Subject: Re: Tom W. Bell paper
From: Don Marti <dmarti@zgp.org>
Date: Fri, 1 Sep 2006 19:07:02 -0700

begin Thomas Lord quotation of Fri, Sep 01, 2006 at 01:11:58PM -0700:

(This is a great set of comments on the SPEX idea --
Tom, have you written to Prof. Bell?)

> Specifically, prediction markets *do not allocate* any of
> the economic growth that results from a research
> success.   Rather, prediction markets allocate some of the
> risk of investment in research.  (But they perform that
> allocation in an odd way, see below.)

I'm thinking about ways that a SPEX (which I don't
think is really a prediction market) can be used to
hedge the "risk of non-innovation".

Let's say you have a big data center, and there's a
SPEX market trading predictions on "a computer will
complete a certain large task in one hour or less
using no more than 100 watt-hours of power".

As an electricity customer, you're already taking
risks in the energy market.  What if you could offset
those risks by taking a position on the "no" side
of the energy-efficient computer prediction market?
Yes, the market is just moving risk, but it's not just
moving it from one R&D area to another, but into R&D
from a non-R&D market.

Non-researchers won't siphon off researchers' rightful
gains from a SPEX for the same reasons non-assassins
won't siphon off assassins' rightful(?) gains from
an assassination market.

-- 
Don Marti                    
http://zgp.org/~dmarti/
dmarti@zgp.org           LinuxWorld: August 14-17, 2006, San Francisco