on some issues, who) are actually doing the buying.

Thus, in this case, are enough people actually buying and selling on the Iran issue to make the prediction worthwhile? (Perhaps a comparison with trading volumes on the Iraq issue?)

Likewise, just getting the Iraq issue right is not in itself massively predictive. At what point did it get it right? Was it really more predictive than $observer? etc.

by Metatone (metatone [a|t] gmail (dot) com) on Fri Apr 14th, 2006 at 09:30:12 AM EST
[ Parent ]
Re: Some good news on Iran (none / 1)
If I understand the graph right, it means that Tradesports is offering odds of about 5/2 on a military strike by March 2007. Now this may be down on prior highs - the market being overbought? - but this is a very "bullish" indicator given the current state of play.
by londanium on Fri Apr 14th, 2006 at 09:04:57 AM EST
Some good news on Iran | 5 comments (5 topical, 0 editorial, 0 hidden)


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