Terrorism futures, again

by John Q on December 19, 2003

The idea that speculative markets can be used to forecast political events hit the headlines a while ago with the furore over terrorism futures. This idea is still around and the general claim that political events can be forecast by futures or betting markets is still being pushed hard. The main source of data is at the Iowa Electronic Markets, but there’s plenty more. Reader Jack Strocchi sent me this report on a study of Australian betting markets and elections.

As it happens, I’d already looked at this and come fairly rapidly to the conclusion that the betting markets weren’t much good, so I was struck by the money quote from author Justin Wolfers

The data suggests the Australian betting market is extraordinarily efficient. And why not? There’s a huge incentive for participants to do their homework, collect reliable information and make sure the price is right.”

Looking at the report and also the Iowa studies, the evidence in support of this claim still seems very weak to me. In 2001, for example,

The night before the election, Howard [the incumbent Liberal PM] was ahead in two of three major polls ….[on Centrebet] Howard was the favorite with odds of $1.55, suggesting a 64 percent probability of his winning the election,”

That is, on the crudest possible use of the polls, two out of three suggested a Howard win, giving odds almost identical to Centrebet. In fact, I doubt that any serious analyst would have given the Labor Opposition even a 25 per cent chance by election night.

To be fair, Wolfers doesn’t put much weight on the election-night market. He says

data from Centrebet, Australia’s largest bookmaker, demonstrated the impact of current events on the betting odds throughout the nine months leading up to the election, reflecting immediately the electorate’s seesawing response to such events as leaders’ televised debates and the Sept. 11 attacks in America.

In fact, however, the betting markets reacted more slowly than the polls. In this piece written in September 2001, Wolfers and his co-author Andrew Leigh rated Labor a 55 per cent chancebased on the Centrebet data.

But enough of this ad hoc dispute. What test should we be applying here? It’s not appropriate, as nearly everyone in this field has done, to treat polls and betting markets as separate predictions. Punters in the betting markets have access to the polls. So they should do at least as well, on average, as any mechanical rule based on poll data. The test “have the markets done better than the polls” implicitly compares the actual betting strategies to the rule “at even money bet on whichever candidate is ahead in the polls”. Even compared to this simple-minded rule, the improvement shown by the markets is marginal at best.

The real issue we should consider, before rushing to embrace terrorism futures and the like, is how betting markets would perform in the absence of information from polls. You’d have to go back before World War II for this, but it’s my impression that predictions of election outcomes in this period were often way off the mark

{ 35 comments }

1

John S 12.19.03 at 9:22 am

Do betting markets do better than polls? I’m swayed by Hal Varian, an economist I think is worth listening to, and he likes betting markets. In any case, your counter-argument is useless in a situation where there are no polls. If there were so-called terrorism futures they’d have no polling equivalent. And I like the fact that betting markets allow anyone, including people who might have good reason to think the way they do, to have a say in the possibility of an outcome. In situations where there are no polls, I find betting markets a much superior approach to asking so-called experts what they think is going to happen.

Finally, your suggestion that we are rushing to embrace terrorism futures is risible. You are trying to suggest you are a rebel on this issue; in fact, your view is orthodox.

2

dsquared 12.19.03 at 11:08 am

Varian likes the Iowa electronic markets, but he hasn’t done any actual work on them as far as I know.

The entire question at issue is whether, in cases like terrorism, constructing markets would be a better use of resources than more conventional data gathering.

I don’t understand why you’re putting words in Mr Quiggin’s mouth; nowhere in his post does he claim we are “rushing toward terrorism futures”.

Finally on a general point, could I ask you to take a more polite tone with our guest commentator, please? We’re having rather a crusade on civility in the comments section at the moment.

3

Nick 12.19.03 at 12:21 pm

I’ll posit a (perhaps too) simple explanation as to why I suspect terrorism futures would not work. If there is information in the market about a terrorist incident, people will want to bet on it and the odds will presumably shorten. But any decent terrorist organisation will monitor the odds of particular events. If the odds shorten on something that sounds uncomfortably close to what they’re planning, surely they’d have the smarts to realise their plan was known and change it.

4

Nabakov 12.19.03 at 12:55 pm

I raised the same point Nick the last time terrorism futures were discussed on CT and was rebutted in a reasonably convincing way. Unfortunately I can’t remember the details (and can’t be bothered sifting through archives) except that it was a rather counterintuitive arguement.

The other way terrorists could benefit from such a market is by playing it themselves to raise the odds on particular events and then plunging(sorry) big based on their own inside knowledge.

Speaking of which, did anybody ever get to the bottom of the suspicious flurry of airline options traded just days before 9/11.

5

John S 12.19.03 at 1:29 pm

Sorry dsquared and Mr Quiggins, I meant no disrespect. In fact, as this is an issue which interests me a lot I was delighted to see it raised again. Perhaps I was ruder than I should have been in my haste to defend what I think is a better idea than most people believe. One too, with a wider application than just terrorism.

As for my putting words in Mr Quiggin’s mouth dsquared, what can I say? Mr Quiggin writes “before rushing to embrace terrorism futures and the like” – that’s not me putting words in his mouth, that’s a cut and paste job. Now, I may have misinterpreted, but I read that as implying that there’s a pent-up wave of demand for terrorism futures. The opposite is true in my humble view (I hope that it’s not too rude of me to say so). There’s no possibility of a rush to such markets as the debacle over the terrorism futures market in the US demonstrates.

The problems with a terrorist futures market are exaggerated. If you think terrorists can manipulate such a market, restrict it to, say, the intelligence community or put a limit on the size of bet that can be placed. Sure, there may be problems, but don’t dismiss the idea without tinkering to see if it can be made to work.

6

Nabakov 12.19.03 at 2:05 pm

“If you think terrorists can manipulate such a market, restrict it to, say, the intelligence community or put a limit on the size of bet that can be placed.”

But wouldn’t that defeat the purpose of the exercise – which is to create real incentives for as many players as possible to collect and act on the widest possible range of relevant information?

Applying the guidelines above would leave you with not much more than the office footy tipping pool.

7

John S 12.19.03 at 3:52 pm

“Applying the guidelines above would leave you with not much more than the office footy tipping pool.”

That may be true, at least for a terrorist futures market, but even that’s better than the office manager alone deciding who’s going to top the league.

8

Barry 12.19.03 at 3:54 pm

And, as has been pointed out in somewhere else, once it’s restricted to the intelligence community, a huge number of bureaucratic factors come into play. Those who place bets disliked by the highers-up will be subject to retaliation from those higher-ups. Bets which reflect the inside information of specialists would come under fire for violation of the rules which govern the compartmentalization of intelligence.

The whole point of a market would be that governmental/corporate chains of command are limited. The whole point of a governmental/corporate chain of command is that internal markets are limited.

9

Barry 12.19.03 at 4:06 pm

Another problem – if participants bet on certain things happening, which they (with good reason) know to be likely, those things should become less likely. That’s the reason for the market. Which means that the people who bet on those things happening are scr*wing themselves by doing so – unless they are small players, who won’t shift the market by their actions. However, in that case, they should be ignored, since there will always be somebody betting on anything.

For example, if I were one of a large number of people bet on attacks against the energy system in the US, the government should shift efforts to preventing those attacks. Which would cause me and the others to have a lesser chance of making a profit. If I were one of a small number of people who bet on something, then the government should not pay a lot of attention to me – so the information is not very useful. And if that particular thing did happen, I’d get a short vacation to Gitmo long before I got the profits.

Things which are likely, but unpreventable shouldn’t find as many takers for their non-occurrence (and that information is less useful to the government).

10

John S 12.19.03 at 4:14 pm

No Barry, not if bets are anonymous. If they’re anonymous, even a limited market will reveal the best guess of the entire community. Presumably, the only reason to create such a market would be to try to find that best guess. If the administration insists that it knows who bet what, yes that will distort the results and return intelligence assessment to the status quo. But why go to all the bother of creating a market then?

11

due torre 12.19.03 at 4:14 pm

I thought the T(errorism)FM was supposed to be like the (succesful, AFAIK) sales futures market HP set up internally a few years back.

The idea behind that was that individually, sales managers would be overly optimistic on their projected sales for the quater, and those numbers agreggated would produce overly-rose projections for the company as a whole.

By allowing managers to (anonymously) put money on what they expected sales to be, HP’s front office came up with a much more accurate prediction.

Translating this to the intelligence field, the idea behind the TFM would be that analysts (the ‘managers’ of intelligence, if you will) are currently pressured to shade intelligence so that it makes the front office happy. By allowing analysts to bet on the TFM (and by keeping those numbers internal), the administration could get assessments more honest than those coming out of Cheney’s office…

In this case, terrorists, like HP’s clients, not only wouldn’t be able to bet on the TFM themselves, they wouldn’t know what level predictions are trading at, so as to call off impending attacks that have been detected and “priced in” to the market.

My concern with the TFM is that unlike the IEM or HP’s sales market, it is not pricing trends (sales or polling data) but discrete events. The closest analogy I can think of in the markets is that of trying to price bankruptcy. While there is a market for that (I would argue the bond market), recent history has shown that following the big three rating agencies rating of corporate bonds is a poor indicator of upcoming bankruptcy…

well that was longer than i planned it to be…

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due torre 12.19.03 at 4:16 pm

sorry for the typos in the previous. not enough coffee this morning…

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John S 12.19.03 at 4:33 pm

Barry, small players can shift markets. Not individually, true, but collectively. And whoever thought, no I won’t buy that ridiculously cheap whatever, even though I know it’s worth much more, because everyone else will have the same idea as me and so soon it won’t be ridiculously cheap anymore?

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Barry 12.19.03 at 5:06 pm

John S, that’s true – a large number of small players can shift the market. I don’t understand your last sentence, but if it’s what I think it is, the terrorism futures market should work the opposite way – once the other investors pile in, the profits should go down, even for the early buyers.

The anonymity – this was in reference to comments that terrorists could game the market, to which it was suggested that the market could be restricted to the intelligence community. In theory, untraceable but restricted access could be granted, but in the real world trusting that would be a major act of faith.

Due torre – D^2 had a post which mentioned the use of ‘internal markets’.

15

Decnavda 12.19.03 at 6:04 pm

“The real issue we should consider, before rushing to embrace terrorism futures and the like, is how betting markets would perform in the absence of information from polls.”

Why on earth is this the “real issue”? I support futures markets, and think they give better info than polls, and I can your answer: Without polls, the futures markets would perform much worse. So what? Futures are information amalgamation techologies. The better the information, the better the amalgamation. You need both.

This is a way for a non-expert to get an accurate picture of the expert’s conventional wisdom. The experts themselves probably should not rely on the futures, but on the data. But a reader of a newspaper story that prints any one of the three polls on Howard would get a skewed view, whereas if the reported cited the futures market, the reader gets the views of everyone willing to stake money. The CEO’s of HP are not experts in projecting sales, but they need accurate info. Their market keeps their experts honest. Elected officals need accurate information on security threat where they are not experts and the relavant experts may have reasons to skew the views they present to the officals. In a democracy the ultimate decision makers are the citizens, who are notoriously non-exerts.

The polls vs. futures is a false delima. Experts need data, and that it not the futures market. Non-experts need honest expert opinion, and that is the futures market.

Analysis of futures markets I have read suggest that they are extremely effective, unless the true odds of an event are less than 10% or greater than 90%, in which case a bias to overesimate longshots creeps in. This would suggest that futures designed to predict specific events – say, will the Isreali PM be assasinated next year – would tend to be over valuated and the market would be ineffective. But make it more general – say betting on the number of Isreali citizens killed in terrorist attacks next year – and it should be extremely accurate.

Finally, what kind of marketing idiot came up with the term “terrorist futures”? Couldn’t your average government employee come up with “security futures”?

16

dsquared 12.19.03 at 6:34 pm

Analysis of futures markets I have read suggest that they are extremely effective, unless the true odds of an event are less than 10% or greater than 90%, in which case a bias to overesimate longshots creeps in

Not true; my favourite statistic is the one which drove the plot of the film “Trading Places”, that 40% of the volatility in the NYMEX orange juice futures contract happens on the day that the Department of Agriculture releases its orange crop forecasts.

17

James Surowiecki 12.19.03 at 6:40 pm

I, too, am a bit confused by the argument about polls. The Iowa Electronic Markets has never involved more than 800 traders, I think. (It may have become bigger this year because of all the publicity.) It costs basically nothing to run, and there’s very little money at stake. And yet between 1988-2000, it did better than the polls 75% of the time. That is, comparing the IEM’s forecast to a poll’s on the day the poll results were printed, the IEM was more accurate three-quarters of the time. The results are less volatile, and are more accurate the further back you go. I don’t really see what is unimpressive about this performance.

Mr. Quiggin’s post also focuses only on the “who will win” contracts. But the IEM also offers “what percentage of the vote will a given candidate get” contracts, and the performance of those contracts has been, if anything, better. In the California election, the market was only about 1% off (in absolute terms) in its prediction of the recall vote, Schwarzenegger’s percentage and Bustamante’s percentage.

No doubt without polls the IEM would perform much worse. But I have little doubt it would be better than any other mechanism you might devise to predict election outcomes.

18

James Surowiecki 12.19.03 at 6:46 pm

One other minor point, which I made too often at the time of the initial uproar over PAM (apologies for repeating myself): the vast majority of the contracts that would have been offered on PAM and I believe will be offered by NetExchange did not have to do with discrete events. They had to do with changes in civil, military, and economic conditions in the Middle East. This was the point of PAM’s partnership with the Economist’s Intelligence Unit. Indices of civil stability, military preparedness, and economic health would have been constructed, and the contracts would have been pegged, effectively, to changes in the indices. There would have been some contracts offered in discrete events — like, say, a coup, I gather — but they would have been more the exception than the rule.

The other innovation that NetExchange was/is planning to offer was combinatorial contracts, which would have attempted to evaluate how changes in one country would influence or be influenced by changes in another.

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decnavda 12.19.03 at 6:56 pm

dsquared-
I was refering to an anlysis I read of idea futures markets, not commodites futures, although I recognize that the dynamics should be essentially the same. When I saw the movie, I assumed that the Department of agriculture had acess to information that investors would not. Is this wrong, or do the investors really just trust the government experts to make better predictions than private experts?

20

Jeremy Osner 12.19.03 at 9:38 pm

Has anyone had the idea yet of a Patents Futures Market? You would buy interest in not-yet-invented machines — inventors could use the market to hedge themselves like farmers use Commodities Futures. Maybe?

21

Decnavda 12.19.03 at 9:43 pm

jeremy-
There are a ton of Science & Technology claims traded at Forsight Exchange. It’s play money, but yes, people have thought about it.

22

John Q 12.20.03 at 12:40 am

To try and clarify my main point, I think the evidence is that prices in betting and futures markets do not add a lot of information to what’s in the polls.

If you grant that, then in a situation where there are no public sources of information comparable to polls, prices will not contain much information.

Coming back to the Iowa Markets, the analog of the weak efficient markets hypothesis is that the market should do better than any estimate that can be derived from polling data (including past elections). The test mentioned above, outperforming a single poll on the day it is published, is much weaker than this, since it ignores all the evidence from previous polls. Especially where samples are small, you would a weighted average of recent polls will typically do better than the most recent poll.

23

Decnavda 12.20.03 at 1:00 am

john q.-
1. No, the markets do not ADD information, they synthasize expert opinions.

2. Without polls, markets would still provide the BEST predictions, although, yes, they might still not be very good.

3. Weightiing the averages of past polls is a job for experts, who will no doubt disagree as to how to weight them and how far back to go. As a non-expert, I do not know how to judge between them of pull out enivitable baises.

Again, if you are arguing that these markets do not provide much useful information for experts, I would probably agree. But I think they are the best way for a non-expert decision maker to see the most honest synthasis of expert opinion.

24

James Surowiecki 12.20.03 at 3:50 am

John, I think you are holding the IEM to an effectively impossible standard. If the polls are relatively accurate, how could the IEM add (I would say “aggregate”) lots of information that’s not in the polls? In other words, even if there is all this relevant private information or analysis that the IEM is, in fact, aggregating, its effects may be going unnoticed because the polls are, relatively speaking, pretty good. In U.S. presidential elections, the IEM’s forecast has been off, on average, by 1.37% in absolute terms (I’m citing from memory here, so I may be slightly off), which is yes, better than the polls. Certainly the market could do better. But I don’t think it would be mathematically possible for it to do better enough to satisfy what you seem to be looking for.

What this means is that your second point (prices would contain little information if there were no public sources) does not follow from your first (your evaluation of the efficiency, or lack thereof, of the IEM). In fact, it’s possible that the less accurate the public sources were, the more valuable something like the IEM would be, because there would be more room for forecasting improvement. In any case, what we know is that the IEM is better than any public source we have (although I’d be happy to see how a weighted-average of polls would do). It seems curious to conclude from this that markets are therefore useless as information-gathering mechanisms.

We also know that sports pari-mutuel markets and odds markets, which operate on the same basic principle as the IEM, are relatively efficient. At least in sports like horse-racing and professional football, it is very difficult, if not impossible, to find a systematic means of making better predictions than the market, and in horse-racing, the final odds on horses are relatively reliable predictors of final outcomes.

By the way, I don’t really believe that the point of a market is to synthesize expert opinion, at least not in the traditional sense. If you look at the makeup of the IEM traders, especially in the early days, it’s not clear that there were that many experts. I think the reason to have markets like the IEM is that we don’t know, in advance, who has information that might be relevant. The market provides an incentive for people who might have that information to reveal it.

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John Q 12.20.03 at 8:03 am

James, you have a point, but I think the Australian evidence is relevant here, because the odds changed radically over the year leading up to the campaign, making a comparison easier than in the case when both estimates are very accurate.

As the link I put up shows, the betting markets did worse than either the polls or expert opinion in absorbing new information.

26

John S 12.20.03 at 9:50 am

“the betting markets did worse than either the polls or expert opinion in absorbing new information”

… which means you’re suggesting that market participants can be systematically wrong. I find that hard to believe because such a situation immediately opens up a profitable opportunity for someone to exploit.

And what is the expert opinion you’re comparing betting markets with? Here you’re suggesting that there are individuals who can do a better job than markets, the classic argument for planning an economy rather than leaving markets to do their work.

And what about a situation where there are no polls?

27

James Surowiecki 12.20.03 at 9:57 am

John Q., judging from the Wolfers/Leigh 9/30/01 article, the Australian betting market does seem in September to have been relatively slow to incorporate new information relating to the overall popular vote. But to me, the most important piece of data in the original Wolfers and Leigh paper is this fact: the betting market called 43 of 47 individual races, including what W and L call “most marginal seats,” rights. In most of these races, they say, polls were not available (though of course the national polls would be relevant) — and where they were, the betting market outperformed the polls. And the betting market called got the “over/under” line on candidates’ vote shares right in 12 of 12 elections, again in the absence of local polls. That seems to suggest some measure of information aggregation outside of public sources may have been going on.

I do think that the way Centrebet seems to have set up the betting is probably not the best approach, and may have something to do with why the market reacted slowly in September. Ideally, you’d like to aggregate all of bettors’ opinions into one number (like the point spread in an NFL game, or the price of a stock), or run a parimutuel system, rather than maintaining two distinct betting pools. In theory, simple arbitrage should make these approaches two systems the same, but the second system is more likely to yield flawed results, because the bettors in each pool (that is, those betting on the Coalition or on the ALP) are likely to be less diverse than a healthy market needs them to be. In the same vein, the IEM would probably be more accurate if it allowed shorting, which I don’t believe it does.

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James Surowiecki 12.20.03 at 10:07 am

John S., although I obviously completely agree with you about the value of markets as information-aggregation mechanisms, it seems pretty clear, as evidenced most recently by the performance of the U.S. stock market from 1999-2001, that the market’s judgment can be wrong for a sustained period of time, even though its wrongness creates, in theory, a profitable opportunity for investors to exploit. Saying markets work well at forecasting the future, and that on the whole they will offer better forecasts than, in this case, polls, doesn’t mean that there are not times when the polls will be more accurate, as seems to have been the case in Australia in the wake of the Tampa incident and 9/11.

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dsquared 12.20.03 at 1:33 pm

James, a couple of points:

1. There very definitely are systematic ways of making money on pari-mutuel horse racing and football betting. They’re called the “home team effect” and the “long shot effect” and they’re statistically very well established. Check out Burton Fabricand’s book on “The Science of Winning” for horse racing; I think Ed Thorp’s done one or two things on football.

2. I question the assumption of even weak-form efficiency in these markets; a casual look at the IEM market in the Democratic nominations, compared with http://www.tradesports.com‘s market in the same race reveals a number of arbitrages.

30

James Surowiecki 12.20.03 at 3:39 pm

The overbetting of longshots (and mild underbetting of heavy favorites) is a well-established inefficiency, which I tend to think is a function of the fact that gamblers have a local preference for risk. And it seems to be the case that the effect is strongest in late races, when bettors are taking a flyer looking to go home a winner. Whether you can systematically make economic profits taking advantage of this is another question.

In this case, I think a concern with academic definitions of perfect (even perfect weak-form) efficiency obscures more than it clarifies. What interests me about parimutuel betting is that, even with the slight bias against heavy favorites, win-pool shares generally provide an excellent prediction of the outcome of races — that is, favorites win most often, place horses second most often, etc. — and the subjective probabilities of victory assigned by the bettors are generally close to the objective results (in terms of how often 3-to-1 horses win, etc.). I don’t see the point of discounting that degree of performance because there is this one systematic inefficiency (which is only exploitable in a tiny fraction of races).

As far as pro football goes, I’ve never found anything written by Ed Thorp on it, other than a chapter on using the Kelly Criterion to bet. But I don’t think there is a “home team” effect in NFL betting. A recent historical study of the results of a straight “always bet the home team” rule found that, although successful slightly more than 50% of the time, it “has not won often enough to compensate gamblers for the required vigorish.” (Obviously, betting the road team would, therefore, not work either.)

When inefficiencies are found, they’re usually quite limited in scope (they also tend to be present late in the season, suggesting that something similar to the longshot effect may be at work). One recent paper that seems rigorous found that betting the home underdog in weeks 15-17 would be a very profitable strategy. (Of course, this strategy was only documented retrospectively.) But even this author argues that “in aggregate, market prices are very close to true values.” Again, all I’m really interested in is whether markets offer a forecast that is, on average and over time, the best one available. In pro football, it seems to be that at least three-quarters of the time.

31

robin green 12.22.03 at 8:35 am

The trouble with a generalised Ideas Futures market is that can involve ideas which are:

(a) seemingly impossible to make rational predictions about – and you’re not going to get a rational collective prediction by mushing together a bunch of irrational individual predictions

or (b) subject to significant information inequalities, which don’t tally with power inequalities among traders, or even straddle traders and non-traders (people who know something but don’t participate in the futures market). In other words, if a little player knows something really useful but doesn’t tell anyone else, he may make a prediction but be completely swamped by everyone else stampeding in the opposite direction.

What’s the alternative? To (a): stop expecting predictions of specific dates for highly uncertain developments, for example. To (b): realise that experts sometimes make better predictions because they sometimes have information (or intuition born from not easily distillable experience) that can’t or won’t be freely released to the market.

Solution (b) seems to be really obvious, and (a) even more so. I don’t understand why Robin Hanson and his free market coreligionists don’t get these things.

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robin green 12.22.03 at 8:47 am

Oh, and my favourite contemporary counterexample to stock market fundamentalism: SCO’s stock price fluctuations as abysmal indication of its lawsuit prospects against IBM, and indeed its prospects for survival. This will I think show that even when expert analysis (that is, expert relative to know-nothing investors) is *”freely available”* to markets, they can still get it wrong if they don’t listen, and particularly if the media doesn’t listen.

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John S 12.22.03 at 9:37 am

robin green,

“…realise that experts sometimes make better predictions because they sometimes have information (or intuition born from not easily distillable experience) that can’t or won’t be freely released to the market”

Like the experts who dreamt up the Stability and Growth Pact for the euro? I think Hanson is interesting which makes me, I take it, a free market coreligionist; on the other hand, you must be an undemocratic elitist because you believe policy making is best left entirely to the professionals.

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James Surowiecki 12.22.03 at 10:34 am

No one here believes that markets never get things wrong, so bringing up examples of mispricing isn’t going to move the discussion along. The question isn’t whether sometimes a small group of “experts” — assuming, for argument’s sake, that you know who they are and are not — can make better predictions. It’s whether they can make better predictions more often than markets (or whatever mechanism for aggregating people’s judgments you want to use). The evidence, to me, suggests that they can’t. You cannot use perfection as your standard for whether or not markets are smart unless you’re going to use the same standard in evaluating your experts.

As for SCO, do you honestly think the volatility of the stock price of a small company whose entire future cash flow depends on the outcome of an often arbitrary and capricious legal process is a good argument against the relative efficiency of markets?

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robin green 12.23.03 at 10:51 am

John – I never claimed that. Please stop putting words in my mouth. I only said that sometimes experts might know better than a whole bunch of non-experts, and that experts don’t always tell non-experts what they know – not, I hope, a controversial starting point.

And no, by “free market coreligionist” I meant someone who draws grand conclusions about the power of markets based on over-simplistic theories – and refuses to listen to reason.

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