Singularity University Live Prediction Markets Simulation & Big Data Quantitative Indicators

Melanie Swan
m@melanieswan.com
@lablogga
July 14, 2014
Slides: http://slideshare.net/LaBlogga
Live Prediction Markets Simulation
Big Data Indicators
Image: http://wall.alphacoders.com/
SU GPS for the Mind: www.mindtimemaps.com/start/sugp1
SU Prediction Market: gsp14.inklingmarkets.com

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Prediction Markets
July 14, 2014
Workshop Timeline
 Big Data Quant Methods Introduction 10 min
 GPS for the Mind Exercise 5 min
 Prediction Markets Overview 25 min
 Estimation Exercise 10 min
 Live Prediction Markets Workshop 60 min

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Prediction Markets
July 14, 2014
About Melanie Swan
 Trader, philosopher, futurist, entrepreneur,
founder DIYgenomics, writer
 Education: MBA Finance, Wharton; BA
French/Economics, Georgetown University;
Kingston University London, Paris Univ 8
 Work experience: Fidelity, JP Morgan, Arthur
Andersen, iPass, RHK/Ovum
 Current projects: melanieswan.com
 Sample publications
 Swan, M. The Quantified Self: Fundamental Disruption in Big Data Science and
Biological Discovery. Big Data 2014.
 Swan, M. Crowdsourced Health Research Studies: An Important Emerging Complement
to Clinical Trials in the Public Health Research Ecosystem. J Med Internet Res 2012,
Mar;14(2):e46.
 Swan, M. Multigenic Condition Risk Assessment in Direct-to-Consumer Genomic
Services. Genet. Med. 2010, May;12(5):279-88.
 Swan, M. Translational antiaging research. Rejuvenation Res. 2010, Feb;13(1):115-7.
 Swan, M. Engineering Life into Technology: the Application of Complexity Theory to a
Potential Phase Transition of Intelligence. Symmetry 2010, 2, 150:183.
Source: http://melanieswan.com/publications.htm

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Prediction Markets
July 14, 2014
Future Studies & Forecasting Toolkit
 Short term (0-5 yrs):
insight and certainty
 Forecasting
 Scanning
 Business intelligence
 Trend analysis
 Market research
 Time orientation
 Outlier identification
 Technology checklist
 Long term (5-20+ yrs):
uncertainty, discontinuity
 Scenario planning
 Simulation
 Frameworks
 Wild-carding
 Longitudinal studies
 Multiple time frames
 Prediction markets Image: Bill Frymire

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Prediction Markets
July 14, 2014
GPS for the Mind Exercise
 Plot time orientation: certainty, probability, possibility
www.mindtimemaps.com/start/sugp1
Image: http://www.mindtime.com
Source: Fortunato, VJ and Furey, JT. The theory of MindTime: The relationships between Future, Past, and Present thinking and
psychological well-being and distress. Personality and Individual Differences. January 2011, 50(1), pp. 20-4. http://www.miindtime.com
certainty possibility
probability

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Prediction Markets
July 14, 2014
Big Data Quantitative Indicators
Increasingly complex analysis tools for
every level of Internet-based activity
Social Networks, Email, Photo-Sharing, Info-Sharing
# people ww online, # phones/smartphones, #IoT
# daily tweets, hourly YouTube volume, eBook sales
MOOCs (Kahn Academy, Coursera, etc.)
Bitcoin (cybercurrencies)
eLabor Marketplaces, Ideas/IP Markets, Health Social
Networks, Quantified Self
Problem-solving Communities (eteRNA, FOLDit, Kaggle)
Influence, Attention, Inention Measurement:
Twitter, Klout, Peer Index, ThinkUp

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Prediction Markets
July 14, 2014
Tweets per Day: 500m (200 bn/year)
http://www.internetlivestats.com/twitter-statistics/
(4 pm)

Unprecedented Immediacy and
Transmissibility
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Prediction Markets
July 14, 2014
32.8 m (Mar 2014)
0.8 m (Nov 2012)
Most
Retweets

BitCoin: Growth, Volatility, Robocoin ATMs
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Prediction Markets
July 14, 2014
Source: http://www.coindesk.com/price/, http://bitcoinatmmap.com
“Bitcoin could become the first trillion dollar non-fiat currency”
Bitcoin is an open-source protocol enabling the transmission of value across the Internet in the form of a
digital asset, digital currency, or payment mechanism; ia decentralized peer-to-peer monetary system

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Prediction Markets
July 14, 2014
Prediction Markets Definition
Image: http://www.simExchange.com
1Source: Trepte, K. et al. Forecasting consumer products using prediction markets. MIT. 2009.
http://dspace.mit.edu/handle/1721.1/53546
 Prediction Markets are a tool for collecting group
opinion using market principles
• Lots of sharable hidden information
• Prediction markets may beat polls/experts in accuracy1

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Prediction Markets
July 14, 2014
Markets and Crowd Intelligence
Collective
intelligence
Markets
Prediction
Markets
•Google+
•Question networks
(Quora, formspring)
•Crowdsourced labor
marketplaces
•Competitions (Kaggle,
foldIT, eteRNA)
•Wikipedia, Twitter
•Health Social
Networks
•DIYscience
http://www.cs.cornell.edu/home/kleinber/networks-book
•Crowdfunding
(Kickstarter, Indiegogo)
•Resource allocation
(Airbnb, Uber,
Gettaround)
•Group purchasing
(Groupon)
•Reverse group
purchasing (Loopt u-
deals, Ringleadr)
•Affinity capital
•P2P lending
•Gift economy

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Prediction Markets
July 14, 2014
History of Prediction Markets
 Decision markets, idea futures, information markets,
event derivatives, virtual markets
 Long history of betting on events
 Election betting, sports betting, stock markets
 Modern incarnation – last ~20 years
 1988 Iowa Electronic Markets first market1
 2002 US DARPA terrorism futures debacle
 Main forms: enterprise and consumer prediction markets
 Testbed for financial contracts
 Housing and weather futures, carbon trading, movie futures
 Futarchy
 Notion of using prediction markets in government policy
1Source: http://www.midasoracle.org/2007/07/17/history-prediction-markets-timeline
Image: http://www.bookshift.com

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Prediction Markets
July 14, 2014
Prediction Markets – ‘Pricing’ Details
 Price: based on probability of
event occurrence
 Value: leading indicator,
expose hidden information
 Pay-off: monetary,
reputational, indirect
 Accuracy: better than
conventional forecasting1
1Source: Arrow, K.J. et al “The Promise of Prediction Markets” Science, 2008, 320, 5878, 877-878
http://www.sciencemag.org/cgi/content/summary/320/5878/877
Iowa Electronic Markets:
2008 US Democratic Convention Market
Clinton
Obama
Image: http://upload.wikimedia.org/wikipedia/commons/1/13/IEM_DCON2008.svg
 Tool for collecting and aggregating opinion using
market principles

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Prediction Markets
July 14, 2014
US Congressional Control for Nov. 2014
Source: https://iemweb.biz.uiowa.edu/graphs/graph_Congress14.cfm

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Prediction Markets
July 14, 2014
Anatomy of a Re-Election
Prediction Market: Obama 2012 (July)
Source: http://www.intrade.com
Blip: May 1, 2011, Osama bin Laden killed

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Prediction Markets
July 14, 2014
Real-time Prediction Market: Obama 2012
Source: http://www.intrade.com
Election Day: November 7, 2014 – 4 pm EST
Election Day: November 7, 2014 – 10 pm EST

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Prediction Markets
July 14, 2014
Bitcoin Prediction Markets
Source: https://www.fairlay.com/

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Prediction Markets
July 14, 2014
Bitcoin Prediction Markets
Source: https://www.fairlay.com/
Bitcoin Prediction Markets White Paper available on Github: https://github.com/psztorc/Truthcoin/tree/master/docs
 Predictious, Fairlay, Bitcoin Bull Bear

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Prediction Markets
July 14, 2014
When to use Prediction Markets
 Complexity (ecosystem)
 Multi-party value chain
 Uncertainty
 Clear outcomes
 Market liquidity
 Diversity of opinion
Prediction Markets books

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Prediction Markets
July 14, 2014
Types of Prediction Markets
 Enterprise
 Revenue forecasting, demand planning, capital budgeting
 Innovation life cycle management (rate, filter, prioritize ideas)
 Project management, risk management
 Consumer
 Event prediction (politics: election results; economics: box office
receipts, product sales; health: pandemic prediction)
 Surfacing relevant content (information valuation)
Source: http://www.hsx.com

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Prediction Markets
July 14, 2014
Enterprise Prediction Markets
 Aggregate hidden organizational opinion and expertise
 PMs in use at 100-200 US organizations (June 2014)
 Ex: Paypal, HP, BestBuy, Electronic Arts, Boeing, Amazon,
Harvard, GM, Hallmark, P&G, Ford, Microsoft, Chevron,
Lockheed Martin, CNN, Adobe, American Express, Bosch
 Prediction market vendors
(enterprise idea management)
 Consensus Point, Inkling,
Spigit/Crowdcast, Bright Idea,
Qmarkets
 Crowdsourcing and creative
concepts market vendors
 Chaordix, Jovoto
Image: http://torontopm.files.wordpress.com/2009/06/quarterly-sales-graph.jpg?w=300&h=234

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Prediction Markets
July 14, 2014
Consumer Prediction Markets
 Iowa Electronic Markets
 Hollywood Stock Exchange (film)
 simExchange (gaming)
 CROWDPARK (general)
 LongBets (futurist)
Release
Date

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Prediction Markets
July 14, 2014
Friday (170), Saturday (180)
Sunday (185), Monday (200)

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Prediction Markets
July 14, 2014
HSX: Actor Markets, TV Markets (new)
 Monetizing the reputation
economy: likes, ideas,
attention, intention

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Prediction Markets
July 14, 2014
Gaming Prediction Market - SimExchange
Source: http://www.simexchange.com

SciCast: Science & Tech PMs
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Prediction Markets
July 14, 2014
Source: https://scicast.org

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Prediction Markets
July 14, 2014
Iowa Electronic Health Markets
Source: http://iehm.uiowa.edu/iehm/markets/trnmts/1/london_cholera

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Prediction Markets
July 14, 2014
Iowa Electronic Health Markets
Source: http://iehm.uiowa.edu/iehm/trnmt/trnmt.html?symbol=dengue
 Flu markets
 Disease markets

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Prediction Markets
July 14, 2014
Crowdsourced Data as Prediction Market
Source: http://iehm.uiowa.edu
HealthMap
Google Flu
Trends

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Prediction Markets
July 14, 2014
Futurist Prediction Markets – LongBets
Source: http://www.longbets.org/bets

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Prediction Markets
July 14, 2014
Futurist Prediction Markets – LongBets
Source: http://www.longbets.org/bets

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Prediction Markets
July 14, 2014
Prediction Market Design
 Structure
 Event outcome (win/loss)
 Market scoring (continuum)
 Time frame
 Episodic or continuous
 Participants
 Anonymous users
 Participation incentive
 Question design:
 (the question) What is your opinion?
 (the feedback loop) Rate your certainty. What do you think
others will say? How accurately will others answer?
 Calibration round(s)
Image: http://www.consensuspoint.com

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Prediction Markets
July 14, 2014
Future of Prediction Markets
 Public Prediction Markets
 Opinion capture as a standard feature
 Activity Chiclets: Like, Vote Up/Down, +1,
tweet, share, comment, bookmark, opine
 Quality, Valence, Value/Interesting-ness
 Two-way XML element
 Ubiquitous real-time polling
 Automatic markets per interest profile
 Enterprise Prediction Markets & Information Modulation
 BOL / ERP / supply chain integration
 Sales and CRM integration
 Reputation: knowledge acuity ratings of individuals
become a valuable and personally-tradable currency
 Accurate predictor, information steward
Image:http://www.tvrage.com/shows/id-23464

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Prediction Markets
July 14, 2014
Broader Context: Markets are the Platform
Types of Markets Resource
allocation
Exchange:
supply &
demand meet
Information
(price)
discovery
Value
identification
& attribution
Utility
creation
Traditional Markets     
Prediction Markets   
Affinity Capital   
Multicurrency Society  
Automatic Markets  
Idea Management
Marketplaces

Scarcity Management /
Abundance Injection (PSE)
  
Roles of Markets
Source: Swan, M. New Banks, New Currencies and New Markets in a Multicurrency World: Roadmap for a Post-Scarcity Economy by
2050, presented at Create Futures IberoAmérica, Enthusiasmo Cultural, São Paolo Brazil, October 14, 2009.
http://melanieswan.com/documents/economy_20.pdf
Economy2.0

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Prediction Markets
July 14, 2014
Resources
 #PredictionMarkets
 @CassSunstein, @JustinWolfers
 http://www.midasoracle.org
 http://www.ingenesist.com
 http://torontopm.wordpress.com
 Prediction Market Industry Association
 http://www.pmindustry.org
 Relevant Papers
 Prelec D. A Bayesian truth serum for subjective data. Science. 2004 Oct
15;306(5695):462-6.
 Trepte, K. et al. Forecasting consumer products using prediction
markets. MIT. 2009. http://dspace.mit.edu/handle/1721.1/53546
 Chang, W. et al. Simulating prediction markets that include human and
automated agents. MIT. 2009.
http://dspace.mit.edu/handle/1721.1/53097

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Prediction Markets
July 14, 2014
Prediction Markets Summary
Image: http://www.simExchange.com
 Prediction markets are a tool for collecting group
opinion using market principles

Questions?
Melanie Swan
Principal
MS Futures Group
+1-650-681-9482
m@melanieswan.com
www.melanieswan.com
Slides: http://slideshare.net/LaBlogga
Image: http://wall.alphacoders.com/
DIAMANDIS KURZWEIL
Well, Ray, we’re still
waiting for the jet pack
Futurism 2050
DIAMANDIS KURZWEIL
Well, Ray, we’re still
waiting for the jet pack
Futurism 2050
SU GPS for the Mind: www.mindtimemaps.com/start/sugp1
SU Prediction Market: gsp14.inklingmarkets.com
“Courage consists in agreeing to flee rather than live
tranquilly and hypocritically in false refuges”
― Gilles Deleuze, Anti-Oedipus: Capitalism and Schizophrenia

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Singularity University Live Prediction Markets Simulation & Big Data Quantitative Indicators