Prediction Markets: Research and Limits

Fact: A story in Science Daily this week, “Election Forecasters Preparing For Historic Election,” relates the publication this month of the “assembled insights of prominent election forecasters in a special issue of the International Journal of Forecasting.” 

Analysis:  The journal articles are available here for download.  One of them, “Prediction Market Accuracy in the Long Run” (by Joyce E. Berg, Forrest D. Nelson, and Thomas A. Reitz from the University of Iowa’s Tippie College of Business), compares the presidential election forecasts produced from the granddaddy of them all, the Iowa Electronic Market (IEM), to “forecasts from an exhaustive body of opinion polls.”  Science Daily says they find that the IEM is “usually more accurate than the polls.”

If we extrapolate out, these election markets are special cases of prediction markets, and I’m always interested in those.

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“The Largest Social Network Ever Analyzed”

FACT: According to ComScore data cited in a story in Monday’s FInancial Times, “Facebook, the fast-growing social network, has taken a significant lead over MySpace in visitor numbers for the first time… Facebook attracted more than 123 million unique visitors in May, an increase of 162 per cent over the same period last year… That compared with 114.6 million unique visitors at MySpace, Facebook’s leading rival, whose traffic grew just 5 per cent during the same period… The findings mark the first time that Facebook, launched in 2004, has taken a significant lead in unique visitors, [and] come at a time of change inside Facebook, as the one-time upstart attempts to transform itself into a leading media company.

ANALYSIS:  This week several members of the Microsoft Institute met in Redmond with a visiting friend from government, and among other talks we had a very interesting discussion with Eric Horvitz, a Microsoft Research principal researcher and manager.  Eric’s well known for his work in artificial intelligence and currently serves as president of the Association for the Advancement of Artificial Intelligence (AAAI).

We talked about one of Eric’s recent projects for quite a while: “Planetary-Scale Views on a Large Instant-Messaging Network,” a project which has been described by his co-author as “the largest social network ever analyzed.” 

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EU says, Costs of Open Source Outweigh the Benefits?

FACT: According to a Reuters story today, “The European Commission, a thorn in Microsoft’s side for its antitrust campaigns against the software giant, is falling short in its own internal attempt to promote more competition in the technology sector. The European Union executive has so far not followed its own policy that it purchase office software and operating systems with open standards as well as Microsoft products.”

(c) European CommunityIn the money quote, according to the Reuters story, the EU’s director of IT solutions “said in an interview arranged by a spokeswoman for Commissioner Siim Kallas, who oversees procurement, that studies showed the costs of moving to open source outweighed the benefits.” 

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How to Find Research: Here, There, Everywhere

FACT: The Washington Post today has a story in the Business section (“Intelligence Agency Joins U-Md. Research Center“) about the relationship between IARPA and the University of Maryland, the location of the planned new IARPA headquarters. 

ANALYSIS: UMd has a set of valuable relationships with the public- and private-sector national security community, and the IARPA startup is just the latest agency to benefit.   Proximity is key, for research and bureaucracy.  In Maryland’s case, IARPA Director Lisa Porter told an IEEE interviewer last month that “It’s nice not to be sitting right next to one particular agency. It’s also nice to be near a university because we’re sending a message that we want to bring in nontraditional partners: academia, industry. It sends a nice message that we’re embracing the broad community to help us solve these challenging problems.”

I lament sometimes that Charlottesville (home to my undergraduate alma mater) is a good two hours away from DC, as even that distance puts a frustrating limit on the amount of joint work that winds up being done with Virginia faculty and students. 

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Web Security and New Media in Politics

FACT: The Obama presidential campaign has been lauded for innovative uses of the Web and social media, particularly for fundraising and volunteer recruitment.  But as PC World has just reported, “Two months after their Web site was hacked, the organizers of Barack Obama’s presidential campaign are looking for a network security expert to help lock down their Web site…. Security experts said this is the first time they can remember seeing a Web security job advertised for a political campaign.”

ANALYSIS:  I wrote before about my experience in 1994-95 helping build one of the Internet’s first political campaign websites – I designed the content and wrote much of it, for Mayor Frank Jordan of San Francisco.  (The pages were literally built and posted by mayoral son Thomas Jordan, by the way, who was then a college student at UC-Berkeley; he went on to great things at Pixar.)   At the time, with such a simple site, we didn’t have to worry much about security – or so we thought, and luckily the worst scandal in those early years involved domain-squatting by certain rival campaigns.

As PC World points out, though, “Obama’s Web site, built by Facebook cofounder Chris Hughes, has been the model of Web 2.0 campaigning, using social-networking techniques to raise funds and build a broad base of active, Internet-savvy supporters. But security experts have long warned that powerful Web site features also open new avenues for attack.”

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Pentagon’s New Program for Innovation, in Context

FACT: According to an article in today’s Washington Post, the Pentagon has announced “the selection of six university professors who will form the first class of the National Security Science and Engineering Faculty Fellows Program. The professors will receive grants of up to $600,000 per year for up to five years to engage in basic research — essentially a bet by the Pentagon that they will make a discovery that proves vital to maintaining the superiority of the U.S. military.”

ANALYSIS: This new program is an innovation from DoD’s Director of Defense Research and Engineering (DDR&E), and since tomorrow I’ll be at Ft. McNair for a two-day conference sponsored by DDR&E on Strategic Communications, I’ll congratulate John Young and his staff for the good idea.

But the Post article falls short in two ways: one immediate (it leaves out key information about next year’s program and the upcoming deadline!) and one longer-term (it ignores the overall context of federal support for R&D).  I’ll fill in the blanks below.

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At Craigslist, “Traffic just keeps going up…”

Back in 1994-96 I was working for the Mayor of San Francisco (Frank Jordan, “the one before Willie Brown” as one friend persisted in calling him), and among other projects I was working on policies to nurture and promote the emerging  Internet economy, particularly the slowly burgeoning culture of Web startups – at times it seemed like the center of the universe was around South Park in the city’s South of Market neighborhood.  For the Mayor’s ’95 re-election campaign we put up one of the first political campaign websites, winning an award from “Campaigns & Elections” magazine. 

One of the cool people I worked with on innovative ideas for the nascent Web back then was Craig Newmark, founder of Craigslist. Like many people in San Francisco, I remember when using Craigslist was synonymous with “finding local S.F. stuff,” and have watched with delighted awe as the site (nonprofit empire!) has grown over the years.  The model absolutely rocks, in its simplicity, consistent innovation, and its universality.

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War is Virtual Hell

FACT: According to market research compiled by Microsoft, the global market for Modeling and Simulation (M&S) software/hardware platforms across all industries, including the defense industry, has hit $18 billion per year; the cumulative growth rate is estimated at 9.6% annually.

ANALYSIS:  The lovely wife and I have been lackadaisically house-hunting down in Virginia’s Northern Neck, the Athens of America and the cradle of our democracy. The Neck is the birthplace of George Washington, the Lee brothers (the revolutionary patriots about whom John Adams used the phrase, “This Band of Brothers,” among them Declaration of Independence signers Richard Henry Lee and Francis Lightfoot Lee, not to mention their later nephew Robert E. Lee), James Monroe, John Ballentine, etc. etc. 

Anyway, recently we toured the historic 1859 house at Braehead, an 18-acre estate actually located within the Civil War battlefield in Fredericksburg, Virginia. The house is for sale, and while it’s likely overpriced (like everything else on the market these days) [this observation has been energetically and somewhat persuasively disputed by the listing agent, who read the post], but we enjoyed the tour.  I’ve posted many (too many) photos of our little tour here.  My interest in the house is the historic angle: it’s actually where Robert E. Lee visited and took breakfast on the morning of the Battle of Fredericksburg in 1862, one of his successful efforts against U.S. forces.  Here’s an article about Braehead’s history and historic preservation.

It was in fact at Fredericksburg that Lee spoke the words which would sum up the entire war, nay all wars, as he witnessed thousands of Union soldiers falling in battle to Confederate guns on the hills above the Rappahannock River: “It is well that war is so terrible, lest we grow too fond of it.”  

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Egypt’s Supreme Court

FACT: Last month Egypt’s parliament passed a new law on public demonstrations in the vicinity of religious facilities (churches, mosques, etc.).  Already, lawyers are planning for an appeal and review of the law before Egypt’s Supreme Constitutional Court (photo left), the nation’s highest judicial body.  

 

ANALYSIS: I wrote earlier that at the Microsoft Institute we’re thinking about ways to help improve the operations and capabilities of the judicial branch of government, at various levels. 

Perhaps my interest has been piqued by the fact that, for quite a while, I’ve been sleeping with a brilliant lawyer – oh, that would be my wife Kathryn. While she’s retired from active practice, she spends some volunteer time each week at the U.S. Supreme Court, giving public lectures on the history of the Court and its justices for the Curator’s Office.

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