Subject: Re: Tom W. Bell paper
From: Don Marti <dmarti@zgp.org>
Date: Sat, 2 Sep 2006 20:51:14 -0700

begin stephen@xemacs.org quotation of Sat, Sep 02, 2006 at 04:36:39PM +0900:
> Don Marti writes:
>  > 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.
> 
> No, it's just moving it from a non-R&D, non-prediction market into a
> non-R&D, prediction market.  As Tom points out very carefully, this is
> not at all a market for R&D.  It's a market for hedging.  That's good
> for the electric company and its investors, which may have
> "trickle-down" effects on R&D.  But no funds from the market itself
> will be automatically allocated to R&D, and there is no guarantee of
> trickle-down effects, as the board may decide they'd prefer to spend
> the freed-up reserves speculating in prediction markets.

Yes, and so you would have to (1) do R&D and (2) take
a position in the market based on "predicting" the
success of your own project in order to profit from
the market.  (Yes, it's a lot like an assassination
market.)  In the energy-efficient computer example,
you invent the machine that can pass the test, buy
"yes" contracts, pass the test -- and immediately
have your market gains to plow into future research,
instead of having to navigate the patent system.

Historical example of technological and business
process innovations driven by a risk allocation
business:
Hartford Steam Boiler Inspection and Insurance Company 
http://www.hsb.com/about.asp?id=50

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