A CASE FOR TERROR FUTURES?

Did the Penatgon make a mis­take in can­cel­ing its Policy Analysis Market — the instantly-​​notorious ter­ror­ism trad­ing floor?
“The idea of a fed­eral bet­ting par­lor on atroc­i­ties and ter­ror­ism is ridicu­lous and it’s grotesque,” Sen. Ron Wyden (D-​​OR) fumed, as he brought the project to the gen­eral public’s atten­tion.
But sup­port­ers of the pro­gram point out that gath­er­ing intel­li­gence is often a messy busi­ness, with pay­offs to unsa­vory char­ac­ters and the elim­i­na­tion of poten­tial adver­saries. The futures mar­ket, ugly as it may sound, doesn’t involve any of those moral com­pro­mises, said Robin Hanson, one of the ear­lier pro­mot­ers of the con­cept of trad­ing floors for ideas and a PAM project con­trib­u­tor. It’s just a way of cap­tur­ing people’s col­lec­tive wis­dom.
“Among the many things we do for intel­li­gence, this is one of the least rep­re­hen­si­ble,” Hanson said. “Paying peo­ple to tell us about bad things. That’s intrin­sic to the intel­li­gence process.“
And a trad­ing floor could be more effec­tive than pay­ing off a snitch.
Projects sim­i­lar to PAM, like the Iowa Electronic Markets, which spec­u­late on elec­tion results, have been sur­pris­ingly reli­able indi­ca­tors of what’s going to hap­pen next.
My Wired News story has Hanson’s — and oth­ers’ — case for ter­ror­ism futures.
THERE’S MORE: Althought the mar­ket has been billed an aggre­ga­tor of infor­ma­tion, “oddly, the hope of the PAM might have been the igno­rance of investors, rather than their intel­li­gence,” Slate notes.

Policy mar­ket day-​​traders who don’t speak Arabic or have access to clas­si­fied infor­ma­tion wouldn’t nec­es­sar­ily make worse bets than the pro­fes­sion­als who spend their days sift­ing through Al Hayat and humintel reports. This is a seem­ing para­dox called the “dumb agent” the­o­ry­one of my esteemed pre­de­ces­sors in this box expli­cated it a few years ago. Walk up to a trav­eler wait­ing in an air­port, ask how many min­utes late the plane will take off, and you’re likely to get a wrong, unin­formed answer. Ask 75 more of your fel­low pas­sen­gers the same ques­tion, and you’ll get 75 more sim­i­larly wrong, unin­formed answers. But throw them all together and take the mean, and you’re likely to get some­thing pretty close to the right answer.

Priorities & Frivolities digs up a Harvard/​Stanford study of Tradesports​.com, which has been offer­ing “Saddam Securities.”

“The price of the Saddam Security is a rea­son­able assess­ment of the like­li­hood of war. The time series move­ment in the series seems sen­si­ble as mea­sured against both expert opin­ion and a nar­ra­tive approach. The mar­ket is deep enough that it should have value as a fore­cast­ing tool, and mar­ket data meets sim­ple tests of efficiency.”

Salon’s Scott Rosenberg makes a per­sua­sive case against the trad­ing floor:

Markets depend on good infor­ma­tion. The DARPA plan is based on the the­ory that an open mar­ket will draw out the best infor­ma­tion from mul­ti­ple sources. That’s fine if, in fact, the incen­tive of mak­ing money in the mar­ket is strong enough to over­come other moti­va­tions of par­tic­i­pants. If you were a ter­ror­ist plan­ning an attack, would you try to make a lit­tle money on the side by using your insider knowl­edge to place a win­ning bet? Or would you allo­cate a lit­tle extra money in your oper­at­ing bud­get to plac­ing decoy bets to delude those who you knew were turn­ing to the U.S. military-​​funded ter­ror mar­ket for intel­li­gence? Or would you sim­ply stay away, dis­trust­ing the market’s anonymity mech­a­nism on the assump­tion that its American design­ers will have built in some sort of back door? It’s nearly impos­si­ble to imag­ine any set of cir­cum­stances in which this mar­ket would pro­vide untainted infor­ma­tion.

Finally, Andy Borowitz puts his sig­na­ture Spinal Tap-​​esque spin on a New York Times edi­to­r­ial call­ing for John Poindexter to step down.
He writes, “The Pentagon has named Retired Admiral John Poindexter, the man respon­si­ble for the recently aban­doned idea of a ‘ter­ror­ism futures mar­ket,’ to head the newly cre­ated Department of Bad Ideas.“
AND MORE: New Yorker finan­cial colum­nist James Surowiecki has a defense of the PAM plan in Slate that’s just about iden­ti­cal, point-​​for-​​point, as my Wired News piece.

July 30th, 2003 | Uncategorized | Comments Off Both comments and pings are currently closed.