Steve Cisler on Tue, 29 Jul 2003 18:28:17 +0200 (CEST)

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<nettime> Policy Analysis Market

Of the 266 Google news links about Policy Analysis Market this morning, 
most of the headlines trumpet "Defense Department Taking Terror Bets." 
Policy Analysis Market is an attempt to use the wisdom of markets to 
predict crises and attacks in the Middle East.  The organizations 
behind the project include the Economist Intelligence unit, the Defense 
Advanced Research Projects Agency (they funded the original Internet), 
and Net Exchange, a spinoff from the California Institute of Technology 
devoted to commercialize " computational combinatorial deal-making 

PAM states this about the whole concept: "Analysts often use prices 
from various markets as indicators of potential  events. The use of 
petroleum futures contract prices by analysts of the Middle East is a 
classic example. The Policy Analysis  Market (PAM) refines this 
approach by trading futures contracts  that deal with underlying 
fundamentals of relevance to the Middle East. Initially, PAM will focus 
on the economic, civil, and military  futures of Egypt, Jordan, Iran, 
Iraq, Israel, Saudi Arabia, Syria, and Turkey and the impact of U.S. 
involvement with each."

What is controversial is that market futures about "the overthrow of 
King Hussein of Jordan" were included and have offended politicians 
here in the US and undoubtedly in Jordan, Saudi Arabia, etc. . Others 
are upset that a trader can actually make some money if he/she predicts 
fairly accurately.  Trading starts October 1, 2003, and you can signup 
now. There will be a cutoff after 1000 registrants, and while they hope 
to have a globally distributed network of participants, what if a 
significant number were nettime readers?

I first ran into this market concept about ten years ago. The Iowa 
Political Stock Market successfully predicted the outcome of the 1992 
U.S. presidential election within a few tenths of a percentage point 
for all three candidates (including Perot).  It was more accurate than 
8 major polls. Since then there have been many other experiments with 
other markets: Hollywood Stock Exchange where people bet on future box 
office receipts and Foresight Exchange where traders bet on the 
outcomes of unresolved scientific and societal questions. Hollywood Stock Market Articficial Markets Policy Analysis Market

Steve Cisler

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