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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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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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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How to Run a State-of-the-Art Technology Program – Quietly

FACT: In the new movie “Iron Man,” defense-contracting billionaire and engineering genius Tony Stark (played by Robert Downey Jr.) designs and builds a suit capable of individual flight (highly engineered control surfaces powered by an “arc-reactor” – it is Hollywood after all). During his first test flight, zooming straight up from Malibu and stressing the system to its max, he asks his onboard computer, “What’s the altitude record for the SR-71?” His computer responds back, “85,000 feet,” whereupon he zooms past that ceiling.

ANALYSIS: Funny moment, and excellent movie.  In its honor, below I’m going to give you access to a remarkable, recently declassified document describing one of America’s boldest Cold War technical achievements.  If you’ve ever run (or wanted to run) a high-tech company or program, like Tony Stark in the movie, you’ll appreciate the startling scope of the work – and if you’ve recently worked in DoD or the Intelligence Community you’ll marvel at how they did it “in the good old days.”

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Required Reading on Innovation and Patents

FACT:  If you’re a fan of Malcolm Gladwell’s tremendous books (“The Tipping Point” and “Blink“), then you probably read the New Yorker magazine just to get his articles.  He has a new piece this week, “In the Air: Who Says Big Ideas are Rare?” in which he describes the phenomenally appealing work of the legendary Nathan Myhrvold and his current gig running “Intellectual Ventures,” often mistaken for a VC firm.  Gladwell recounts the facts that Myhrvold “graduated from high school at fourteen. He started Microsoft’s research division, leaving, in 1999, with hundreds of millions.”  It is what he’s done since then that grabs the mind, particularly if you’re interested in invention and innovation:

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Some Photos from Cairo

I’m in Cairo this week, my first-ever trip to Egypt, visiting the Cairo Microsoft Innovation Center (CMIC) – they’re doing some really interesting work particularly in Information Retrieval, Collaborative Content Services, and Digital Content Services – a very web-minded, web-services driven set of research and development activities with some real payoff in areas like machine translation and collaborative practices.   More information on their work at http://www.microsoft.com/middleeast/egypt/cmic/.

I love Cairo already, on just my second day here.  I’ve posted some photos at a Flickr collection, and  I’ll keep adding to those….

 

 
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