News Aggregator + Prediction Market = Crazy Interesting

There were recently two launches of prediction markets that are worth writing about: HubDub and The Industry Standard.

Prediction Market with News Aggregator

Both of these sites take a "prediction market" and merge it together with a "news aggregator." Most people reading this probably know what prediction markets are - news aggregators are simply sites which pull together news articles from a bunch of different sites and try to make some sense out of them. Perhaps the biggest pure news aggregator is Google News. One benefit this gives is that it makes for interesting reading and helps inform traders in the market. People coming to the site may be interested in trading on a particular topic but not have the news story right at hand.

Major drawback - Information Homogeneity

From his overview of predciction markets Jed Christiansen talks about the need for diversity in the market.

But it does need diversity in traders’ sources of information and/or their analysis of that information. If everyone in a market is using the same data sources and the same analytical tools and processes, it will certainly affect the quality of the forecast.

Yeah. So, providing the news sources might actually make the markets less valuable. Bummer. So, if we assume that at least some of the traders are getting news on the topics from outside sources then that might make them better. It would be interesting to do experiments with markets in both styles - or to see if the traders on HubDub who get the highest returns are those who have unchecked the "Show news: " option on the listing pages (i.e. those who get their news from a different source).

So far, I really like the HubDub system. Their betting interface - you agree with a position and then tell them how much you agree with it - is awesome in its simplicity. You don't have to worry about buying/selling/prices/quantities or any of the usual junk that most "option-like" prediction markets bring forward. It's really great stuff. It seems like it's built on an automated market maker system (see David Pennock's great introduction to the topic) but I wonder which pricing rule they use...

I haven't really experimented with Industry Standard just yet. Fellow Drupal fan Jeff Whatcot discussed it (though it's not clear if he used/uses it...hmmm).

Congratulations to both teams on these launches. They should both help grow the love for prediction markets.

Comments

PM implemented as Drupal module?

Any idea whether the PM on Industry Standard is implemented within Drupal or not? They use clean URLs throughout, so that unfortunately offers no hint. They might be an interesting resource for the development of the module that you are working on.

As for PopSci, my understanding is that PPX is a separate system that they have linked up alongside of the Drupal implementation, rather than integral to it.

Industry Standard Partial Drupal...

The Industry Standard site is, in general, built on Drupal. Their prediction market portion is separate, though it is fairly well integrated.

I think that their UI is not quite as solid as the HubDub UI and it appears that there questions are yes/no only (not sure if that's a policy limitation or a technology limitation).

Also -- Hubdub using a parimutuel market maker?

Could HubDub be using something like Pennock's DPMM? I'm still trying to wrap my head around both market-maker systems, but the FAQ gives a payoff rule that looks somewhat like a parimutuel payoff.

3. How do you calculate how much I will win?
If you predict something will happen, then we take Your Price from 100% and divide the result by Your Price to get the winnings multiple. We then multiply the winnings multiple by the amount you risked to get your winnings.

For example, if you predicted something to happen, risking H$100 at 20%, then if it does happen, your winnings multiple would be 80% / 20% = 4.0 and therefore your winnings would be H$400. You would also get your stake of H$100 returned.

Any thoughts?

FYI: A new PM opening on Facebook

It is the last moment for Election! Who will enter the WHITEHOUSE ,
Obama? McCain? Join us in the prediction market on Facebook (http://
apps.facebook.com/winfutures/) and place your bet! Have fun!

You can also create your own contract product in our prediction
market. We have two types of product (vote and stock) . Any comments,
suggestion, bug report are welcome:) Have fun in winfuture~~

Thanks,
Winfutures Team

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