Subject: Re: Tom W. Bell paper
From: Don Marti <dmarti@zgp.org>
Date: Sun, 3 Sep 2006 14:22:53 -0700

begin Thomas Lord quotation of Sat, Sep 02, 2006 at 10:50:41PM -0700:
> Don Marti wrote:
> >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.
> 
> Your obligation here isn't simply to show how an
> innovator could win a game in a Spex, given compliant
> counter-parties.   You need to show why those counter-parties
> would enter the market in the first place (and you've just
> provided an argument that they would not).

A bug bounty system is a distant relative of a SPEX,
and counterparties do show up in those.  Free software
users are willing to "put up money to have somebody
fix this", despite bounty systems' poor record so
far in matching developers and investors.

I have suggested previously on this list that
restructuring a bounty system as a prediction market
might make it more useful.

http://zgp.org/~dmarti/blosxom/business/software-deficiency-futures.html

> Now, you very well might be able to best Bell by further
> developing your idea.   Insurance may very well be able
> to suggest some market models that could truly "whup"
> copyrights and patents.   You might be on to something there.
> To the degree you are, you are departing from, not supporting
> Bell.

I don't think a full-grown SPEX is going to pop up,
but it's an extreme example of where things could go
if the law became friendlier to prediction markets.
Bug futures are an approachable relative, and the
referees and infrastructure are already in place for
those, thanks to bounty systems.

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