Tim has identified the problems, including what may be the most important one, that the "market," unlike other such markets, is subject to gaming for motives that are other than economic. In other words, the item in question doesn't lend itself to commoditization; the subject pork bellies are not fungible. MacN -----Original Message----- From: Tim May [mailto:timcmay@got.net] Sent: Tuesday, July 29, 2003 6:17 PM To: cypherpunks@lne.com X-Orig-To: cypherpunks@lne.com Subject: Re: Someone at the Pentagon read Shockwave Rider over the weekend On Tuesday, July 29, 2003, at 03:24 PM, Steve Schear wrote:

At 16:20 2003-07-29 -0700, John Young wrote:

...

Tim May wrote:

...

Yes, a bunch of "ideas futures" markets have existed for nearly a decade. An acquaintance of mine, Robin Hanson, was actively promoting such things in the late 80s and may have been involved in some of the Extropians-type markets which arose a few years later (I recollect several efforts with varying degrees of success).

Yes, Robin Hanson worked on DARPA's PAM program. Here's his e-mail about it in May 2003:

Looks like Robin may have to concentrate on a commercial venture if he wants to see his ideas put into practice.

And use an offshore nexus, and good anonymity and digital cash tools...just as predicted many years ago. Doing this aboveboard, and doing it with the collusion of the actors who can alter the outcome, is asking for trouble: * violation of gambling laws...as I said in other articles, betting on the death of the King of Jordan is not different from betting on the winner of the World Series. * distortion of markets by players who see more benefit in adjusting the expectations than in spending some relatively small amount of money (If "Chances that weapons of mass destruction being found in Iraq by Nov. 1" is being de-rated, in a relatively thin market of a few dozen players, then someone with an interest in altering the odds can probably do so with relatively little money...especially if the money is from a Black Budget and comes from money taken at gunpoint from taxpayers.) (I can't resist mentioning that I was able to massively distort/sabotage the market in reputations that the Extropian list experimented with in 1993. I did this by buying "play money" (extro-dollars or whatever they were called) from other players in an out-of-band transaction. A mere $20 in U.S. money gave me a huge amount of additional spending money in this reputation market. Naturally, my reputation rose. Likewise, if Paul Wolfowitz wants the market to assess a "grave danger" that Norway is financing terrorism, he can use out-of-band methods to get a bunch of "ringers" (cut-outs, co-conspirators) to start bidding up the market. As the penalty for not guessing correctly is not clear until the outcome, and inasmuch as the money is provided by agencies, the opportunities for mischief are obvious.) * Insider trading. Letting government employees benefit from their inside information is like letting IBM or Intel employees engage in a wagering system based on KNOWLEDGE THEY ACTUALLY HAVE. (Not that insider trading is unknown in commodity or stock markets, including futures markets. But these markets have traditionally been heavily regulated and insider trading is forbidden, at least nominally. In the case of this DARPA market, the players are by definition the insiders, with various amounts of very non-public information about plans and contingincies. "Duh.") And so on. So many attacks on this system. Anyway, there _already_ are very real, hard to manipulate markets in information. We call them markets. Markets for real estate, for corn, for copper, etc. If a lot of residents of Jordan think a collapse is coming, real estate prices in Amman will fall. If a lot of technologists think a return to copper wiring is coming, copper prices will rise. And so on. Betting on contrived propositions with relatively small amounts of money ("toy systems") and/or with play money is not very interesting. --Tim May