Watching the INTRADE World Crisis Index

INTRADE are following the global financial crisis. Although this is not meant to be a free ad, ‘Intrade, is The Prediction Market where you can buy and sell “shares” in financial, political, weather and other important subjects’.

Their latest email from John Delany on 28 January claims:

The Intrade World Crisis Index will tell us whether the Davos World Economic Forum Matters!

A higher post meeting index means our markets predict a more disastrous 2009 than before. A lower post-meeting index means our markets predict global leaders have reduced the probability that 2009 will be the disaster we previously thought.

We hope the global leaders convince our traders that 2009 will not be as bad as previously thought. We hope to see the index react to the keynote addresses.

You can also bet on the Academy Awards. Slumdog Millionaire is currently at 77.5 for Best Picture. You’ll have to visit their website for an explanation of the betting system.

Kevin Rennie

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16 Responses

  1. Ah… I think I understand Kevin. They will then check the same factors after the Dr Who nemesis conference in Davros – if the Index Value goes up then things are predicted to get worse, if it goes down then things are predicted to get better.

    Is that it?

  2. That’s an interesting ‘basket’ of select event derivatives they have ‘repackaged’…economic x7 and an airstrike. One wonders if someone is still playing at their Total Info Awareness futureMAP game.

  3. Joni

    That’s right. 100 is apocalypse now!

    Legion

    Iran = oil price

  4. I think I will stick with the ponies and dogs 🙂

  5. renniek, on January 29th, 2009 at 11:31 am

    Yeppers, caught that inference, but I was heading in a slightly different direction. That same metadata could be used to gauge how a subset of the world thinks Iran thinks the world thinks about the likelihood of an airstrike, for instance, which goes to the element of surprise and not the oil per se at the level of un-asked, but subconsciously answered, questions (choosing an inferential question and a way to construct some metadata is limited only by imagination and social engineering). It’s why I was suggesting, as a first thought about Intratrade’s operations, that Intratrade, and its curious index mix, is a little bit like futureMAP. Keep in mind, also, that, like regular derivative markets, an estimated 1% to 4% of traders can be expected to be inside traders.

  6. Repeat after me, children.

    Correlation does not equal causation.

  7. I seem to recall Krugman put up a telling post about prediction markets during the US election season. His graph showed that the predictions changed dramatically after a certain piece of news broke, not before…thereby questioning their claims to have better insight into the future. (I’d buy claims they provide insight into current beliefs over a population – but that’s an entirely different and much less useful piece of information to have.)

  8. Lotharsson, on January 29th, 2009 at 2:11 pm

    I vaguely recall a master logician doing some fancy cogitation over in the AGW threads. Similar expertise might not go astray here, if one swallow does not a Summer make.

  9. Presumably the only one who can definitely benefit from insider trading on Iran is Obama or the Israeli PM. My bet is that the latter is the more likely aggressor.

  10. There’s never been a shortage of people who claim to have some foresight into where the markets are heading or any number of people willing to believe them.

  11. Hi Reb.

    There were two soothsayers economists on the 7.30 report just now.

    One, a relative pessimist, says our recession will last till 2010, and even then recovery will be soft.

    The second was more optimistic, and predicts strong recovery in the second-half of this year, when rate drops and monetary policy actions will kick-in.

    I liked the second guy.

  12. Hi Tony,

    LOL!!

    I like the sound of the second guy too..!

    Historically, recoveries tend to happen quite quickly, and escalate rapidly particularly during the first one to two years, by which time the “doomsayers” have lost out on any major gains.

  13. Yes Reb,

    I read a fact the other day – I found it interesting, but others disagreed – that the average length of a recession in the US is 11 months. On the other hand, the average length of a US expansion is six years.

  14. Agreed Tony.

    And according to some pundits, we have already reached the bottom of the market. I reckon the markets will start to recover soon, and then this will be “felt”in the economy towards the end of the year and into 2010.

    This is of course pure speculation. However I refuse to be drawn on the people who constantly say that things are going to get worse and it’s basically the end of the world.

    The reality is that “their guess” is (almost) as good as mine!

    🙂

  15. Nup, still uninteresting to me (that’s me personally and not personal against the poster) the second time round.

  16. I am either a mug or an optimist but I am still buying shares.

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