From: Robin Hanson (rhanson@gmu.edu)
Date: Mon Jul 28 2003 - 14:55:41 MDT
At 04:01 PM 7/28/2003 -0700, Rafal wrote:
> > FYI, our DARPA project (www.policyanalysismarket.com) has just been
> > denounced by two senators:
> > http://wyden.senate.gov/media/2003/07282003_terrormarket.html
>
>### Congratulations! The attack from Poindexter ...
Actually Poindexter runs the part of DARPA that funded the project; he
is not attacking it.
>Is there a way of discriminating manipulations of the market produced by
>individuals intent on temporarily affecting the market (as opposed on wider
>market forces)?
We've done lab experiments and found that giving people incentives to
manipulate the markets doesn't make the price estimates much less accurate.
>How would a terrorist who decides to sell futures on his planned attack try
>to profit from this market? Could he establish credentials by e.g.
>predicting an attack? Will he make money if his attack succeeds despite the
>warning implied in the futures he is selling?
You can make money when you have more information, and a terrorist who trades
to profit from his information is in essence being bribed to give a warning
about his attack. In our markets he could at most make a few hundred dollars
from doing so, and his attack would have to be a pretty big deal.
Robin Hanson rhanson@gmu.edu http://hanson.gmu.edu
Assistant Professor of Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030-4444
703-993-2326 FAX: 703-993-2323
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