Wednesday, September 22, 2010
TODAY: Department of Play info session! Wed (9/22) 6-7:30pm @ E14-240
Tuesday, September 21, 2010
Speakers at the Conference "Using Prediction Markets in Government". September 22, 2010, Washington, DC.
Rich Byrne, MITRE
Mr. Richard Byrne is a vice president in The MITRE Corporation's Center for Integrated Intelligence Systems. In this role, he directs MITRE's work on behalf of the U.S. intelligence agencies, military intelligence organizations, and the combatant commanders with a particular emphasis on integration topics. Prior to joining MITRE, Mr. Byrne was a founder and engineering manager at VTC, a semiconductor startup where he led the design and production release of more than 150 products over five years. From 1980 to 1985, Mr. Byrne worked as the technical manager of VLSI Design Methods for telecommunication at ITT's Advanced Technology Center where he designed custom, ASIC, standard cell, and gate array products and advanced CAD tools. A member of the IEEE and the Armed Forces Communications and Electronics Association (AFCEA), Mr. Byrne sits on the board of the AFCEA Lexington-Concord Chapter. In 2010, he received AFCEA International's Benjamin H. Oliver Gold Medal for Engineering. He received the 2006 AFCEA International Meritorious Award for Engineering and the 2004 AFCEA International Golden Link Award. He served as the chairman of the Semiconductor Research Corporation's Design Sciences Board for two years and was a contributor to the first International Technology Roadmap for Semiconductors. Mr. Byrne received a B.S. in electrical engineering and an M.S. in electrical engineering and computer science from MIT. He is a 2006 graduate of the Harvard Business School General Management Program, where he was elected class speaker.
John Michitson, MITRE
During his 29 year career he has been a technical manager, systems engineer and engaged in research and development, and product management for engineering corporations on the forefront of technology, such as the MITRE Corporation and Bell Labs, as well as Internet startups. He is currently leading a cross-functional team applying technical guidance across several airborne networking programs to ensure interoperability. He is currently spearheading two internal research proposals that leverage open innovation and prediction markets for Federal Government markets. He has a Bachelor of Science degree in Electrical Engineering from Merrimack College and recently completed the Entrepreneurship Development Program at MIT's Sloan School of Management. John is very active in his community. He served 10 years on the City Council in Haverhill, Massachusetts, including his last two years as President.
Ricardo Valerdi, MIT
Dr. Ricardo Valerdi is a Research Associate in the Engineering Systems Division at the Massachusetts Institute of Technology. His research focuses on systems engineering metrics, cost estimation, test & evaluation, human systems integration, enterprise transformation, and performance measurement. His research has been funded by Army, Navy, Air Force, and BAE Systems. Dr. Valerdi is the co-Editor-in-Chief of the Journal of Enterprise Transformation and served on the Board of Directors of the International Council on Systems Engineering. He received a Ph.D. in Industrial & Systems Engineering from the University of Southern California.
Matthew Potoski, Iowa State University
Matthew Potoski is a Professor in the Department of Political Science at Iowa State University where he teaches courses on public management and policy. He has received Iowa State University LAS awards for Early and Mid-Career Achievement in Research. He is Co-Editor of both the Journal of Policy Analysis and Management and the International Public Management Journal. Dr. Potoski's research investigates public management and policy in domestic and international contexts, including public sector contracting and service delivery, environmental policy, and voluntary regulations. He is co-author with Aseem Prakash of the Voluntary Environmentalists (Cambridge, 2006) and Co-Editor of Voluntary Programs: A Club Theory Approach (MIT 2008). He is author or co-author of over thirty articles appearing in journals such as the American Journal of Political Science, the Journal of Policy Analysis and Management, and Public Administration Review. Dr. Potoski received a Ph.D. in Political Science from Indiana University in 1998 and a bachelor's degree in Government from Franklin and Marshall College.
Rob Henry, MITRE
Mr. Henry has been with MITRE's Center for Acquisition and Systems Analysis (CASA) since 1995 and co-leads MITRE's risk analysis and management community of practice. He has a broad range of risk analysis and management experience developed over ten years supporting a diverse set of sponsors (US Government Classified and intelligence agencies, Office of Secretary of Defense, Air Force, Army, Navy, Marine Corps, Department of Homeland Security, Census Bureau, FAA, Department of the Treasury, NOAA) and MITRE research initiatives. Mr. Henry has a demonstrated ability to assess the risk analysis and management needs of an organization. He develops, tailors, and implements a wide variety of risk analysis and management methodologies, approaches and tools supporting capability-based risk assessments, risk metrics, enterprise risk management, program risk management, risk-informed portfolio analysis, analysis of alternatives, and trade-space analysis. Additionally, Mr. Henry is a trained facilitator and has facilitated numerous risk analysis and mitigation planning sessions. He has provided risk theory and practice training to well over a 1,000 individuals in government organizations. Rob has an M.A. in Teaching, History from Salem State College and a B.A. in History from Virginia Polytechnic Institute and State University.
Jason Matheny, IARPA
Jason is an Incisive Analysis Program Manager at Intelligence Advanced Research Project Activity (IARPA) and is interested in Statistical Forecasting, Econometrics, Risk Analysis, Human Judgment, Uncertainty, Bio-surveillance, Epidemiology, Modeling and Simulation. Jason has a B.A. from the University of Chicago, an M.B.A. from Duke University, an M.P.H. from Johns Hopkins University, and a Ph.D in Applied Economics from Johns Hopkins University.
Jon Schuler, MITRE
Jon Schuler has been with the MITRE corporation since 2007, specializing in applied mathematics, statistics, data mining, as well as computational sociology of organizations, program requirements, and other relational dependencies. Prior, Jon spent 12 years in the field of image and signal processing of airborne tactical infrared and hyperspectral imaging sensors for the Department of Navy, and holds a patent on image super-resolution. Professionally, Jon has migrated from the analysis of 'hard sciences' (and correspondingly well-defined data sets), to analysis of the 'soft sciences', represented by subjective assessments and qualitative measurements. Jon strives to tease out actionable, reproducible conclusions from such data sets using non-parametric statistical methods. Jon is a huge fan of 'The Black Swan' and 'Freakonomics'
Thomas Montgomery, Ford
Tom is a Technical Expert in Ford Motor Company's Research and Advanced Engineering. He has a B.S. in Physics and PhD in Distributed Artificial Intelligence from the University of Michigan. Tom has specialized in text mining (data mining from text-based sources), with a recent expansion into prediction markets. Seventeen years in Ford Research has given him the opportunity to contribute to many areas of the company including supply base risk analysis, competitive intelligence, customer satisfaction, survey verbatim analysis, early warning in warranty claims, failure mode simulation, and market share analysis. Tom says, "it is a target-rich environment at Ford -- there is never a dull moment, always another interesting and challenging problem to work on."
David Rejeski, Woodrow Wilson International Center for Scholars
David Rejeski directs the Science and Technology Innovation Program at the WoodrowWilson International Center for Scholars, a non-partisan policy research institute in Washington, DC. The program's mission is to explore the scientific and technological frontier, stimulating discovery and bringing new tools to bear on public policy challenges that emerge as science advances. Project areas presently include: nanotechnology, synthetic biology, serious games, participatory technology assessment, and geoengineering. He was recently a Visiting Fellow at Yale University's School of Forestry and Environmental Studies and has been an adjunct affiliated staff member at RAND. Between 1994 and 2000, he served as an agency representative (from EPA) to the White House Council on Environmental Quality (CEQ). Before moving to CEQ, he worked at the White House Office of Science and Technology (OSTP) on a variety of technology and R&D issues, including the development and implementation of the National Environmental Technology Strategy. Prior to working at OSTP, he was head of the Future Studies Unit at the Environmental Protection Agency. David sits on the advisory boards of a number of organizations, including the National Science Foundation's Advisory Committee on Environmental Research and Education; the Committee on Science, Engineering and Public Policy of the American Association for the Advancement of Science (AAAS); the National Council of Advisors of the Center for the Study of the Presidency; the Journal of Industrial Ecology; and Games for Change. From 2004 to 2009, he was a member of EPA's Science Advisory Board. He has graduate degrees in public administration and environmental design from Harvard and Yale and studied industrial design at Rhode Island School of Design.
Adam Siegel, Inkling Markets
Adam is the co-founder of Inkling Markets, a yCombinator funded company offering prediction market software and solutions to companies, governments, and non-profits. Before co-founding Inkling, Adam worked at Accenture where he served over a dozen clients across multiple industries for over a decade. He also managed an internal venture fund to seed the development of new ideas and ran a research initiative around next generation user experiences. Adam is a regular speaker at conferences and in M.B.A. classrooms and has been published in Forbes, Risk Management Magazine, and the Journal of Prediction Markets. Adam has a B.A. in Political Science from Indiana University.
Monday, September 20, 2010
Principle 43
1. Goal Condition: The controller must have a goal or goals (e.g. to maintain the setpoint).
2. Action Condition: The controller must be able to affect the state of the system. In engineering, control actions are implemented by actuators.
3. Model Condition: The controller must be (or contain) a model of the system.
4. Observability Condition: The controller must be able to ascertain the state of the system. In engineering terminology, observation of the state of the system is provided by sensors.
(Leveson, Engineering a Safer World, pp.54-55).
Tuesday, September 14, 2010
"Bear Traps: Can Russia Avoid the Pitfalls on the Road to Sustainable Economic Growth" (C. Gaddy and B. Ickes)
There are several chapters that will require particular attention given my research thesis:
2.7 Machinery and Equipment
3.2 Cost of Cold
3.3.1 Siberia and the GULAG
4.1.1 Decentralization versus Federalism
4.6.1 Federalism versus Efficiency
Clifford and I discussed related topics this spring when I visited him in DC. I am looking forward to further discussion this fall.
For more info please see Barry W. Ickes' blog, http://ickmansblog.blogspot.com/
Monday, September 13, 2010
Goodbye Wordpress.com, Hello WordPress!
WELCOME TO MY NEW WEBSITE
One year after I started my blog on abdimom.wordpress.com I made my decision to build and migrate to my own website. What started as innocent collection of System architecture principles (thank you Professor Edward Crawley), have become full-time hobby.
I am very disorganized person, who lives very much in the present. Around late January 2010, as I gained pace and habit of collecting my system architecture principles, I started to realize that my blog can be the place for both collecting what I've learned in the past and what I will [and need to] learn in the future.
Building and maintaing your own blog is very time consuming and often painful endeavor, but I hope it will payback in the long term. Special thanks to Rafael Maranon at http://rafaelmaranon.mit.edu/ for his help and support, thanks to Leyla Abdimomunova (no blog reference for now, but she is next) for her patience and tolerance to my addiction. Special thanks to Lois Slavin, Communications Director at MIT System Design and Management program for motivation and support, as well as for linking my blog to http://sdm-blog.mit.edu/.
PS: I also started to put together my thesis (for now just Chapter 1), which I would like to share with you.
First year blogging anniversary
Thursday, September 2, 2010
Amazon Kindle: Azamat shared from Honest Signals: How They Shape Our World
" To be reliably better than individuals across many types of issues, we have to be careful to avoid two fundamental problems: idiots and gossip. "
Wednesday, September 1, 2010
Russia’s web community is preparing for the 2011-2012 political season.
"Живой журнал" (LiveJournal, the most popular blog platform is Russia) now is integrated with Twitter and Facebook. LiveJournal has 26 million users, one quarter of which belong to the Russian-speaking blog-sphere. In comparison, Facebook has auditory of 500 million people world-wide. FB's market segment among Russia's social network sites is expected to grow from 2% in 2009 to 10% by the end of 2010. For now Russia's most popular social network is Vkontakte, a mock-up version of russified Facebook with similar user-interface, that keeps 45% of the market (14 million users).
LiveJournal is one-dimensional platform with primary focus on blogposts, whereas Facebook allows to integrate diverse range of visual and audio media on its platform. Today Facebook's major problem is limited broadband access beyond Russia's megalopolises. This is where Twitter gets its niche by allowing faster and more reliable micro-blog interaction via omnipresent 2G and emerging 3G networks.
In sum, the migration of Russia's most active bloggers from XX century LiveJournal to XXI century Facebook is underway. It will takes several months before we see the spillover effect. By the end of this year Russian-speaking Facebook and Twitter will be as much politicized as "Живой журнал" (LiveJournal).
It seems that both sides are getting ready for the incoming web-storm. However, President Medvedev's fascination with social media and particular with Twitter (http://bit.ly/dxov70) may backfire if Russian officials underestimate the latest developments.
Friday, August 27, 2010
Using ViralHeat
Many companies are turning to social-media sites to gauge the success of a new product and service. The latest activity on Facebook, Twitter, and countless other sites can reveal the public's current mood toward a new film, gadget, or celebrity, and analytics services are springing up to help companies keep track. Social-media analytics startup Viralheat, based in San Jose, CA, is now offering free, real-time access to the data it is collecting on attitudes toward particular topics or products...
...Social Trends uses this information to provide a widget that can be embedded on a blog or website showing the sentiment around particular terms. These widgets stay connected to Viralheat's data stores through an application programming interface (API) and are updated as the company collects more information. Viralheat believes the tool will be particularly useful for news sites wanting up-to-date infographics and for bloggers who want to track trends...
Is Social Media Tracking for You?
If you’re looking for the most affordable and practical way to measure social media analytics, ViralHeat is your current best bet in terms of useful metric reporting and price.
In all, it’s not worth your while to bother with social media tracking if you’re throwing out Facebook Pages and videos for the hell of getting backlinks or casual followers, but it’s a must-have if you take it seriously and really integrate these technologies with your brand name, or to maintain relationships with your customers. You’ll WANT to see how it’s doing, otherwise, you’ll be missing out to the point where your campaign will be mediocre at best.
Until Google Analytics supports social media analysis (which I doubt, unless we’re talking about Google-sponsored social media services like Buzz, Wave and the alleged Google Me), ViralHeat is a solid contender that won’t hurt your budget.
Tuesday, August 24, 2010
Russia. August. 2010. Part 2: Wildfires.
(cont. from Russia. August. 2010. Part 1: Grain. )
The surge of wildfires this summer has shown two important developments in today’s Russia: deteriorating regional/local government system and growing importance of Russia's blogosphere.
Ever since 2000, when then President Putin started to rebuild centralized federal government system, regional governments were gradually giving up political power. In some respect such reconstruction was aimed at limiting the power of regional political elite, rather than actual power of Russia’s regions, which never were strong. Establishment of the seven (and later the eighth in the Northern Caucasus) super-regional administrations or Federal Districts was meant to bring systematic order and constitutional synchrony to diverse forms of regional entities of new Russia. Political centralization process, coincided with decade long surge in the commodities market, allowed Russia’s Federal Government to gather low-hanging fruits of administrative reforms and economic development. Modernized federal system permitted relatively efficient federal intervention on political, economic and security matters on a case-by-case basis.
This summer, however, the system has encountered its biggest challenge so far. Wildfires in more than 40 different regions (7 with the state of emergency) of Russia have stretched its Federal government and its most effective agency - EMERCOM.
Of course record heat wave and drought throughout Russia were key systemic factors that significantly impacted the scale of the disaster. However, if we measure the apathy and ineffectiveness of the regional/local governments not in "hectares of forest burned", but in “lives lost” or “days it took for some of the regional governor to interrupt their vacation” the picture gets clear. In the system where accountability and resource allocation has only upward dynamics, regional elite is more likely to respond to the criticism from the federal center (i.e. Putin or Medvedev) rather than people on the ground.
In any event, when you watch President Medvedev meeting with Russian oligarchs who pledge money to rebuild villages of Central Russia or Prime Minister Putin responding to remarks of an unknown before blogger, whose comments on government’s handling of fire gone viral, the question you may ask is "what is regional/local governments' response of to the fire or at least the discussion on the web?"
This brings us to the second point of this post - growing importance of Russia's blogosphere. The backbone of Russia’s civil society is not community services, local churches, PTAs or rotary clubs. The backbone of Russia’s civil society is truth seeking and straight talking “lonely hero”, the one who dares to speak to the authorities. If previous Russian regimes have sent such loners to Siberia and psychiatric hospitals, the current landscape is significantly different. The internet connects such "lonely hero" to like-minded persons all over the nation. Russia’s blogosphere gives such "lonely heroes" opportunity to express themselves and to be heard by ordinary people. Twitter makes the dissemination speed supersonic, and mainstream media’s fascination with new means of communication results in media spillovers.
The blogger named “top_lap” with his “Put my f___n village bell back” is yet another example of Russian blogosphere’s growing influence and its interesting manner of communicating with the authorities (in Russian http://top-lap.livejournal.com/2010/08/01/, YouTube - "Рында как символ русской демократии" - Эхо Москвы 1/5).
Here is English language summary of the discussion:
In a scathing attack posted on LiveJournal, a blogger writing under the name top_lap vented his frustration at the authorities’ chaotic efforts to contain the fires. He said the ponds his village had previously used as reservoirs for fighting fires had been filled in and sold to developers, the local fire engine had vanished and the fire bell had been removed.
Such is the sensitivity surrounding public anger over the government’s response that Vladimir Putin himself was forced to go online and answer top_lap’s claims. This in itself is noteworthy as the prime minister claimed in 2007 that he had never even written an email.
***
Top_lap, who says he has a holiday home in a village in Tver province, 153km (95 miles) from Moscow, asked why there were no more forest wardens, who in Soviet times would have raised fire alerts. The fire bell had been replaced by a telephone which did not work, he said in his blog entry, which is punctuated by obscene swear-words. "Where is our [tax] money being spent?" he asked. "Why with every passing year are we hurtling towards a primitive social order?"
***
Top_lap questioned the need for Medvedev’s pet project of building a Russian “Silicon Valley” when the country doesn’t have enough fire engines. “We have no hope in you,” he wrote, addressing Russian officialdom. “We all understand that your one principle in life is that everybody owes you. But you’re mistaken, you owe us and you owe us a lot.”
Putin penned his answer after a Moscow radio station forwarded him a blog that railed against the decline of rural fire protection and self-serving bureaucrats. Dmitry Peskov, Putin’s spokesman, confirmed the authenticity of the response posted on the website of broadcaster Ekho Moskvy.
“On the whole I agree with your observations,” Putin wrote in a letter mixing flattery with irony... Putin, 57, told Time magazine in 2007 that he’d never sent an e-mail... Putin, who began his letter with the words “dear user,” said he read the blog “with great interest and pleasure.” While conceding the government’s responsibility to fight natural disasters, he explained that Russia was facing its worst heat wave in 140 years and that western countries also suffered frequent wildfires. “You’re definitely a gifted writer,” Putin wrote. “If you made a living by writing, you could live in Capri, just like Vladimir Lenin’s favorite writer, Maxim Gorky.” “If we had your address, you’d immediately get a ship’s bell from the governor,” he wrote.
Monday, August 23, 2010
Michael Davies teaches Systems, Leadership and Management (SLaM) Praxis and Lab for SDM MIT Fellows
"This course is about praxis1; it gives SDM Fellows a systematic approach and the practical skills needed for the application of their rich and deep learning and frameworks about systems, architecture, technology and strategy to real-world leadership and management challenges. It runs during the Summer session as a complement to and preparation for the SL&M Lab course in the Fall session, in which project teams work with the top management team of a high-tech business on a relevant real-world systems, leadership and management challenge.
This course provides a systematic approach and a a set of powerful analytical tools for the effective strategic management of high-tech and systems business. The objective of the program is to enable would-be managers in high-tech or systems businesses to better:
• anticipate the future and navigate its implications
• innovate and differentiate their offers, creating new value
• build competences and capabilities, and thereby capture value
• make smart decisions, fast and accelerate execution
Most sessions will involve a mix of case studies, class discussion and in particular guest speakers who have directly relevant experience; one of the later sessions is a computer-based simulation exercise in which participants play the role of the top management team of a high-tech business.
A central element of the course is a project carried out in teams of three to five people that involves an analysis of the strategic challenges currently facing the top management team of a major high-tech or systems business, and recommendations for the strategy that the business should pursue."
The final project of the summer SLaM Praxis
(August 9, 2010):
"The Great Game's scope is the complete digital ecosystem, although the primary focus will be where all of the major players meet, in smartphones, consumer electronics, digital media and the connected home.
http://en.wikipedia.org/wiki/The_Great_Game
http://www.tbray.org/ongoing/When/201x/2010/07/30/Mobile-Market-Share
The scope explicitly includes:
- mobile OS platform battles
- connected home: Apple TV, Google TV and so on
- gaming
- media
- cloud services
'The Great Game' will have four rounds:
- 2010
- 2011
- 2012
- 2013-2015
Each round begins with each team announcing its intended strategic moves for the round, covering issues such as product portfolio, scope of activities, intended partnerships and so on. This can include real options, that are triggered by other players or by market developments."
Additional information and readings on technology strategy can be found at MIT Open Courseware:
Saturday, August 21, 2010
2nd INTERNATIONAL CONFERENCE ON CRISIS MAPPING (BOSTON, OCTOBER 1-3, 2010)
Feel free to join our dedicated CrisisMappers Google Group here.
Friday, August 20, 2010
While my MacBook was on repair for the last two weeks...
Wednesday, August 18, 2010
Russia. August. 2010. Part 1: Grain.
(cont. in Russia. August. 2010. Part 2: Wildfires. )
It seems that August continues to be most intense month in Russia's political life. The heat wave followed by massive wildfires in the central Russia and Siberia add to the long list of events that took place in Russia's most contemporary history: August Putsch (August 19-21, 1991), Financial crisis (August 17, 1998), Kursk Submarine Accident (August 12, 2000), Russian-Gerogian Conflict (August 8, 2008), Sayano-Shushenskaya hydro accident (August 17, 2009).
This summer the heat wave in Russia reached absolute record temperatures. There were 21st temperature record registered in Moscow this summer. Two records were broken in June, ten in July and ten in the first half of August.
Low rainfall and hot temperatures damaged 32 percent of the country’s grain crops, said Russian Agriculture Minister, Yelena Skrynnik on July 23. This satellite vegetation index image, made from data collected by the Moderate Resolution Imaging Spectroradiometer (MODIS) on NASA’s Terra satellite, shows the damage done to plants throughout southern Russia.
Hot and dry summer resulted in massive drought, which led the government ban its grain export. Agricultural analysts are estimating that grain output will suffer a 40% loss this year, cutting previous forecasts of 70-75 million tons to 59.5-63.5 million.
Prime Minister Vladimir Putin suggested the ban could remain in place until well into 2011. Mr Putin said that this year's crop could be as low as 60 million tonnes, well below last year's 97 million, and Russia needs almost 80 million tonnes to cover domestic consumption, so even with this ban, there might be a shortfall of nearly 20 million tonnes for the Russian consumer.
President Medvedev's verified Twitter account (KremlinRussia) posted a link to presidential memo, which assigned responsibilities to different cabinet members. The two biggest concerns so far are (1) monitoring internal dynamics of food prices (and if necessary intervention) and (2) mitigating the possibility of grain reserve imbalance between different regions of Russia.
It is too early to say if Russia's neighbors may follow suit. A senior Ukrainian Farm Ministry official said this year's wheat harvest could fall to about 17 million tons, below the consensus in a Reuters poll last week of 18.1 million and down from 20.9 million in 2009. However, the decision to ban Ukraine's export has not been made.
Analysts already expect the London-listed Russia's deep-water Novorossiysk commercial sea port on the Black Sea may lose up to $40 million over a ban on grain exports imposed by the Russian government. Novorossiysk port also serves as a transportation hub for Russia's landlock neighbors.
Now let us zoom out from Russia's map and look at big picture. The total drop of Russia grain production (plus its closest neighbors) is going to be 20-25 million tons lower that previous forecasts. Fortunately such amount will not significant impact world's grain output. Take a look at data provided by UN's Food and Agriculture Organization. World grain production fluctuates between 670-685 million tons per year, in which 25 million ton or even 30 million tons shortage makes less than half of a percent of global food production.
Then the question is What's All The Fuss About? And here I can give you two different explanations. First, the ban is Russia's internally driven policy directed toward domestic audience. Unfortunately, its domestic media machine works so efficiently that it spins its internal message into global media.
This leads us to the second and more important point: Russia's domestic policy is unintentionally helping international food commodity traders. I am concluding this post with SPIEGEL magazine article Speculators Rediscover Agricultural Commodities. The article was published on July 29, 2010 before the Russian ban on grain, nevertheless it captures the trend:
Driving the price explosion was the growing use of agricultural commodities to produce biofuel. But 2008 was also the year in which, for the first time, the public realized that grain merchants were no longer the only ones trading on the exchanges (in their case, by buying grain futures to hedge against poor harvests), but that the major players in the financial markets had discovered the lucrative trade in agricultural commodities.
Last year, Goldman Sachs earned $5 billion in profits with commodities alone. Other major players include the Bank of America, Citigroup, Deutsche Bank, Morgan Stanley and J.P. Morgan.
They are no longer merely offering classic funds, but are now trading in financial instruments that function similarly to the subprime mortgage loans on the now-collapsed US real estate market. With these instruments, known as collateralized commodities obligations, or CCOs, profits are based on market prices. The higher the trading prices of wheat, rice and soybeans, the bigger the profits. The market's behavior reminds one of the Internet bubble at the beginning of last decade and the fluctuations just prior to the financial crisis, then-Merrill Lynch President Gregory Fleming said in May 2008.
Wednesday, August 4, 2010
RIP Google Wave
RIP Google Wave...
"Wave has not seen the user adoption we would have liked. We don’t plan to continue developing Wave as a standalone product, but we will maintain the site at least through the end of the year and extend the technology for use in other Google projects. The central parts of the code, as well as the protocols that have driven many of Wave’s innovations, like drag-and-drop and character-by-character live typing, are already available as open source, so customers and partners can continue the innovation we began. In addition, we will work on tools so that users can easily “liberate” their content from Wave." (Official Google Blog, http://googleblog.blogspot.com/2010/08/update-on-google-wave.html)
Obituaries:
"Google Wave, Poorly Understood and Underused, Dies In Infancy" (Fastcompany.com)
"Maybe it was just ahead of its time. Or maybe there were just too many features to ever allow it to be defined properly, but Google is saying today that they are going to stop any further development of Google Wave." (Techcrunch.com)
"Goodby Google Wave, We Hardly Knew You." (DailyFinance)
"Google's attempt to reinvent e-mail has fizzled." (CNN.com)
"The move isn’t much of a surprise; adoption never seemed to materialize for Google Wave — even after it dropped its invite-only status — as users struggled to find meaningful use cases for the service (though we found a few)." (Mashable.com)
"It's dead, Jim. Google Wave, the much-hyped collaboration tool that Google released in beta form just about a year ago at its developer conference, is dead." (Examiner.com)
"Google is known for daring to invest in new products, services and features and being willing to walk away from those not living up to its hopes." (AFP)
"After opening to the public in May, Wave failed to attract the user base Google anticipated. Instead, when faced with a drastically different paradigm for interaction, the public decided to stick with the familiar: e-mail, IM and Facebook." (Switched.com)
Monday, August 2, 2010
"MIT OpenCourseWare recognized by the AAAS"
"The American Association for the Advancement of Science (AAAS) has announced that MIT OpenCourseWare (OCW) has been named a recipient of the Science Prize for Online Resources in Education. OCW is the Institute's groundbreaking effort to share the core academic content — including syllabi, lecture notes, assignments and exams — from the entire MIT undergraduate and graduate curriculum. The site currently includes materials from more than 2,000 MIT courses and has received more than 68 million visits since the site's launch in 2002." (http://web.mit.edu/press/2010/ocw-award.html)
Sunday, August 1, 2010
System Design and Management Program and Social Media, need some crowdsourcing advice...
BBC News - Global cluster bomb ban comes into force
BBC: "A new global treaty banning cluster munitions has come into force. The Convention on Cluster Munitions bans the stockpiling, use and transfer of virtually all existing cluster bombs, and also provides for the clearing up of unexploded munitions. It has been adopted by 108 states, of which 38 have ratified it. The charity Handicap International estimates that 98% of cluster bomb victims are civilians and nearly one-third are children."
Friday, July 30, 2010
Recorded Future goes beyond Search
Thursday, July 29, 2010
MIT vs. Harvard Case Competition 2010
MIT Events Calendar - Friday, July 30, 2010 - MIT vs. Harvard Case Competition 2010.
The case that teams will have to crack is on Boston based car-sharing start up called RelayRides.
Friday, July 16, 2010
"I Write Like" filter-like algorithm compares and categorizes your writing style
The idea belongs to Dmitry Chestnykh, a 27-year-old Russian software programmer. "Chestnykh modeled the site on software for e-mail spam filters. This means that the site's text analysis is largely keyword based. Even if you write in short, declarative, Hemingwayesque sentences, its your word choice that may determine your comparison" (NPR: http://alturl.com/8qurx).
The Russian blog-sphere is surprisingly quiet about both the author, Dmitry Chestnykh, and the site. As for Dmitry himself, he twitted "I write like Douglas Adams. Proof:" on July 8. One week later he is Internet's newest superstart, busy giving away interviews. Here is one of them from THEAWL.COM (http://alturl.com/4h8tx):
"...How many authors are currently in the database? How did you decide which authors to include?
The current version includes 50 writers. First versions included authors from the bestsellers list on Wikipedia, top downloaded books from The Gutenberg Project (a public library of out-of-copyright books), and the ones I could remember. Later versions included authors suggested by users.
When are you going to add explanations for the algorithm for each author? Why haven't you included this already — why keep it secret?
I wanted to write a blog post about it, and to open-source the code, but haven't had time for it yet, because I've been busy updating the program and handling all the traffic, emails and comments I received. Also, it's really interesting to read how people try to explain the results they got.
Actually, the algorithm is not a rocket science, and you can find it on every computer today. It's a Bayesian classifier, which is widely used to fight spam on the Internet. Take for example the "Mark as spam" button in Gmail or Outlook. When you receive a message that you think is spam, you click this button, and the internal database gets trained to recognize future messages similar to this one as spam. This is basically how "I Write Like" works on my side: I feed it with "Frankenstein" and tell it, "This is Mary Shelley. Recognize works similar to this as Mary Shelley." Of course, the algorithm is slightly different from the one used to detect spam, because it takes into account more stylistic features of the text, such as the number of words in sentences, the number of commas, semicolons, and whether the sentence is a direct speech or a quotation..."
Well, I inserted three sample essays from my blog. Twice it came out as David Foster Wallace (http://alturl.com/w2quj) and once as Arthur C. Clarke (http://alturl.com/rmixh).
Thursday, July 15, 2010
"Ask an Engineer" is MIT's Cool Way of Explaining Ideas and Research
Why does traffic bottleneck on freeways for no apparent reason?
Can traditional gasoline-powered cars be converted to run on hydrogen fuel cells?
You can get answers to these and many other questions via MIT's most recent webtheme called "Ask an engineer", which leads you to MIT Engineering Website.
The site streams questions about science and engineering frequently asked by visitors who either come to MIT or browse its webpages. Most interesting part of this stream is the fact that questions are answered by MIT Engineering faculty. Streaming answers in simple and informal way helps explain "day to day" applicability of cutting edge research conducted at MIT. For each of the questions you can get "one-sentence" answer, an expanded explanation and credible references if you choose to explore such topic further. Each answer also helps you understand who among MIT faculty conducts research in the given field.
"Ask an Engineer" is a simple and effective communication tool that helps bridge people's interest in science, technology and everyday life with wide spectrum of state of the art research at MIT. Some of these research topics pioneered decades ago and we just do not realize these connections, for other topics it may take a decade before actual results can become part of our everyday life.
If you would like to submit your own question, you may do so at http://engineering.mit.edu/ask/submit_question.php .
Friday, July 9, 2010
What is value-related operand of a glider?
On the side of runway at Bar Harbor Airport (Maine), which is 12 miles from Acadia National Park.
Here is 1963 Cessna 182F that pulls us into the air.
It takes less than 45 seconds to take off. The glider is very light and fast.
July 4 weekend is the busiest time at the county airport. The airport's "parking lot" is full with private jets that bring wealthy summer house and island owners.
As we reach 4,000 ft (1,220 m), Cessna detaches the cable and leaves back to the airport.
Bar Harbor at morning low tide.
The same land bridge that connects the Bar Island during the low tide.
The same theme from the top of Cadillac mountain.
Friday, July 2, 2010
Top five FIFA World Cup teams on MITRE's prediction market
1. Spain with 28.82%
2. Germany with 20.59%
3. Argentina with 19.39%
4. Netherlands with 18.64%
5. Uruguay 5.65%
Tuesday, June 29, 2010
Top five FIFA World Cup teams on MITRE's prediction market
1. Brazil with 28.59% chances to win the cup
2. Spain with 18.04%
3. Germany with 14.02%
4. Netherlands with 12.04%
5. Argentina with 10.18%
I am betting on Germany.
My personal rank in the market (the is to stay in the upper third):
Most recently I received my prize from betting on appointment of John S. Pistole as the next T.S.A. Chief. Too bad I bet only one share (got 49 virtual dollars).
Sunday, June 27, 2010
One can run, but cannot hide from World Cup at SDM
The World Cup is my greatest enemy these days. It is my greatest source of distraction and procrastination. I try to avoid my US, Spanish, Saudi, Korean, Chilean friends (guys, you know who you are and I will not publish your names) who are watching live games on their laptops via www.espn3.com, I try to block myself from the heated follow up discussions. I stay away from bars and other public places. I even tried to stay away from my house, where my family is watching the games 24/7 on TV.
Football (dare I say soccer) is a great game, where rules are simple and everyone can consider himself/herself an expert (if you have a blog, your chances of being such expert double). These days you cannot avoid the World cup, when even bloggers on National public radio are comming up with "ballanced" and "impartial" taxonomy of football fans: "...
- The Citizen: wild-eyed nationalists, unless you’re a compatriot..
- The Hermit: must “stay home in front of the telly with a can of beer and a packet of crisps,”
- The Hoverer: want to hang out with their chums, drink some beer, maybe glance at the game every ten minutes or so
- The Ogler:
- The Windbag: opines brazenly and shamelessly
- The Chronic, Enthusiastic, and Frequently Mistaken Caller of “Offside!
- The Real Deal: takes sheer pleasure in watching the game—regardless of nationality
- Soccer Savant: deeply loves soccer, he knows a lot about it—and imparts his knowledge in a calm, cool-headed manner ..."
http://www.npr.org/blogs/showmeyourcleats/2010/06/26/128132590/seven-species-of-soccer-spectator-a-taxonomy?ft=1&f=1001&sc=tw&utm_source=twitterfeed&utm_medium=twitter
Tuesday, June 22, 2010
CRISIS-MANAGEMENT CROWDSOURCING PLATFORM WAS LAUNCHED IN KYRGYZSTAN TO MAP AND SHARE RELIABLE INFORMATION
The platform that is being used by the website seems to come from open source non-profit initiative called ushahidi. User named <altyni> initially posted that "We are supported by crisis managers of Chile, Haiti, Dushanbe, Ukraine, USA, Kenya #savekg" and several hours later "I officially announce that we have launched @ushahidi platform in #freekg", "#thanks: Mark Belinsky, Nona Lambert, Patrick Meier, David Kobia, Alana Shaikh, Anaha Ayala, Max Froumentin, Juliana, Sanjana and others."
“The open-source project Ushahidi, which takes its name from the Swahili word for “testimony,” ... The software allows text messages to be mapped by time and location. It was developed to track reports of ethnic violence in Kenya in 2008. Suddenly mere words can create a moving picture of where violence started and where it intensified.” http://www.nytimes.com/2009/11/09/business/09link.html?_r=1
The Ushahidi platform was most recently used in helping earthquake effort in Chile and Haiti; tracking extreme weather (snowstorm, etc) and wildfire; monitoring elections in India, Mexico and Sudan; covering activities in Gaza during the war; recording reconciliation effort in Kenya, etc. Here is descriptive video http://ushahidi.com/embeds/what_is_ushahidi.html
If you would like to share information, you can send text message to 0779069805, email to savekg@gmail.com or use #savekg on twitter. You can also contact the developers to offer your help via webpage http://www.aikol.kg/contact .
Monday, June 21, 2010
Bloomberg reports about Kazakh National Bank seeking bidders to manage $100 Million of its $25b.+ National Oil Fund
http://noir.bloomberg.com/apps/news?pid=20601095&sid=argSOp2PrPKE
You can read the official announcement on External management tender for «Global active equity» and Investment Guidelines at http://www.nationalbank.kz/?docid=539&switch=eng
Saturday, June 19, 2010
John Sterman's Summary on Principles for Successful Use of System Dynamics.
"...
1. Develop a model to solve a particular problem, not to model the system. A model must have a clear purpose and that purpose must be to solve the problem of concern to the client. Modelers must exclude all factors not relevant to the problem. The goal is to improve the performance of the system as defined by the client. Focus on results.
2. Modeling should be integrated into a project from the beginning. The value of the modeling process begins early on, in the problem definition phase. The modeling process helps focus diagnostics on the structure of the system rather than blaming problems on the people making decisions in that structure.
3. Be skeptical about the value of modeling and force the “why do we need“ discussion at the start of the project. There are many problems for which system dynamics is not useful. Carefully consider whether the system dynamics is the right technique for the problem. Modelers should welcome difficult questions from the clients about how the process works and how it might help them with their problem. The earlier these issues are discussed, the better.
4. System dynamics does not stand alone. Use other tools and methods as appropriate. Most modeling projects are part of a larger effort involving traditional strategic and operational analysis, including benchmarking, statistical work, market research, etc. Effective modeling rest on a strong base of data and understanding of the issues. Modeling work best as a complement to other tools, not as a substitute.
5. Focus on implementation form the start of the project. Implementation must start on the first day of the project. Constantly ask, How will the model help the client make decisions? Use the model to set priorities and determine the sequence of policy implementation. Use the model to answer the question, How do we get there form here? Carefully consider the real world issues involved in pulling various policy levers. Quantify the full range of costs and benefits of policies, not only those already reported by existing accounting systems.
6. Modeling work best as an interactive process of joint inquiry between client and consultant. Modeling is a process of discovery. The goal is to reach new understanding of how the problem arises and then use that understanding to design high leverage policies for improvement. Modeling should not be used as a tool for advocacy. Don’t build a client’s prior opinion about what should be done into a model. Use workshops where the clients can test the model themselves, in the real time.
7. Avoid black box modeling. Models build out of the sight of the client will never lead to change in deeply held mental models and therefore will not change client behavior. Involve the clients as early as possible. Show the model. Encourage them to suggest and run their own tests and to criticize the model. Work with them to resolve their criticism to satisfaction.
8. Validation is a continuous process of testing and building confidence in the model. Models are not validated after they are completed nor by any one test such as their ability to fit historical data. Clients build confidence in the utility of a model gradually, by constantly confronting the model with data and expert opinion – their own and other’. Through this process both model and expert opinions will change and deepen. Seek out opportunities to challenge the model’s ability to replicate a diverse range of historical experience.
9. Get a preliminary model working as soon as possible. Add detail only as necessary. Develop a working simulation model as soon as possible. Don’t try to develop a comprehensive conceptual model prior to the development of a simulation model. Conceptual models are only hypotheses and must be tested. Formalization and simulation often uncover flaws in conceptual maps and lead to improved understanding. The result of experiments inform conceptual understanding and help build confidence in the results. Early results provide immediate value to clients and justify continued investment in their time.
10. A broad model boundary is more important than a great deal of detail. Models must strike a balance between a useful, operational representation of the structure and policy levers available to the clients while capturing the feedbacks generally unaccounted for in mental models. In general, the dynamics of a system emerge from the interactions of the components in the system – capturing those feedbacks is more important than a lot of detail in representing the components themselves.
11. Use expert modelers, not novices. Modeling requires a discipline approach and an understanding of business, skills developed through study and experience. Get the expert assistance you need. Use the project as an opportunity to develop the skills of others on the team and in the client organization.
12. Implementation does not end with a single project. In all three cases the modeling work continued to have impact long after the initial project is over. Models and management flight simulators were applied to similar issues on other settings. The modelers developed expertise they applied to related problems and clients move into new positions and new organizations, taking the insights they gained and, sometimes, a new way of thinking, with them. Implementation is a long-term process of personal, organizational, and social change.
..."
Friday, June 11, 2010
John Sterman, Systems Thinking and Modeling for a Complex World (2000): Summary of Chapter 1.
1.Yesterday's solution becomes today's problem...
2. Policy resistance arises because we often do not understand the full range of feedbacks operating in the system. Our actions alter the state of the system, other people react to restore the balance we have upset... Side effects are not the feature of the reality but a sign that our understanding of the system is narrow and flawed.
3. Our decisions alter our environment, leading to new decisions. But also triggering the side effects, delayed reactions, changes in goals and interventions by others. These feedbacks may lead to unanticipated results and ineffective policies.
4. All dynamics arises from the interaction of just two types of feedback loops, positive (self-reinforcing) and negative (self-correcting) loops. The positive loops are all processes that generate their own growth. Negative loops counteract and oppose change. These loops all describe processes that tend to be self-limiting, processes that seek balance and equilibrium.
5. Active modeling occurs well before sensory information reaches the areas of brain responsible for processing visual information. Our survival depends so completely on the ability to rapidly interpret our environment that we long ago evolve structures to build these models automatically.
6. The act of measurement introduces distortions, delays, biases, errors, and other imperfections, some known, other unknown and unknowable. Measurement is an act of selection.
7. People generally adopt an event-based, open-loop view of causality, ignore feedback processes, fail to appreciate time delays between action and response and in the reporting of information, do not understand stocks and flows and are insensitive to nonlinearities that may alter the strength of different feedback loops as a system evolves.
8. When we attribute behavior to personality we lose sight of how the structure of the system shaped our choices.
..."
Tuesday, June 8, 2010
Kiplinger missed Boston and/or Cambridge, MA in its "10 Best Cities for the Next Decade"
1. Austin, Tex.
2. Seattle, Wash.
3. Washington, D.C.
4. Boulder, Colo.
5. Salt Lake City, Utah
6. Rochester, Minn.
7. Des Moines, Iowa
8. Burlington, Vt.
9. West Hartford, Conn.
10. Topeka, Kan.
What Kiplinger misses in its criteria, is strength and density of new technology companies. According to MIT Professor Michael Davies, there are "two regions-four institutions" (Harvard-MIT, Berkeley-Stanford) where innovation is concentrated, and Kendal-MIT area by far surpasses all other cities.
Sunday, June 6, 2010
101 Things I Learned in the System Design and Management Program #101SDM
Congratulations to those of you who just graduated. On behalf of SDM10 cohort we wish you all the best in your future career and life endeavors.
I am sure many of us at least once had difficulties explaining what SDM is all about, and I think that “an elevator pitch” does not reflect all aspects of our unique program.
So I am trying to put together “101 Things I Learned in System Design and Management Program.” I think it could be a good summary of SDM program for perspective students (and sponsors?), as well as current, graduating and alum members of the SDM community.
It will take some time and several drafts, but I am eager to finish it before the Annual Systems Thinking Conference at MIT in October this year.
I am sure everyone has at least one idea and one experience to share with the rest of us. If you have time, please email directly to me abdimom@mit.edu (or twit at #101SDM), because spam can easily kill this idea. I will share with everyone drafts along the way (eventually I will put together a wiki or some other sharing tool). If the project proves to be successful, we can leave it for future SDM fellows to come up with updated editions.
Looking forward to hear from you,
Azamat Abdymomunov, SDM10
Saturday, June 5, 2010
Just a thought on "design thinking" in business
Friday, June 4, 2010
FT is praising Kazakhstan for handling financial crisis: "demand that creditors absorb all, or part, of the losses"
...0ption, as demonstrated in Kazakhstan, is to demand that creditors absorb all, or part, of the losses, even as the bank remains a going concern. And indeed, this is precisely the idea that is now starting to gain traction in some regulatory quarters."
http://www.ft.com/cms/s/0/050d003a-6f4a-11df-9f43-00144feabdc0.html
Wednesday, June 2, 2010
NYTimes discusses "nuking the well", studies were done decades ago
Kazakhstan's National Nuclear Center continues environmental monitoring of the sites. I am not an expert in this field, but from what I understand an underground nuclear explosion creates a sealed cavity that serves as a container, which keeps natural gas and condensate form leaking into the ground. I have thought about this project when InnoCentive announced its "Emergency Response 2.0 : Solutions to Respond to Oil Spill in the Gulf of Mexico" on https://gw.innocentive.com/ar/challenge/overview/9383447 .
At that time I thought it could be nearly impossible to place a nuclear device 1 km deep into the water and further into the seabed. But I guess, some of the scientists that were involved with the project decided to give the idea a shot, literally. I knew that both underwater and underground tests were routinely done in the past (see http://alturl.com/v7x6 ), but combining two in one could be a real challenge.
I agree with NYTimes that such risky idea is cannot be seriously considered. However, as crazy as the idea sounds, the fact that it got front page coverage in NYTimes (!!!"...What about nuking the well?") suggests that both BP and the Federal government are running out of serious options. Or perhaps, public opinion is being prepared for an option that includes conventional explosion to stop the spill, which looks much more acceptable vis-a-vie a nuclear option.
Here is an abstract from the paper called Reduction of Risks from Lira Underground Nuclear Facilities at Karachaganak Oil-and-Gas Complex published by National Nuclear Center researchers in 2008:
"T. I. Ageyeva2, A. Zh. Tuleushev2 and V. V. Podenezhko2
(2) Institute of Nuclear Physics, Almaty, Kazakhstan
The theme of this article is the investigations of radioactive contamination within and around underground cavities created by underground nuclear detonations performed in connection with the operation of oil and gas condensate fields. Underground storages of gas condensate are not maintained for a long time. The results from the large-scale complex indicate the absence of a real threat from nuclear objects on the environment. However, there is a potential danger connected with possible changes in the geological environment containing the underground storages of condensates. The pressure created in the cavities is the controlling parameter of the conditions in the cavities. Laboratory investigations of a condensate from the underground cavities confirm the absence of caesium-137 and strontium-90 and the presence of tritium. The strategy of closing off the cavities with the application of filling the cavity space with loose or helium materials is designed. The basic objective of the subsequent works is to decrease the environmental risks associated with oil-and-gas operations and underground storage of condensates.
Keywords cavities - underground nuclear detonations - condensate storage - LIRA - Kazakhstan"
Source: http://www.springerlink.com/content/r3w0jgvmx87tv332/
Tuesday, June 1, 2010
Realpolitik of the Blame Game
In this respect, Obama's decision to begin criminal investigations into the Deepwater Horizon explosion and the oil spill may give such satisfaction. Unfortunately, it is short-lived and may prove counterproductive in the long-run. Criminal inquiries into the cause of the oil spill is likely to narrow down the scope of post-mortem analysis to near physical and temporal proximity of the accident. In other words, the investigation will focus on people who made decisions as the accident emerged.
After the Exxon Valdes accident, the public was given a scapegoat, Capitan Hazelwood, who was singlehandedly blamed to cause the accident. Although, he was later cleared of the charge being drunk at the time of the accident, he had never cleared his name from the stigma of causing of the biggest oil spill in US history (until current accident). There were more systemic problems such as functional and interoperable navigation systems on board the ship and on the shore of Alaska, the culture of tolerance to safety problems among the oil executives and public official, etc. However, systemic factors tend to “spread the blame” and lack the luxury of targeted blame, thus satisfaction of punishment. Simple and straightforward causes are always easier to describe and accept. I hope to be wrong, but it is likely that we can expect several Capitan Hazelwoods from BP and its subcontractors who could be “scarified” to satisfy public outcry. However, it is unlikely that such narrow view can help us understand the complexity of the accident.
It is in our human nature to go back in time and look for a single event, which could have prevented to the catastrophe from happening. The bigger the accident, the stronger is our temptation to reverse time. Inability to reverse the situation results in anger, dissatisfaction and need for revenge. These emotions have to be channeled one way or the other. What make the case with the oil spill unique is the fact that the public is given a rare opportunity to be part of the accident as it emerges. The public feels helpless to reverse time and to contain the accident. Old and new media channels enables people to get first-hand accounts of the environmental impact on the ocean's seabed, the coast and wildlife. As the result, it is natural for people to ask who is in charge and who is to blame. If those who are in charge do not act swiftly and find those who are to blame, the public could blame those who are in charge. If those who were in charge yesterday do not blame those who are in charge today, then those who were in charge yesterday are to get blamed themselves and vice versa. The same is true with BP and its numerous subcontractors.
Unfortunately realpolitik of the blame game creates an environment in which each player is concerned with own political and legal liabilities. Criminal inquiry adds more gasoline to the flame. Starting the investigation before accident’s containment is almost like investigating causes of an air crash with airplane still in the air. Perhaps, such approach could give unique perspective, but more likely it will downgrade itself to simplified description of immediate events with operators and decision makers who were unfortunate enough to be in close proximity as the accident emerged.
Friday, May 28, 2010
MITRE Prediction Market Pilot
In short prediction markets create common and usually electronic platform that allow participants to put their bets on certain prediction, which has asset price and where this price is tide to the probability of this event. Most famous and successful example of prediction market is Iowa Electronic Markets, a non-profit academic exchange, which conducts US Presidential Elections prediction markets and claims to have more accurate results than the election pools.
Here are some basics: let us assume that in the Winner-Takes-All Market one-dollar value is assigned if the prediction that candidate A wins the election and zero dollars if the same candidate looses the election. The price of the contract that fluctuates between the staring point and the end-point of the bet (for example between 0.2 dollars and 0.4 dollars) means that the chances of candidate A winning the election fluctuates between 0.2 and 0.4 probability. Let us assume that the probability of the bet at a certain day is 0.33. This means that one can buy the contact for 0.33 dollar at that day and if the candidate A wins the election at some point in the future, the gain is equal to 0.77 dollar (or loose 0.33 dollar if the candidate fails).
Basic requirements for Prediction market are:
- Clear rules. Event should have definite outcome and ending date. Preferably known market participants.
- Clear incentives (monetary or other) to make accurate predictions and bet against other participants.
- Stable market size.
- Adequate rewards for risk taking.
- Mix of participants, which includes experts and non-experts like me.
- Clearly defined, exhaustive and engaging predictions.
In the case of MITRE pilot, there are predictions such as “When will the oil spill in the Gulf of TX be contained (i.e. no longer allowed to contaminate the water?)”, “Will Greece default on all or part of its sovereign debt by December 31, 2011?”, “Will the iPhone be available on the Verizon Network on Oct 1, 2010?” and many more. Each player has 5,000 units of virtual currency (which for some reason are called dollars, perhaps because organizers would like to honor the currency in which the pilot is funded :) ).
In 2005 Google made an attempt to introduce prediction markets to evaluate its internal performance (such as product launch dates or quarterly figures) and assess external competitive environment (such as actions and products made by its competitors). One key distinction from the Iowa Electronic Markets and MITRE’s pilot was that Google employees/traders were trading in pseudo currency called Goobles. The authors of the project created indirect reward system, so that monetary benefits would not distort the prediction outcomes. After all, the value generated by the prediction markets was participants’ perception of future development and events. This shift in motivation made traders focus on their reputation, credibility and ability to influence the market. It is not clear if the prediction market is operational at Google these days. It seems that long-term sustainability of such initiative require strong commitment form both management and market participants. One interesting and unexpected conclusion that can be taken from Google’s initiative is the fact that prediction market can map the flow of information within particular organization. There was a study done by Google and Wharton scholars to prove this point (Using Prediction Markets to Track Information Flows: Evidence from Google, 2009). One more important detail, in Google’s case the prediction market techniques fit company’s innovative culture with its etiquette of internal communication, as well as diverse, tech-savvy and self-motivated employees.
It is too early to say, but it seems that MITRE’s pilot is also moving into the direction of using non-monetary incentives such as honor badges, surveys, rankings, etc. The main question here is whether the performance of the players will eventually be measured by virtual monetary gains or accuracy of predictions.
So what is the justification for prediction markets? I tried to dig some articles in Google Scholar. Here is a good summary of justifications that comes from Joyce E. Berg and Thomas A. Rietz; and their 2003 Prediction Markets as Decision Support Systems, Information Systems Frontiers Market paper: “(1) the markets give continuously updated dynamic forecasts; (2) through the price formation process, the markets aggregate information across traders, solving what would otherwise be complex (at best) aggregation problems; (3) markets give unbiased, relatively accurate forecasts well in advance of outcomes; (4) these forecasts can outperform existing; (5) the evidence suggests that market dynamics can overcome biases that individual traders may have, effectively eliminating them from forecasts; (6) the markets can be designed to forecast a variety of issues and provide a variety of types of information” (Joyce E. Berg, Thomas A. Rietz, 2003).
Cass R. Sunstein, Administrator of the White House Office of Information and Regulatory Affairs, former University of Chicago Law School and current Harvard Law School professor, argues that predictions market (information market) tend operate more accurately than exit pools and expert panels due to the dynamic and aggregate nature of the market. In prediction markets (information markets) participants are given the right incentives to disclose information they hold. “Groups often hold a great deal of information, and an important task is to elicit and use the information of their members… Much of the time, informational influences and social pressures lead members not to say what they know. As a consequence, groups tend to propagate and even amplify cognitive errors. They emphasize shared information at the expense of unshared information, resulting in hidden profiles… [Information] markets tend to correct rather than amplify individual error, above all because they allow shrewd investors to take advantage of the mistakes made by others. By providing economic rewards for correct individual answers, they encourage investors to disclose the information they have. As the result, they are more often more accurate than the judgment of deliberating groups”(Sunstein, 2006).
It seems that prediction markets have value, but I will have to try it on my own to be convinced. So currently I am in the "learning by doing" mode: taking careful strategies and aiming to get into upper quartile rank of market traders. I will keep readers posted on my success.
As for the trading platform of MITRE’s pilot, I should say that it is user-friendly. It has Dashboard and Stats that engage you into the trading process. It also gives you an option to ask clarifying questions and make comments before or after particular trade is made. So the system is evolving and I am interested to see where it will takes us in the end (the pilot will last for 6 months as far as I know).
You can visit the site https://mitre.inklingmarkets.com/ to be the judge.