Found this in the news today.

[Skandranon]

Then you better be a damn sure your speculation is good. Your're betting on ideas, intangibles, I'd rather go to a psychic to get information.

You must have a pretty low opinion of political analysts and professors if you think psychics are just as reliable. Using the example you supplied, the two people interacting are a specialist in Jordanian domestic affairs and a specialist in US military planning and operational capabilities.

What the idea market is doing is drawing together their expertise without actually having to get the two people together. In effect, it creates a "think tank" of every specialist that has access to the site. You think psychics are this reliable?

Given the example again, setting up futures on whether the Jordanian monarchy is overthrown and if the Iraqi regime persists: these are not intangibles. These are not just ideas. Take into account the stability of the Jordanian people; the strength and number of revolutionary movements within Jordan; the ability of the monarchy to maintain order; the loyalty base among the Jordanian people toward the monarchy. It is not that these things cannot be known. Just because they are to you, pakman, intangibles because you, pakman, do not know anything about them does not mean that no one does.

Political situation change daily, tomorrow Saddam might die or England will decide to pull out of the conflict (unlikely), but it could happen.

And of course someone's free to put a bet on that. And if they're wrong, they lose money. It's not, "nothing happens". There's a clear and very direct penalty for a wrong prediction. Don't disregard it.

Going back to Pete's signature a while ago, opinions are now counted by how much money people throw at it.

And what's wrong with that? You get a small return for being right and a huge loss for being wrong. The way the system works, people only bet on what they have expertise in. The system is based around everyone betting having expertise in something, because the people with expertise in nothing will lose all their money fairly quickly.

Also, have a look at what Warren Buffet has to say about derivatives, page 12. It's a risky business. The example about betting on the number of twins born in Nebraska in 2020 is how I view the PAM.

The example you refer to is just a throwaway line on the lengths to which derivatives can go. Otherwise, his comments deal mainly with the accounting issues related to the derivatives market and are therefore not particularly germane to this discussion.

This criticism of yours also implies that you believe that with an idea futures market, people will just go around betting on whatever they want, throwing their money away. I'm not sure where that belief comes from. I certainly don't like losing money and a lot of other people don't like it either, and I'm sure that my dislike of losing money won't magically go away if I'm offered the opportunity to lose money on an idea futures market.

And what about if those very people we are talking about in the news decide to play the game? Take Osama BinHidin'. He sets up a third party to place bets, does something nasty, and then collects the money?

So Osama puts up a prediction that, say, the Empire State Building will be struck by two airplanes the next morning. Puts money on that, probably a million or more dollars. The act of putting so much money on that raises the percentage assigned to that prediction. The US Government, which is watching the board (after all, that's what it's for) notices the prediction, notices the bet, and immediately alerts authorities all over the country...preventing the attack. And if Osama puts only a dollar or two on it, keeping the percentage low? I'd call the benefits of the system far better than the possibility of handing Osama one whole dollar.

The idea, which I'm still not sure you get, is that somewhere in the world or even just in the United States, someone knows part of what is going to happen for exactly the right reasons. And someone else knows another part of what is going to happen for exactly the right reasons. The information market lets them get that out where a community of potentially tens of millions can read over it.

All of this, of course, is a sideshow, even the winning and losing of money. The point is that the US government, by watching the board and the predictions that surface and become either more strongly or weakly supported, can virtually predict the future...and in a far more accurate manner than psychics. What this is, is a potentially incredible tool. Naturally, the current form as suggested by DARPA has some flaws. What doesn't, when it first starts out? But you have to start somewhere.