Policy Analysis Market

Policy Analysis Market

The Policy Analysis Market (PAM), part of the FutureMAP project, was a proposed futures exchange developed by the United States' Defense Advanced Research Projects Agency (DARPA) and based on an idea first proposed by Net Exchange, a San Diego research firm specializing in the development of online prediction markets. [ [http://infowar.net/tia/www.darpa.mil/iao/FutureMap.htm FutureMAP project] ] .

Proposal

PAM was to be a "a market in the future of the Middle East", and would have allowed trading of futures contracts based on possible political developments in several Middle Eastern countries. The theory behind such a market is that the monetary value of a futures contract on an event reflects the probability that that event will actually occur, since a market's actors rationally bid a contract either up or down based on reliable information. One of the models for PAM was a political futures market run by the University of Iowa, which has allegedly proven more accurate in predicting the outcomes of U.S. elections than either opinion polls or political pundits. PAM was also inspired by the work of George Mason University economist Robin Hanson.

Opposition

At a July 28, 2003 press conference, Senators Byron L. Dorgan (D-ND) and Ron Wyden (D-OR) claimed that PAM would allow trading in such events as "coups d'état", assassinations, and terrorist attacks, due to such events appearing on interface pictures on the project website. They denounced the idea, with Wyden stating, "The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it's grotesque," while Dorgan called it "useless, offensive and unbelievably stupid". [ [http://www.commondreams.org/headlines03/0729-03.htm "Pentagon Plans Online Terror Bets". BBC. July 29, 2003] ] Other critics offered similar outrage. Almost immediately afterwards (within less than a day) the Pentagon announced the cancellation of PAM, and by the end of the week John Poindexter, head of the DARPA unit responsible for developing it, had offered his resignation.

Further developments

CNN reported the program would be relaunched by the private firm, Net Exchange, which helped create it, but that the newer version "will not include any securities based on forecasts of violent events such as assassinations or terror attacks". cite web
title =Middle East futures market returns. Private firm will restart Pentagon project, but without contracts for violence, in 2004.
work =CNN.com
url =http://money.cnn.com/2003/11/17/news/terror_futures/index.htm
accessdate=2006-07-16 ] On June 11, 2007, Popular Science launched a similar program, known as the Popsci Predictions Exchange. Another project was the 'American Action Market' announced by Tad Hirsh of the MIT Media Lab in 2003, which would permit for-profit betting on major events.

There are now commercial policy analysis markets, such as InTrade, which offers futures on events such as the capture of Osama bin Laden, the U.S. Presidential Election, and the bombing of Iran.

Related topics

*Assassination market
*"The Wisdom of Crowds," a popular book which supports the Policy Analysis Market

References

News articles

* "The New York Times": [http://www.nytimes.com/2003/07/29/politics/29TERR.html "Pentagon Prepares a Futures Market on Terror Attacks"]
* Washington Post: [http://www.washingtonpost.com/wp-dyn/articles/A10810-2003Jul31.html "Poindexter to Leave Pentagon Research Job"]
* [http://hanson.gmu.edu Robin Hanson] : [http://hanson.gmu.edu/ideafutures.html Idea Futures]
* [http://gandalf.ics.uci.edu/blog/2003/07/images_of_what_policy_analysis_market_would_have_looked_like.html Images from the now defunct PAM website]
* Wired: [http://www.wired.com/wired/archive/11.10/start.html?pg=14 Robin Hanson Policy Analysis Market]
* Slate: [http://slate.com/id/2086427/ "Damn the Slam PAM Plan!"] , James Surowiecki, Slate magazine
* [http://www.iwar.org.uk/news-archive/tia/futuremap-program.htm DARPA - FutureMAP Program - Policy Analysis Market Cancelled]
* [http://adage.com/mediaworks/article?article_id=117165 PopSci Online Feature Migrates Back To Print]

External links

"Was policyanalysis.org, no longer present."
*Hanson, Robin cite web
title =The Policy Analysis Market (and FutureMAP) Archive
work =
url =http://web.archive.org/web/20050328091844/http://hanson.gmu.edu/policyanalysismarket.html
accessdate=2006-07-16
* [http://hanson.gmu.edu/PAMpress.pdf The Informed Press Favored the Policy Analysis Market] : "Research paper by Robin Hanson analyzing press reaction to PAM"
*cite web
title =A Terror futures trading market is being developed by the Pentagon / Darpa] : Collection of dated articles from WSJ and others
work =www.mongabay.com
url =http://www.mongabay.com/external/pentagon_terror_futures.htm
accessdate=2006-07-16

Congressional record

* [http://www.fas.org/sgp/congress/2003/s072903.html Congressional Record: July 29, 2003 (Senate)] : Transcript of the debate on the Senate floor after NY Times wrote an article about PAM.

Blogs

* [http://www.thetalentshow.org/archives/000319.html Talent Show] : Even More on Terrorist Futures. Contains relevant analytical quotes and clips.


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