Subject: Re: Tom W. Bell paper
From: "Rich Bodo" <richbodo@gmail.com>
Date: Fri, 1 Sep 2006 00:19:20 -0700

>
> This is interesting, but is a market in science and
> technology really a prediction market, if you could
> use your cold fusion futures to hedge your oil stocks,
> or use factoring algorithm futures to hedge your
> quantum crypto startup?

Some might say that as long as the purpose of the market is to
predict, it is a prediction market.  You could create a hedge fund
that included bets on the spex market, tho.

Mr. Bells definition of a prediction market's purpose is in large part
enumerated in a matrix that compares markets on page 16 of his paper.
In that matrix, he contends that the secondary purpose of a prediction
market is to promote discovery.

I would rather identify the type of market the usual way, by what is
bought and sold.  It's harder to say to what purpose a market is
created and used.  I think he should lose that matrix.  If we take
that approach, a spex is a prediction market in which assets are
bought and sold that are tied to scientific claims.

Some of Bell's other attempts at fundamentally differentiating a spex
from other prediction markets didn't work for me, either: "Because
markets in skill-based claims reward research, however, they tend to
stimulate it."  Although true, that does not differentiate a spex from
other prediction markets in principle.  You could make a similar case
for an assasination market.

Love the underlying motivation of the paper, and it's probably a good
legal howto, but I didn't feel he addressed just the type of question
you ask - the what, and it too quickly skims over the more intrigueing
"why?".

-- 

-Rich
http://rbodo.blogspot.com