
Using Prediction Markets to Enhance US Intelligence Capabilities (2006) - cisstrd
https://www.cia.gov/library/center-for-the-study-of-intelligence/csi-publications/csi-studies/studies/vol50no4/using-prediction-markets-to-enhance-us-intelligence-capabilities.html
======
thinkloop
Prediction markets have consistently proven to be one of the best ways of
predicting the future (per tfa). For them to be most effective however, they
need scale (many participants) and real material value at stake (money).
Unfortunately, the underlying mechanism that makes them work is gambling, and
most societies have rules to control and limit that. As a result few
prediction markets have been able to form and remain in operation. This costs
the world quite a bit, because the emergent value they create - the most
accurate knowledge of the future - is applicable to so many people beyond
those doing the gambling.

Imagine a big corporation studying the feasibility of a large capital outlay
for some factory in a semi-stable country. It would be very valuable for them
to know the probability of a government coup, the odds of a natural disaster,
and various other hard to estimate metrics before they spend their X billion
dollars. If there was a highly liquid and active global prediction market,
they could look up the current odds of any event that interests them, and
factor it into their feasibility, without ever having to gamble.

Additionally organizations can better protect their businesses by using these
markets to hedge against events that aren't covered in the few positions
available on financial markets.

I could go on and on with valuable use-cases that go far above the gambling.

I'm the lead UI engineer at Augur, a decentralized blockchain-based prediction
market, and we're attempting to solve this. I really hope we do, the world
would be a better place.

------
mattkrause
Looking at the date, this isn't that surprising.

The idea itself is a bit older: the Iowa Electronic Market had been taking
election bets since the late '80s, but they exploded in popularity in the mid
2000s. HP had an internal prediction market that allegedly estimated DRAM
pricing very accurately. Pfizer had one where employees could "bet" on new
product ideas and there were tons of startups trying to build them for movies,
sports, etc.

I haven't heard much about this since then, or perhaps the idea of
crowdsourcing has just become pretty standard.

------
zero_intp
This is a classic plot. I highly recommend the futurist John Brunner's
"Shockwave Rider".
[https://en.wikipedia.org/wiki/The_Shockwave_Rider](https://en.wikipedia.org/wiki/The_Shockwave_Rider)

The immediate and obvious problems stem from self-satisfying actors. "Oh,
10,000:1 on blowing up Country Y's embassy in Country Z this week! Lets go
make some money boys."

~~~
yummyfajitas
Lets think carefully about the immediate and obvious problem.

If a terrorist plans to blow up an embassy and places bets on this action,
he's _directly transmitting his plans to the public_. The price of "embassy
bombing" skyrockets, security agencies are notified, and his odds of success
go way down. (His odds of surviving the attack and collecting his money also
aren't that high anyway.)

Now consider the possibility that the terrorist leaks information to his
supporters/criminal underworld/etc - e.g. the gangsters selling him semtex.
These guys would never betray him, but on the other hand they see some free
money sitting on the table. They place bets on an attack, the price goes up,
and again agencies are notified. That's a good thing - a truly anonymous way
for criminals to probabilistically inform on each other.

When smart people like Robin Hanson (who was in part behind this proposal) and
various CIA types get behind a proposal, you should always think twice about
the "immediate and obvious problem". The folks proposing this aren't stupid,
so they probably thought about it too.

------
rrggrr
After reading The Human Factor by Ishmael Jones, I can't help but think this
is a boondoggle misdirecting the Agency from human intelligence gathering. I
hope I'm wrong.

~~~
yummyfajitas
The entire goal of this proposal is to gather human intelligence and combine
it with analysis and other forms of intelligence into a coherent probability
estimate. If I have knowledge of an attack, I'll bet in favor of it (to cash
in). This leaks information about it that you probably wouldn't get any other
way.

