Policy Analysis Market Explained
The Policy Analysis Market (PAM), part of the FutureMAP project, was a proposed futures exchange developed, beginning in May 2001, by the Information Awareness Office (IAO) of the United States Defense Advanced Research Projects Agency (DARPA), and based on an idea first proposed by Net Exchange, a San Diego, California, research firm specializing in the development of online prediction markets.[1] PAM was shut down in August 2003 after multiple US senators condemned it as an assassination and terrorism market, a characterization criticized in turn by futures-exchange expert Robin Hanson of George Mason University, and several journalists. Since PAM's closure, several private-sector variations on the idea have been launched.
Proposal
PAM was to be "a market in the future of the Middle East", and would have allowed trading of futures contracts based on possible political developments in several Middle Eastern countries. The theory behind such a market is that the monetary value of a futures contract on an event reflects the probability that that event will actually occur, since a market's actors rationally bid a contract either up or down based on reliable information.[2] One of the models for PAM was a political futures market run by the University of Iowa, which had predicted US election outcomes more accurately than either opinion polls or political pundits. PAM was also inspired by the work of George Mason University economist Robin Hanson.[3] [4]
Opposition
At a July 28, 2003, press conference, US Senators Byron L. Dorgan (D-ND) and Ron Wyden (D-OR) claimed that PAM would allow trading in such events as French: [[Coup d'état|coups d'états]], assassinations, and terrorist attacks, due to such events appearing on interface pictures on the project website. "On the web site, as a backdrop to bold text, were faint background sample screens. In a small (less than 2 percent) section of two such screens, Polk had included as colorful examples of possible miscellaneous items an assassination of Yasser Arafat, a missile attack by North Korea, and the overthrow of the king of Jordan."[5]
They denounced the idea, with Wyden stating, "The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it's grotesque", while Dorgan called it "useless, offensive and unbelievably stupid".[6] Other critics offered similar outrage. Within less than a day, the Pentagon announced the cancellation of PAM, and by the end of the week John Poindexter, head of the DARPA unit responsible for developing it, had offered his resignation.[7]
PAM had first been proposed and funded in 2001, Poindexter joined DARPA in December 2002, and Hanson claimed that Poindexter "actually had little involvement with PAM".[5]
Further developments
CNN reported the program would be relaunched by the private firm, Net Exchange, that helped create it, but that the newer version "will not include any securities based on forecasts of violent events such as assassinations or terror attacks".[8]
On June 11, 2007, Popular Science launched a similar program, known as the PopSci Predictions Exchange. Another project was the American Action Market announced by Tad Hirsh of the MIT Media Lab in 2003, which would permit for-profit betting on major events.
There are now commercial policy-analysis markets that perform such functions. One, Intrade, had previously offered futures on events such as the capture of Osama bin Laden, the US Presidential Election, and the bombing of Iran. As of March 10, 2013, all trading had been suspended on Intrade's website due to undisclosed financial irregularities.
See also
External links
- Web site: Trading in Death . Congressional Record . Senate section, pp. S10082–S10083 . July 29, 2003 . . https://web.archive.org/web/20160513123322/http://www.fas.org/sgp/congress/2003/s072903.html . May 13, 2016 . live . October 29, 2019. – Transcript of the debate on the Senate floor after The New York Times wrote an article about PAM.
- . Damn the Slam PAM Plan! Canceling the Pentagon's futures market is cowardly and dumb. . James . Surowiecki . James Surowiecki . July 30, 2003 . https://web.archive.org/web/20171023143744/http://www.slate.com/articles/news_and_politics/hey_wait_a_minute/2003/07/damn_the_slam_pam_plan.html . October 23, 2017 . dead . October 29, 2019.
- Web site: Hanson . Robin . Robin Hanson . The Policy Analysis Market (and FutureMAP) Archive . Hanson.GMU.edu . . 2005 . https://web.archive.org/web/20190614231440/http://mason.gmu.edu/~rhanson/policyanalysismarket.html . June 14, 2019 . live . October 29, 2019.
- Web site: Hanson . Robin . The Informed Press Favored the Policy Analysis Market . Hanson.GMU.edu . August 8, 2005 . https://web.archive.org/web/20190513010258/http://mason.gmu.edu/~rhanson/PAMpress.pdf . May 13, 2019 . live . October 29, 2019. – A research paper analyzing the media reaction to PAM
- Web site: Hanson . Robin . Idea Futures . Hanson.GMU.edu . June 12, 1996 . https://web.archive.org/web/20190912124408/http://mason.gmu.edu/~rhanson/ideafutures.html . September 12, 2019 . live . October 29, 2019.
- Web site: DARPA - FutureMAP Program - Policy Analysis Market (PAM) Cancelled . IWS – The Information Warfare Site . 2003 . Wanja Eric . Naef . https://web.archive.org/web/20190116055513/http://www.iwar.org.uk/news-archive/tia/futuremap-program.htm . January 16, 2019 . live . October 29, 2019. – Includes text and PDF versions of the DARPA press release announcing the end of PAM, and other materials such as a Dept. of Defense news briefing and archived images from the PAM funding proposal.
- Web site: Even More on Terrorist Futures . The Talent Show . July 30, 2003 . https://web.archive.org/web/20060511210542/http://www.thetalentshow.org/archives/000319.html . May 11, 2006 . dead . October 29, 2019. – Contains relevant analytical quotes and clips.
Notes and References
- Web site: Programs: FutureMap . . InfoWar.net . 2003 . https://web.archive.org/web/20120422065908/http://infowar.net/tia/www.darpa.mil/iao/FutureMap.htm . April 22, 2012 . dead . October 29, 2019. This is an archive of the official FutureMap and PAM webpage, which was eventually taken offline by DARPA.
- News: Threats and Responses: Plans and Criticisms; Pentagon Prepares a Futures Market on Terror Attacks . Carl . Hulse . . July 29, 2003 . October 29, 2019.
- Web site: Lundin . Leigh . PAM, PRISM, and Poindexter . SleuthSayers: Professional Crime-Writers and Crime-Fighters . July 7, 2013 . Washington, DC . January 4, 2014.
- Web site: Policy Analysis Market and the Political Yuck Factor – why Americans shied away from a geopolitical futures market . 2004 . . SIRC.org . . October 29, 2019.
- Hanson . Robin . The Policy Analysis Market (A Thwarted Experiment in the Use of Prediction Markets for Public Policy) . Innovations: Technology, Governance, Globalization . August 2007 . 2 . 3 . 73–88 . 10.1162/itgg.2007.2.3.73. 57563194 . free .
- Book: Lee . Newton . Counterterrorism and Cybersecurity: Total Information Awareness . 7 April 2015 . Springer . 978-3-319-17244-6 . 146 . Second . 17 November 2022 . en . 6.
- News: Poindexter to Leave Pentagon Research Job . . July 31, 2003 . dead . September 8, 2017 . https://web.archive.org/web/20120805115248/http://www.washingtonpost.com/wp-dyn/articles/A10810-2003Jul31.html . August 5, 2012 .
- News: Middle East futures market returns. Private firm will restart Pentagon project, but without contracts for violence, in 2004. . Mark . Gongloff . November 17, 2003 . . . 2006-07-16.