Copyright 1995, Los Angeles Daily News,
Appeared July 26 1995, L.A.Life section, page 12. Also Woodland Hills Daily News same day.
Appears here by permission of author.

On-line users bullish about futures market of punditry

By Yardena Arar

We all have a stake in the future. But lately, thanks to an award-winning World Wide Web site, mine has become more speculative in nature.

The site is called Idea Futures, and it's essentially a rotisserie-league futures market for punditry. The commodities are predictions [-] about 150 of them at the moment, dealing with topics as diverse as a cure for AIDS, the O.J. Simpson trial, time travel and Fermat's Last Theorem.

Do you believe there will be nudity on network television by 1999? So does the market; coupons for that prediction are being offered for 80 cents (out of a possible $1, the amount coupons to the various claims will pay if the claim is judged true). Will Colin Powell run for president? You're in the minority if you think so; the asking price there is only 21 cents.

None of this is real money; the medium of exchange is virtual, or funny money; you get an ``allowance'' of $50 a week. Trading goes on 24 hours a day among, at present, about 1,200 participants. Anyone can play simply by registering with a valid e-mail address, a real name and a phone number.

The market opened to the public last September with about 30 players, and participation has been leapfrogging since then, said Duane Hewitt, one of a half-dozen Canadians responsible for the web site, which is based at the Alberta Research Council in Calgary.

``There's people from all over the world,'' he said. ``I don't have those figures, but I know the web page is being accessed every three seconds on average.''

Most players hear about Idea Futures because its organizers periodically post market figures on various claims to concerned Usenet newsgroups. Some of the five O.J. Simpson-related claims (O.J. will be found guilty, his trial will end in a hung jury or mistrial, O.J. will testify, jurors will be dismissed, and the length of the trial) are posted to

Market prices are supposed to reflect public confidence in a claim; the lower the price, the fewer people think a claim will be true and vice versa. However, Hewitt said Idea Futures tends to be heavily influenced by current events.

``It may not be the greatest predictor, but it's great at responding to things,'' he said.

``It did anticipate the Dow going over 4,200.''

Mailing lists devoted to various categories of Idea Futures claims -- computer related, scientific and miscellaneous -- have ``really kept us up to date on things,'' Hewitt added.

``There's been a lot of discussion on the Unabomber and the mass of the neutrino. ... It's a good filter for new developments on neat stuff.''

Anyone may post a claim, but it costs $50 ``to keep people from swamping us with questions,'' added Hewitt, a geneticist who serves as Idea Futures' spokesman.

Similarly, sports claims are not accepted because there are plenty of markets for those predictions, in Las Vegas and elsewhere.

Idea Futures, which recently won the Golden Nica Award in the World Wide Web category of the Austrian Broadcast System's Prix Ars Electronica, did not start out as a game. It was first proposed in a 1992 article by Robin Hanson, a California Institute of Technology economics graduate student who at the time was an artificial intelligence researcher in the San Francisco Bay Area.

Hanson's article for Extropy, a scholarly journal concerned with the future, proposed Idea Futures as an alternative to consulting experts, who may have axes to grind, for consensus about future events of a scientific or technical nature.

``Standard institutions for punditry are defective,'' Hanson explained. ``The consensus you perceive in media is biased, and tends to be extreme. Academics have similar problems. The idea is to have a fair way in which you can reward people who are good predictors and discourage people who are lousy predictors.''

Hanson proposed a real-money version of Idea Futures, because he believed having to put real money on the line would make people a lot more careful about their predictions and weed out most crackpots. But the Extropy article inspired a group of former University of Calgary graduate students, who had kept up their friendship at weekly meetings after work. Among them were some computer scientists at the Alberta Research Council, who came up with the idea of implementing Hanson's market on the Internet.

Whenever you access the web site, the screen displays a list of claims in play (each has a ticker tape-style abbreviation), along with the current lowest asking price, highest bid and last sale price.

For example, the price of a prediction that Roman Catholic priests will be allowed to marry by the year 2005 is listed as WedP. Earlier this week, the highest bid was 18 cents, the lowest offer to sell was 23 cents, and the last transaction was at 20 cents. The claim that Clinton will be re-elected (highest bid 36 cents, lowest offer 42 cents, last sale 36 cents) is listed as BC96.

Each of the claim acronyms links to a page in which the claim is fully explained, including a deadline for judgment.

Some claims do not involve all-or-nothing payoffs; in other words, the redemption price varies up to the $1 maximum.

For example, shares in a `` `Waterworld' opens big'' claim will pay 2 cents for every $1 million that the Kevin Costner epic grosses in its opening weekend, up to $1 if the film grosses $50 million or more. (This claim was hovering in the mid-50-cent range earlier this week.)

You place orders to buy or sell on a transaction sheet that also lists your current holdings, net worth and a score calculated by dividing your net worth by the amount of money you've had to play with. Any score greater than 1 means you've made money; there's a ranking sheet on which you can see how you stack up against other players.

Even though only play money is at stake, Hanson says he has been pleasantly surprised by the Internet version of his game.

``The odds of things are often off, but they are not terribly off,'' said Hanson, whose own score in Idea Futures has been hovering just above 1.

Hewitt said he and his partners hope to turn Idea Futures into something more than an academic exercise.

``We're forming a company,'' he said. ``It's been a hobby until now, but it's become so big we're going to try to make something of it.''

A real-money Idea Futures may not be immediately possible; among other things, that would appear to be subject to a slew of gambling laws, Hewitt said. But his group is looking into everything from corporate sponsorship to optional payment for a greater weekly virtual allowance.

Idea Futures players themselves appear reasonably convinced that a real-money version of the game will come to pass. The last time I checked, a share in that very claim was going for 81 cents -- that's 4-to-1 odds in its favor.

To learn more about Idea Futures and to register, point your web browser to Graphics are not required; a text-based browser such as Lynx is fine as long as it accepts forms.

Robin Hanson August 14, 1995