THE PENTAGON WANTS TO USE A FUTURES MARKET <http://nytimes.com/2003/07/29/politics/29TERR.html> to predict terror attacks. Although this is getting a lot of criticism (mostly from members of Congress who, I suspect, couldn't accurately describe the operation of /existing/ futures markets) I think it's an excellent example of creative thinking, and the Pentagon deserves to be congratulated for it. As I've suggested before (here <http://www.techcentralstation.com/1051/defensewrapper.jsp?PID=1051-350&CID=1051-041603A>, here, <http://www.techcentralstation.com/1051/defensewrapper.jsp?PID=1051-350&CID=1051-021203A> and especially here <http://techcentralstation.com/1051/techwrapper.jsp?PID=1051-250&CID=1051-103002A>) the diffuse, fast-moving threat of terrorism requires a diffuse, fast-moving response. And this sounds like a very plausible way of recruiting a lot of minds in the service of anti-terrorism.
Josh Chafetz agrees: <http://www.oxblog.blogspot.com/2003_07_27_oxblog_archive.html#105943317047655345>
A futures market in terrorist attacks, while it sounds grisly, may help us to aggregate diffuse knowledge in a way that will prove superior to expert knowledge. It also may not, but it seems to me that it's worth a try. At the very least, if we're going to demand that the government get creative in fighting terror, we shouldn't be so quick to criticize when it does just that.
UPDATE: Reader Fred Butzen emails:
The story about the Pentgon's "terrorism market" clearly is an extension of Iowa Electronic Markets, which has been run for years by the University of Iowa's Tippett School of Business. Here's a link to the Iowa Information Market's web site:
In brief, the IEM lets persons place bets on the likelihood of given events' happening; for example, people could bet on the likelihood that Saddam Hussein will survive this year, or who will win the next presidential election. The collective expertise of the participants has proven to be extremely useful in predicting events.
The notion that the dim-bulbs in Congress and the media should attack such a useful and proven idea as the Pentagon's is utterly absurd.
This is absolutely right. Whether or not the Pentagon's idea is a good one depends on details I don't know about. But the lame criticism makes clear that the critics are -- as usual -- clueless on the subject.
ANOTHER UPDATE: Mitch Berg points out <http://www.mitchberg.com/shotindark/2003_07_01_archive.html#105948759942593174> that this approach has worked in the past.
posted at 08:44 AM by *Glenn Reynolds* <http://www.instapundit.com/archives/010668.php>
Robin Hanson wrote:
FYI, our DARPA project (www.policyanalysismarket.com) has just been denounced
by two senators: http://wyden.senate.gov/media/2003/07282003_terrormarket.html
Robin Hanson [EMAIL PROTECTED] 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