← Autodidact Archive · Original Dissent · yummybear
Thread ID: 8559 | Posts: 1 | Started: 2003-07-29
2003-07-29 17:15 | User Profile
[url=http://news.bbc.co.uk/1/hi/world/americas/3106559.stm]http://news.bbc.co.uk/1/hi/world/americas/3106559.stm[/url]
Pentagon axes online terror bets
The Pentagon has abandoned plans to set up an online trading market to help predict terrorist attacks. Senator John Warner, chairman of the Senate Armed Services Committee, said he had spoken by telephone to the programme's director "and we mutually agreed that this thing should be stopped".
Under the plan, bets could have been made about future terrorist attacks and other major political developments.
But the proposal ran into fierce opposition in the US Congress.
Senators Ron Wyden of Oregon and Byron Dorgan of North Dakota, both Democrats, wrote to the Pentagon urging it to abandon the idea.
"The idea of a federal betting parlour on atrocities and terrorism is ridiculous and it's grotesque," said Senator Wyden.
Senator Dorgan said it was "useless, offensive and unbelievably stupid". He said he had trouble in persuading other people it was not a hoax.
"How would you feel if you were the King of Jordan and you learned that the US Defence Department was taking bets on your being overthrown within a year?" he asked.
Market vision
The idea had been to try to improve the prediction and prevention of events by using the expertise of the open market instead of relying on government agencies which have often failed in the past.
The US Defence Department defended the initiative and compared the proposed market to those predicting the price of petroleum, the results of elections and even the demand for cinema tickets.
"Research indicates that markets are extremely efficient, effective and timely aggregators of dispersed and even hidden information," it said in a statement earlier.
Markets have done this in economics for some time and the Iowa Electronic Markets does it for US presidential elections, so it is not really novel
Merli Baroudi
Risk Services
"Futures markets have proven themselves to be good at predicting such things as election results; they are often better than expert opinions."
The proposed scheme - called the Policy Analysis Market (PAM) - was set up by a Pentagon unit known as the Defence Advanced Research Projects Unit.
This is under the control of retired Admiral John Poindexter who has been involved in another controversy recently in a plan for a sweeping electronic intelligence operation.
If the plan had gone ahead, the market would have worked by getting traders to deposit money in an account and using that to buy and sell contracts. They would have made their money if a particular event actually happened.
Invitations had gone out online for an initial 1,000 traders to register on 1 August and the programme had been designed to start on 1 October.
Cost effective insight
Senator Wyden explained the system by saying: "You may think early on that Prime Minister X is going to be assassinated. So you buy the futures contracts for 5 cents each.
"The payoff if he is assassinated is $1 per futures. So if it comes to pass, those who bought at 5 cents make 95 cents and those who bought at 50 cents make 50 cents."
One of the organisations which provided data for the project was the Economist Intelligence Unit in London.
Speaking before the plan was abandoned, its Director of Risk Services, Merli Baroudi, told BBC News Online: "It is trying to gather insights of people in a cost effective way. Markets have done this in economics for some time and the Iowa Electronic Markets does it for US presidential elections, so it is not really novel."