19 Jul 2004 | Andy Budd said...

[Groups] will consistently make better decisions than an individual

That's unless you're the "international" intelligence community which has famously been criticised for it Group Think on Iraqi WDM.

19 Jul 2004 | George Hotelling said...

The problem I never saw addressed with a terrorism futures market isn't the intelligence it would provide, it's the fact that it would provide further incentive for terrorism.

A terrorist might say "Oh, I see the odds on x being assassinated are pretty long, I'll invest in some of those futures through some dummy organization and then make it happen." They probably wouldn't provide as much exposition, but you get the idea.

19 Jul 2004 | Milan Negovan said...

I think in this particular case it's difficult to rely on the wisdom of the crowd. The games with color-coded alert levels were played to keep people in fear. A frightened person would do anything, and that's what the US government was banking on by feeding lies from the start and did so deliberately.

If people get zombified persistently and don't want to think for themselves how can you draw on their wisdom?

19 Jul 2004 | Jeff said...

Actually there is a futures market at http://www.strategypage.com. Strategypage is a site that is sort of a mix of military news, military tactics and complex tactical wargames information (not your kiddie wargames).

During conflicts (like Iraq 2003), this is one of the best non-official news source for those interested in knowing what exactly is happening on the ground. Their live maps are great as well. It's visited by a wide variety of folks, not just military enthusiasts but folks who simply want information straight from the source (ie, soldiers with internet connections either in the field, or in contact with units in the field).

Anyway, they have their own "prediction market". Check it out. Some GREAT futures on there. Some surprising ones as well.

http://www.strategypage.com/prediction_market/default.asp

20 Jul 2004 | Ed F. said...

i don't know. despite what Surowiecki says, i still feel like it's a bad idea. this isn't the way to fix the intel community, that's for sure.

20 Jul 2004 | pb said...

I think there was generally agreement that it wasn't a bad idea. It was just poorly introduced to the public.

20 Jul 2004 | One of several Steves said...

The assumption that groups "will consistently make better decisions than an individual" is fundamentally flawed. One just needs look at history, the stock market, the CIA, fraternities, my friends, etc. to find plenty of cases where groups make worse decisions than any individual involved would.

21 Jul 2004 | Don Schenck said...

But, then again, parimutuel wagering seems to pan out in the long run. Go, ponies, go! :-)

22 Jul 2004 | WVd said...

Re: "...if PAM would have made Americas national security stronger, itd be morally wrong not to use it".

Such a statement is a clear example of a selfish and unethical point of view, where the end justifies the means. If you want to defend an ethical society, you had better limit yourself to ethical means - or you undermine the very heart and soul of what you're supposed to defend. Even Benjamin Franklin knew it: "He who would trade liberty for some temporary security, deserves neither liberty nor security".

30 Jul 2004 | Jimmy said...

With a market which pays money to investors, there is always the possibility for investors to game the system. Betting more on future change of other investors opinions rather than pertinent facts. This can lead to cascading failures such as are described in the book.

The examples in the book are pretty thin when it comes to "getting the stock price right". Surowiecki says that a stock price is correctly valued if in 20 years the dividends it pays match the current stock value. There is no accounting of whether or not the investors picked the best company or technology. For instance, a company with an inferior business model or technology is favored by the market over a better model or technology, but since the capitol investment goes to the more popular one, the company with the better solution may fail and it may in fact be the wrong decision. In this example, if the investors had picked the better technology, perhaps they could have made even more money.

He tries to mention elections, waffles on the issue, but basically says well, the vote of the people must be right, because it's what ends up happening. That's a logically vacant argument. There is no accounting for deliberate lying on the part of the politicians, the creation of incorrect information or propaganda. If the people have value X and the politician says they support value X, then votes for value Y, is the decision of the voter right or wrong?

While the wisdom of crowds is useful for certain situations such as judgment of how many jelly beans are in a jar, it is not the be all end all that he makes it out to be.