While it is sometimes claimed that political betting markets are a recent invention, they clearly are not. Rather it is the absence of such markets during the mid- and late-20th century which is the exception.
The big problem here is that punters generally don't care about 'socially useful' markets. They want short term markets about things they care about like sports or elections. If socially useful markets are going to work then there is going have to be a new way compensating knowledgeable punters.
Proper betting exchanges (like 'Betfair') allow you to either 'Back' (bet for) or 'Lay' (bet against) an outcome. So in theory there should be equal numbers of fraudsters for and against an outcome, and they cancel each other out.
Also, where fraud is at work, there is often meta-betting on the fraud : sure a result may be fixed, but punters don't know which way, and they then bet on that ;)
"Bet or be silent" is an awesome rationalist edict. If you're not confident enough in your predictions to wager on them, they're worthless.
There are lots of people inventing all kinds of wacky theories to invent the crisis. But the people we should be asking about what caused the crisis are John Paulson, George Soros, and James Simon: the managers who made billions by predicting the crash. They are the ones who understand.
Gamblers do extreme things to modify an outcome if they've got a lot of money at stake. So why not just put a cap on the amount of money people are allowed to bet? That would also prevent rich lunatics from exerting too much sway.
Best betting market I've found so far is the 'Betfair' betting exchange (UK-based), which offers perfectly fair (100% return to punter) odds, but takes a 2%-5% commision from net profits. Lots of punters and high liquidity, lots of betting on all sports and seem to be evolving into the de facto leading global prediction market:
Betfair
Got some tips for readers:
Melbourne Cup (Nov 4th)- greatest horse race in the world: great odds on the Irish horses 'Septimus', and 'Profound Beauty', top European stayers - get on!
Caulfield Cup (18th Oct) and Cox Plate (25th Oct)
'Littorio' at great odds for the Caulfied, but don't count out the Aussie champ 'Weekend Hussler' in the Cox.
--
Unfortunately Robin, Internet betting seems to be illegal in the US in most states, which is probably what is hampering the growth of prediction markets there.
New Zealand on the other hand, just set up a new prediction market, in which a paper of yours was quoted:
iPredict
and in Europe and Australia you can't walk down a city street without passing at least a few bet shops. Betting's a way of life in Australia, and the whole nation stops for the running of the Melbourne Cup.
As champions of capitalism, the States does seem to have some strange regulations at times...
I've also heard a few people talk of dismantling the NYSE. A public high school biology teacher as the leader of that chorus of banning advocates, if I remember correctly. I proceeded to defuse their position, my success remains in doubt.
Also, by banning shortselling, and forcing changes in the firms capital structures, is the government not, in effect, dismantling the machinery of the financial markets in order that the markets spit out the message that most people would prefer? Not an outright ban, but moving in that direction.
Stock markets now often say things those in power don't want to hear, but no one considers banning them. Untrue -- I've heard plenty of people talk about banning them.
It's the people who believe (rightly or wrongly) that stock markets constitute an exploitable resource that they can make money with who don't talk about banning them. People who do not share that belief, in my experience, often consider such banning to be desirable. They're just not likely to be in a position to do so.
"Wagering was generally legal under British common law, so long as it did not to lead to immortality or impolity."
I must say I'm rather impressed with the power of this wagering. If this is what betting markets can do, clearly we should set some up forthwith! I don't understand why its advocates are not making this argument.
Carl, sure powers could want to lash out at markets that don't favor their views, but the more embedded in society are such markets the less they'd be able to oust them. Stock markets now often say things those in power don't want to hear, but no one considers banning them.
Maybe I'm missing something, but I didn't notice a lack of betting shops in the latter part of the 20th century. Are you mistaking US history for world history?
I guess betting on whether a vampire bite is going to be effective would be out, then? I suppose the scene at the end of Indiana Jones and the Last Crusade could be considered a bet leading to immortality.
The big problem here is that punters generally don't care about 'socially useful' markets. They want short term markets about things they care about like sports or elections. If socially useful markets are going to work then there is going have to be a new way compensating knowledgeable punters.
John,
Proper betting exchanges (like 'Betfair') allow you to either 'Back' (bet for) or 'Lay' (bet against) an outcome. So in theory there should be equal numbers of fraudsters for and against an outcome, and they cancel each other out.
Also, where fraud is at work, there is often meta-betting on the fraud : sure a result may be fixed, but punters don't know which way, and they then bet on that ;)
"Bet or be silent" is an awesome rationalist edict. If you're not confident enough in your predictions to wager on them, they're worthless.
There are lots of people inventing all kinds of wacky theories to invent the crisis. But the people we should be asking about what caused the crisis are John Paulson, George Soros, and James Simon: the managers who made billions by predicting the crash. They are the ones who understand.
"Bet or be silent."When I was growing up that was phrased as "Put yer money where yer mouth is!"
Gamblers do extreme things to modify an outcome if they've got a lot of money at stake. So why not just put a cap on the amount of money people are allowed to bet? That would also prevent rich lunatics from exerting too much sway.
Best betting market I've found so far is the 'Betfair' betting exchange (UK-based), which offers perfectly fair (100% return to punter) odds, but takes a 2%-5% commision from net profits. Lots of punters and high liquidity, lots of betting on all sports and seem to be evolving into the de facto leading global prediction market:
Betfair
Got some tips for readers:
Melbourne Cup (Nov 4th)- greatest horse race in the world: great odds on the Irish horses 'Septimus', and 'Profound Beauty', top European stayers - get on!
Caulfield Cup (18th Oct) and Cox Plate (25th Oct)
'Littorio' at great odds for the Caulfied, but don't count out the Aussie champ 'Weekend Hussler' in the Cox.
--
Unfortunately Robin, Internet betting seems to be illegal in the US in most states, which is probably what is hampering the growth of prediction markets there.
New Zealand on the other hand, just set up a new prediction market, in which a paper of yours was quoted:
iPredict
and in Europe and Australia you can't walk down a city street without passing at least a few bet shops. Betting's a way of life in Australia, and the whole nation stops for the running of the Melbourne Cup.
As champions of capitalism, the States does seem to have some strange regulations at times...
"Rolf, sorry, fixed the typo. "
Aw. It was much more entertaining the old way. :(
I've also heard a few people talk of dismantling the NYSE. A public high school biology teacher as the leader of that chorus of banning advocates, if I remember correctly. I proceeded to defuse their position, my success remains in doubt.
Also, by banning shortselling, and forcing changes in the firms capital structures, is the government not, in effect, dismantling the machinery of the financial markets in order that the markets spit out the message that most people would prefer? Not an outright ban, but moving in that direction.
Rolf, sorry, fixed the typo.
And the big question... how accurate were those old betting markets?
Stock markets now often say things those in power don't want to hear, but no one considers banning them. Untrue -- I've heard plenty of people talk about banning them.
It's the people who believe (rightly or wrongly) that stock markets constitute an exploitable resource that they can make money with who don't talk about banning them. People who do not share that belief, in my experience, often consider such banning to be desirable. They're just not likely to be in a position to do so.
"Wagering was generally legal under British common law, so long as it did not to lead to immortality or impolity."
I must say I'm rather impressed with the power of this wagering. If this is what betting markets can do, clearly we should set some up forthwith! I don't understand why its advocates are not making this argument.
Carl, sure powers could want to lash out at markets that don't favor their views, but the more embedded in society are such markets the less they'd be able to oust them. Stock markets now often say things those in power don't want to hear, but no one considers banning them.
Maybe I'm missing something, but I didn't notice a lack of betting shops in the latter part of the 20th century. Are you mistaking US history for world history?
I guess betting on whether a vampire bite is going to be effective would be out, then? I suppose the scene at the end of Indiana Jones and the Last Crusade could be considered a bet leading to immortality.
If decision markets reveal that the plans of the party in power are counterproductive they will demonstrate social value and backlash simultaneously.