Markets in prediction, revisited

You can now bet on future developments in the tech sector. The questions include the following:

1. When will Google have an IPO?

2. Will SCO be awarded damages? [in its lawsuit against IBM at the District Court in Utah]

3. When will there be a commercially available electronic device using ultrawideband technology?

4. Will Oracle acquire PeopleSoft Inc?…before March 31st, 2004.

Here is the website. There are no cash prizes, but it is not just for pure play either. The top ten winners receive prizes from Circuit City. If you are wrong about everything, you lose nothing.

My take: I’ve long been intrigued by the idea futures concept. One central question is whether they can perform some function that current asset markets do not already satisfy. I’ll say no for this version of the idea. For instance some of the other predictions involve the future value of the NASDAQ index. Many of the others can be satisfied, albeit with noise, by betting on the relevant companies. Note also that Circuit City wins publicity for sponsoring the contest, which points to another truth about idea futures. In financial terms they are a zero-sum game for the investors, so a sponsor may need an external incentive, such as publicity value, to market the idea. If idea futures have a breakthrough use, it may well be within companies, such as to evaluate competing R&D proposals.

Thanks to Daniel Akst for the pointer to the link.