Subject: Re: Tom W. Bell paper
From: Thomas Lord <>
Date: Sat, 02 Sep 2006 00:50:46 -0700

Don Marti wrote:
> 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.

Wouldn't that hedge be more efficient if I did it by shorting
shares in projects that aimed at bringing to market patented
implementations of energy-efficient computing?

I'd be all in favor of some cautious relaxations of securities
regulations for ordinary offerings but the indirection of
trying to end-run around regulations with prediction markets
doesn't seem to me to offer any benefit.

(One of Prof. Bell's motivations seems to be to create
markets that act as signals to journalists.   For example,
in his view, such markets would create more accurate
environmental reporting.   Maybe he doesn't read the same
press I do.   In what I read, markets are taken very much
as signals.   For example, real estate speculation in prime
locations for massive data centers is a good indication of
the consensus about future improvements in computing
costs relative to demand.)