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Pentagon Lets You Bid on Terrorism? 846

Elysdir writes "DARPA is creating an idea futures market, the Policy Analysis Market, to try to predict events in the Middle East. See Bloomberg article for more info." Read this article. I mean it. This is amazing. Update: 07/29 14:45 GMT by J : The NYT story claims "The White House also altered the Web site so that the potential events ... that were visible earlier in the day ... could no longer be seen," but those example images are still being served: Jordanian overthrow, bidding on assassinations, cool graphics... Update: 07/29 16:44 GMT by M : Looks like the publicity was too much.
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Pentagon Lets You Bid on Terrorism?

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  • How... How... (Score:3, Interesting)

    by mgcsinc ( 681597 ) on Tuesday July 29, 2003 @09:08AM (#6558178)
    Omigod! Predictive tool, my ass! How desperate have we gotten to keep our economies stable in times of despair? A way to instantly give people an economic boost when tragedy strikes? I thought the balanced budget was a lot to be sacrificing for a stable economy, with these refund checks, but now, we're staking our relations with the world? Like the article points out, ``How would you feel if you were the king of Jordan and learned that the U.S. Department of Defense was creating a futures market in whether you're going to be overthrown." I really, really hope this is a joke...
    • Amazing. (Score:5, Insightful)

      by Randolpho ( 628485 ) on Tuesday July 29, 2003 @09:35AM (#6558414) Homepage Journal
      What a great way to fund future terrorism! All you have to do is load your bets on a target, then go blow it up! Talk about your self-fulfilling prophesies!
      • Re:Amazing. (Score:4, Insightful)

        by Llywelyn ( 531070 ) on Tuesday July 29, 2003 @10:05AM (#6558680) Homepage
        "What a great way to fund future terrorism! All you have to do is load your bets on a target, then go blow it up! Talk about your self-fulfilling prophesies!" ...and, in doing so, you have:

        1) Let the US Government know of your intentions.

        2) Let the US Government know who you are.

        • Re:Amazing. (Score:3, Insightful)

          by Randolpho ( 628485 )
          Hmm... so are you saying that the events futures market (why does that sound so wierd to me?) is really a means of the government trolling for terrorists? Interesting way to combat terrorism...
          • Re:Amazing. (Score:3, Interesting)

            by Llywelyn ( 531070 )
            Not exclusively, but as a terrorist you would have to be daft to try and make any kind of serious money off of this.
          • Re:Amazing. (Score:4, Insightful)

            by kilgore_47 ( 262118 ) <kilgore_47&yahoo,com> on Tuesday July 29, 2003 @10:36AM (#6558956) Homepage Journal
            Hmm... so are you saying that the events futures market (why does that sound so wierd to me?) is really a means of the government trolling for terrorists? Interesting way to combat terrorism...

            If you read their TOS it probably says "if you bet on a terrorist act occurring, and then it occurs, we can detain you as a suspect indefinitely". Because only terrorists would bet against the USA.

            Seriously though, I think this is an absolutely horrifyingly terribly offensive proposition, and if they actually go live with it I'll probably sign up and place some bets.

            Yeah yeah, I know, they're trying to call it "trading" instead of "betting," but whatever...
      • by cev ( 572524 ) on Tuesday July 29, 2003 @10:31AM (#6558905)

        For any given attack, there are going to be a lot of people who know about it beforehand. Some of those people are going to be stupid enough to try to profit on it.

        When the futures fluctuate dramatically due to the new 'interest,' everyone at the pentagon knows that something is going to happen. The SEC uses it to catch insider trading, the NCAA uses it to catch game fixing. Q: Why can't the government use futures to catch terrorists?

        A: Great idea, bad diplomacy. Hello! This is the US government we're talking about! We don't care how the rest of the world feels anymore.
        • by Dan Crash ( 22904 ) on Tuesday July 29, 2003 @12:53PM (#6560793) Journal
          When the futures fluctuate dramatically due to the new 'interest,' the Pentagon won't be the only one who knows. This system essentially lets terrorists know the probability of success of a given terrorist action before they launch it. They can see which of their plans have leaks and which do not, and use that data to organize more effectively.

          This is an idea which Has Not Been Thought Out.
    • Re:How... How... (Score:4, Informative)

      by Farley Mullet ( 604326 ) on Tuesday July 29, 2003 @09:38AM (#6558433)
      Given that the PAM only allows 1000 people a day to sign up, it'd take just under 3 years for even one million people to sign up. I don't think that the economic impact of the PAM will have any statistical significance. There's a really good piece on information markets [] on the New Yorker's website [].
    • by ladyeyes ( 667481 ) on Tuesday July 29, 2003 @09:53AM (#6558564)
      I work in an office involved with the press conference. Its real enough that DARPA wants US$3 million to continue it, and it was originally slated to become a piece of TIA.

      Aren't you just so glad that Poindexter is in charge of the department that comes up with such useful ideas?


    • by securitas ( 411694 ) on Tuesday July 29, 2003 @10:54AM (#6559106) Homepage Journal

      I really, really hope this is a joke...

      Even senators thought this was a joke so you can be excused for thinking so. See the bold text from the rejected submission below - it's from the NY Times article.

      Poindexter's Middle East Terror Bookie Scheme

      2003-07-29 08:16:21 Poindexter's Middle East Terror Bookie Scheme The NY Times reports on DARPA's latest scheme: an options and futures trading market where you can bet on assassinations, toppling governments, instability and war in the Middle East [] (Google []). The $8 million program [] is under the control of Admiral John Poindexter who brought us Total Information Awareness []. The Policy Analysis Market [] starts taking registrants this week and betting/trading begins in October. Senator Byron L. Dorgan [] of North Dakota, said the idea seemed so preposterous that he had trouble persuading people it was not a hoax.

    • by HighOrbit ( 631451 ) on Tuesday July 29, 2003 @11:24AM (#6559485)
      Yes a predictive tool. Basicially, this a way to measure the current "worth" of a particualar idea by using a market-type game theory. As ideas become more likely, their worth rises so they will be bid-up by the masses (of analysts). The most likely will float to the top. The theory is that no one person has perfect (or infinite) insight and information, but thousands of people - each acting independently in a common market - will distill some insight by their collective action. That is classical political-economic theory.

      Take the "money and morality" part out and you can see the academic value in a theory like this. Can anybody suggest a better option? Perhaps a bunch of ivory-tower professors and analysts making wild-a** guesses (WAGs) around a conference table? Which WAG is more "valuable" than the others?
    • by galgon ( 675813 ) on Tuesday July 29, 2003 @12:14PM (#6560230)
      As reported in Yahoo News [] The Pentagon has Abandoned its plan for the Terrorism Betting. My favorite quote from the story:
      "The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it's grotesque," said Sen. Ron Wyden D-Ore.
  • place your bets! (Score:5, Interesting)

    by sweeney37 ( 325921 ) * <mikesweeney AT gmail DOT com> on Tuesday July 29, 2003 @09:09AM (#6558179) Homepage Journal
    perhaps the /. paranoia bug has rubbed off me a bit too much, but what are the chances that your "bets" could be used against you in the war on terrorism?

    you hit three or four correct terrorist acts and the next thing you know you're in an orange jumpsuit overlooking guantanamo bay.

    • by Ominous Coward ( 106252 ) on Tuesday July 29, 2003 @09:17AM (#6558250)
      This is moderated "funny", but it's less funny, and probably more true. Someone might be tempted to bet a lot if they had "insider information", and then the government would track them down to see what they know, and why they know it. Some might be false leads, but if the King of Jordan is assassinated 2 days after CmdrTaco bets $10,000 on it, I'd definitely question CmdrTaco if I were a fed.
      • No kidding! (Score:5, Interesting)

        by mr_luc ( 413048 ) on Tuesday July 29, 2003 @09:44AM (#6558484)
        You just nailed one of a major benefits of this system.

        At the very least, this system would provide statisticians with a massive, currently relevant pool of opinions on the likelihood of any particular kind of terrorist attack occurring. The statisticians may not find anything, but honestly, for the price of running a single secure website, they're gathering an insane amount of valuable data.

        That's at the very least. If it does just what it is intended to, and no more. At best . . .

        At best, it is a honeypot. If something major is in the works, like 9/11, what are the odds that someone, somewhere along the line wouldn't have placed some serious bets? Maybe not the terrorist himself, but what about his family? The people he stayed with in the US? Not everyone involved is going to be a Q'ran-thumping martyr. This scheme plays the self-interest of individual terrorists against the greater secrecy of terrorist proceedings, and it has the potential to be extremely revealing in that respect, simply as a massive, relatively cheap method of adding to ordinary intelligence information.

        I mean, honestly, I know it sucks that they might tap your phone because of a $1,000 bet, but if you were just some guy exercising free speech, and proclaimed to the world that you would bet anyone $1,000 that there would be a major biological attack in Israel within the next week, and it got bandied about in a newspaper, your phone would be fuckin' tapped. Nothing happens, they intrude your life a little, and realize you're a crank or a nut or just a weirdo, and they leave you alone. It sucks, but at least this is something you can avoid and expect -- I mean, you do know who is running this thing, right?
        • by idfrsr ( 560314 ) on Tuesday July 29, 2003 @10:44AM (#6559014)
          The statisticians may not find anything...

          You don't know any statisticians do you....

        • Re:No kidding! (Score:5, Insightful)

          by cmburns69 ( 169686 ) on Tuesday July 29, 2003 @11:01AM (#6559189) Homepage Journal
          "a massive, currently relevant pool of opinions on the likelihood of any particular kind of terrorist attack occurring"

          What are you talking about? Massive, yes. Relevant, probably not. The only way this could work is if the people investing the money had access to all the information. CNN and FoxNews are decent news sources, but their coverage of world events is clearly limited by our (and foriegn) governments.

          For other markets where this has been a success, there was adequate information provided mandated by law. How open do you think the DoD will be with information relating to national security? (And if you don't think foreknowledge of a possible coup would be classified, you're living in a fool's paradise!)

          When investors don't get adequate (or they are provided with incorrect) information, investors make inacurate (or just plain poor) choices. Look at corporate/market scandals like Enron and Arthur Anderson. With all the proper information, nobody would have invested in those companies. And look at everyone who lost big, because they didn't have all the information.

          Imagine if the government had acted based on how the markets percieved Enron. They might have forced other energy companies to close (in darwinian fashion) to let Enron continue its successes.

          At best its a honeypot, but thats all it is. At worst, it will ruin our already poor relations with other nations. But please don't think for a moment that there will be any correlation between this "market" and the real world.
          • by crucini ( 98210 ) on Tuesday July 29, 2003 @01:36PM (#6561472)
            It's true that our stock markets had serious problems during the boom, and some of the problems persist.

            The only way this could work is if the people investing the money had access to all the information. CNN and FoxNews are decent news sources, but their coverage of world events is clearly limited by our (and foriegn) governments.

            I disagree. If people want to invest their money solely on the basis of CNN and Fox, they are more likely to lose it. That will improve the market because these investors will have less money to invest and be more interested in research. There are tons of information available about the countries of interest - most of us don't have time to keep up.

            Remember, intelligence agencies have a very bad track record at predicting future events. That may be because the incentives affecting an individual employee reward political conformity rather than correctness. The Cold War was largely shaped and perpetuated by the flawed intelligence of the CIA and KGB.

            The proposed system creates a class of analysts with an incentive for accuracy. And having their own money at stake will harness the analytical powers more effectively.

            In the big picture, Enron-type disasters are needed to discipline the market. Likewise, this events market would make some mistakes. Maybe after losing a few thousand dollars people would learn not to predict events based on their political beliefs or what they saw on TV.
        • Re:No kidding! (Score:4, Insightful)

          by urbazewski ( 554143 ) on Tuesday July 29, 2003 @02:13PM (#6561943) Homepage Journal
          Okay, suppose I'm a member of a well-funded terrorist group and I think the US government takes the 'information' from this market seriously. My organization is planning a biological attack on Israel. I disperse money to people all over the world and have them all invest in the "hijacking in Jordan" option. The Feds ramp up their efforts to track down who placed the bets and redouble their efforts to catch hijackers in Jordan. Suddenly, everyone is talking about a possible hijacking in Jordan. The market for 'hijacking in Jordan' goes wild.

          Meanwhile, the plans for a biological attack on Israel proceed apace.

          It amazes me that anyone take the efficient markets hypothesis seriously after the dot com boom/bust. Bubbles are not compatible with the efficient markets hypothesis. Bubbles exist. Draw the obvious conclusion.

      • Re:place your bets! (Score:5, Interesting)

        by TheMidget ( 512188 ) on Tuesday July 29, 2003 @09:44AM (#6558488)
        Isn't this what happened just before September 11? [] Lot of investor bought put options for airline stocks for unknown reasons (unknown until Sep 11, that is...), causing the stocks to dip noticeable. Strangely enough the affected airlines where AMR (American Airlines) and UAL (United), those two whose planes were used in the attacks.

        Even more interesting, due to closure of the New York stock exchanges, the "investors" couldn't trade in their loot right away. And by the time it re-opened, papers and the SEC were already makeing the connection between the attacks and the strange trading patterns. Thus, many of those "investors" didn't turn up to collect their loot, even though their options were in the money!

      • by Anonymous Coward on Tuesday July 29, 2003 @10:38AM (#6558970)
        your missing the point, this system isn't about insider information or profiting off terorism, its about gather intelligence upon the risk of terrorism / risk happening. This entire future market model is a risk assessment model where a market of thousands predicts the odds at which events happen. Here's what most people miss about this idea; when people have money, they always consider risk vs gains. Not many people are going to put a million down on France declaring war on the UK unless they're fine with throwing a million away. Inverselly, many people would hedge bets on Iran becoming a nuclear power because there is less risk in that issue (but smaller returns).

        DARPA is running this program, think how valuable it would be to DARPA if thousands of analysts all started hedging bets on Iran. The use of money makes the bet relevent because people act more objectivelly with their true beliefs with real money.

        This entire project seems to me like it was dreamed up by an economist because it does make sound economic sense. Have people who know the most about certain topics put future investment in to issues that are most likelly to happen. The best way to gauge the amount of risk in any issue is through money.

        The most troubleing thing about this article to me is that it suggests the US goverment isn't doing enough in gathering adequete foreing intel to prevent international disasters from happening. ie International terroism
    • by Fred IV ( 587429 )
      I think any organization bright enough to pull off a major terrorist act would also be bright enough not to make a bet with the pentagon about when and where it would happen.

      The stupidity involved in designing this system is amazing.
    • This creates an incentive for terrorism by insane individuals.

      Remember the case where someone tried to manipulate the stock market by putting cyanide in Tylenol?

      I might not have the facts exactly right, but the idea is the same. The potential exists for someone to use this to make money, by finding a way to encourage the terrorist acts to come true.
    • Be Paranoid, be -vary- paranoid (or NOT! have plans)

      I am glad they finally listened to one of my friends'
      ideas from a couple years ago. So, I am not worried,
      when my friends go to Guantanamo, I go to Canada,
      wait for the invasion, then head to France, before
      being forced in to hiding in the Tibet border region
      until the end of the war.

      I have my travel/vacation agent already working out
      the cost from here to Tibet. The return trip I was
      told was not possible to plan, because there was no
      confidence which currency
  • by Anonymous Coward on Tuesday July 29, 2003 @09:10AM (#6558184)
    Please place all american-bashing statments under this comment. Thank You.
  • by mjmalone ( 677326 ) * on Tuesday July 29, 2003 @09:10AM (#6558185) Homepage
    There are no commodities being purchased, and unlike the stock market there is (hopefully) no relation between the actions these countries are going to take and the investors "investing" in the liklihood of them occuring. However, right there is a huge flaw. It seems like a $1,000,000 investment in terrorists bombing isreal could potentially be a good enough reason for someone to bomb isreal.
    • This is Futures trading. And just like most other non-equity based trading (Bonds, Convertibles, Options) you are simply buying a contract or some sort, not the actual equity (stock), so yes, this is an "investment" but then again, the entire market is gambling really, isn't it?

      But of course the implications of something like this are just insane. Because someone put 1MM into a WMD going off in Isreal doesn't mean someone is going to do it. Someone will invest 1MM into this because they are going to do it
    • by awol ( 98751 ) on Tuesday July 29, 2003 @10:14AM (#6558769) Journal
      Well, yes and yet no. The lack of a commodity does not off itself imply gambling, the use of a derivative to move risk from the risk averse to the risk friendly is a totally legitimate form of investment. Taking this site at face value, the idea that the government might use the value of these derivatives to determine policy is kinda scary, but if you were a business with exposure to the Middle East, the idea of a derivative to help you hedge the risk of a war in the area is an extraordinarily powerful tool.

      The big problem with the idea though is pricing the thing. I mean it wasn't until Black and Scholes showed that one could price a financial derivative using quantifiable metrics (albeit corollary metrics in some senses, ie price volatility for risk and interest rate for baseline return on investment) that financial derivatives took off. The explosion in credit derivatives in the last five years is another example where the discovery of pricing methods fuelled the creation of a market.

      The other thing is that this is a futures market not an options market so there is a zero sum game at the end of every maturity so the pricing question is less of a showstopper for actually running the market, but the difference between a derviatives market and gambling is not the fact that there are no commodities involved, but rather that bookmakers determine price by current payout exposure not underlying metric. This market appears to be different and real metrics will be used in the end to determine strike price.

      Returning to the interested parties, Arms manufacturers and Airline companies would be ideal counterparties for such derivatives since their businesses rise and fall on the opposite outcomes of the same "event". The issue is not profiting from these events but avoiding the catastrophic fallout from the side of the event that is bad for you. For example if the airline industry had been able to hedge with the military supply industry (and look at Boeings recent acquisition history for an example of an attempt) then maybe they would not have gone bust after 9/11. Though this may sound callous, it really isn't the spreading of risk is a way to smooth out the economic bumps. To enhance the efficiency of capital to avoid sloshing it around, in and out of different sectors as markets change and all the problems that causes.
  • by typical geek ( 261980 ) on Tuesday July 29, 2003 @09:10AM (#6558187) Homepage
    I can't wait for a few middle east specialists to start skewing data to make their bets pay off.

    "Woot! Car Bomb in Riyadh! That pays 100-1, guess I shouldn't have sat on that report about Saudi terrorists."
  • question? (Score:5, Funny)

    by Yaruar ( 125933 ) on Tuesday July 29, 2003 @09:11AM (#6558195)
    If al-quieda sign up will they get taken to court for insider trading?
  • Quality!!! (Score:5, Funny)

    by iainl ( 136759 ) on Tuesday July 29, 2003 @09:12AM (#6558204)
    And you thought that the "short the dying guy" strategy on Hollywood Stock Exchange was a slightly sick game to play.

    So this is what they mean when they talk about a "peace dividend". I never realised it was quite so literal.
  • by anonymous loser ( 58627 ) on Tuesday July 29, 2003 @09:13AM (#6558208)
    Look at how unpredictably the stock markets behave already. When was the last time a major drop or surge in the NYSE or NASDAQ was accurately predicted by the majority of investors?

    At best this kind of analysis helps you see trends over a long time period, but I don't see how that can help the pentagon except when they ask for more funding (See! Carbombings will increase by 50% over the next 5 years! Please give us money).
  • by Kludge ( 13653 ) on Tuesday July 29, 2003 @09:13AM (#6558213)
    They're just looking to nab the people that post "There will be a Jihad and DEATH TO AMERICANS!!!".
  • not just middle east (Score:5, Informative)

    by Ravagin ( 100668 ) on Tuesday July 29, 2003 @09:14AM (#6558221)

    Ny Times [] article (free reg, stop whining) says it's not just for the Middle East. In any event, while I support innovative ways of fighting terrorism (as opposed to wiretapping everyone and giving the president imperium, etc) the idea of making money off of death is exceptionally disturbing.

    Says this is another idea from Admiral John Poindexter of, most recently, Total Information Awareness fame. Sounds like he might be a sick sick man.

    • So morticians shouldn't be able to profit from death either?
    • I find this akin to Hari Seldon's theory of psychohistory. A statistical measure of future trends in human behavior. This could be a vary primitive form of that science, or a key device in its theory. A very efficient way to model large, turbulent systems is to use a statistical representation of the system.

      The problem is contaminating the with the notion of money. Bias such as a monetary gain will skew the results of this framework and make the statistics unreliable. If this were a purley academic
  • Jim Bell (Score:5, Informative)

    by Ann Coulter ( 614889 ) on Tuesday July 29, 2003 @09:14AM (#6558226) Journal
    Remember Jim Bell? Posted comments to the effect of setting up a system where you can bet on who will be assassinated. He got into deep trouble with the courts who tried to censor any mention of it. Here is some more information. []
  • Trading Places II (Score:5, Insightful)

    by AtariAmarok ( 451306 ) on Tuesday July 29, 2003 @09:15AM (#6558231)
    I think this is all a plot to make sure that the forthcoming film "Trading Places II" is a big box-office draw due to inclusion of lots of explosions, related to this new film being about bidding on military incident futures.
  • by mschoolbus ( 627182 ) <.travisriley. .at.> on Tuesday July 29, 2003 @09:15AM (#6558236)
    I wonder if everyone simply voted that someone would be assasinated, if some crazy man would say he was obliged to kill him?

    I think it could get interesting...
  • by misterpies ( 632880 ) on Tuesday July 29, 2003 @09:16AM (#6558243)
    Reminds me of the old joke about two efficient-market economists walking down the street. Economist one: "Look - there's a $50 bill on the sidewalk" Economist two: "Don't be stupid, if it was somebody would have picked it up already" I reckon that's about the predictive power of this initiative.
  • by ninthwave ( 150430 ) <> on Tuesday July 29, 2003 @09:16AM (#6558246) Homepage
    It is not April First, is it?
    This dogmatic idea that the market is the best model for almost anything in western society is creeping into subjects where the economics laws don't apply. The other side of this is would it be insider trading violation to bet a few mil that Jordan would be overthrown and then spend a few mil backing Jordanian rebels to overthrow Jordan increasing your turn. Capitalism is good, free markets are good, but for a market in statistical data to work the participants need to be involved in the creation of the data have complete intelligence on what they are betting or trading on and have some control of their goods. The subject matters broached do not seem to give them a full free market and not being a fully free market the data will be flawed.

    It is not April the first or have I slept through atumn and winter this is just crazy.
  • Predicted in SF (Score:5, Informative)

    by AlecC ( 512609 ) <> on Tuesday July 29, 2003 @09:17AM (#6558248)
    by John Brunner, in "The Shockwave Rider", based heavily in Alvin Tofler's "Future Shock".

    The principle is called Delphi Polling. It is based on the observed fact that the aggregate answers of a large number of people sufficiently knowlegeable to understand a question seem, empirically, to be more accurate than the anwers of any one expert. Even though the answers of any one non-expert may be wildly out, the errors cancel out to a good approximation of the correct answer. Futurologists have been using it for a while to predict trends, and it works better than tea leaves, crystal balls and just plain "informed opinion" i.e. guesses. The USN even tried it with flying a plane, and it worked there too.

    • Re:Predicted in SF (Score:3, Informative)

      by xyzzy ( 10685 )
      The US Navy didn't try it *flying a plane*, they tried it *finding* a plane -- specifically, one that had crashed in the Atlantic near Spain, if I remember correctly, with an atomic bomb inside! The success of this approach was detailed in the book "Blind Man's Bluff", about the Navy and Submarines:
    • by ryanvm ( 247662 ) on Tuesday July 29, 2003 @09:46AM (#6558506)
      Yeah, it's also called "Poll the Audience" on Who Wants to be a Millionaire.
    • Re:Predicted in SF (Score:3, Interesting)

      by mseeger ( 40923 )

      "The Shockwave Rider" is probably one of the most far sighted books ever written. It is really spooky what John Brunner envisioned in 1973. He predicted the PC, the Internet, Worms and Viruses, Online Identity Theft, Gene-Engineering etc. It always gives me a shudder to read that book.

      If you ever see a copy around: buy it! It gets reprinted only very rarely. Look on ebay. Just got a "first edition" print for 5 bucks.

      Bye, Martin

  • by plcurechax ( 247883 ) on Tuesday July 29, 2003 @09:19AM (#6558264) Homepage
    This sounds like it could be abused to become a BlackNet []

    an experiment in information markets, using anonymous message pools for exchange of instructions and items. Tim May's experiment in guerilla ontology.

    Or actually a bit more like Jim Bell []'s Assassination Politics [], which is a scheme that allows murder for hire under the pretext of a lottery.

  • This disgusts me. (Score:4, Interesting)

    by Jonsey ( 593310 ) on Tuesday July 29, 2003 @09:19AM (#6558266) Journal
    Holy Crap.

    That's disgusting.

    And, on a lighter note: Think of the money you can make taking exotic vacations and causing havok! Insider trading laws be damned, this could be a wonderfully abusable system.

    God, I hope this is a joke.
  • by Anonymous Custard ( 587661 ) on Tuesday July 29, 2003 @09:20AM (#6558277) Homepage Journal
    Ok, our stock markets are filled with lies, greed, and wild speculation. Let's fix that before we apply the same model to something that could take us to war!

    "The new approach is to set up, as it were, a `market' in two kinds of futures contracts -- one pays $1 if an attack takes place; the other pays $1 if there is no attack, DARPA said."

    I mean, holy shit dude! Rich guys putting bets on whether we'll go to war, then working behind the scenes to make sure it happens, so they get some profit! Christ, every day, I don't understand why I still live here.
    • I can buy a lot of options contracts on someone like say Lockheed on the basis that, for example, there may be another Middle East war (Syria, Iran, whatever). I can then hedge my holding with 'peace' contracts bought on this exchange.


  • by BTWR ( 540147 ) <americangibor3@y ... inus threevowels> on Tuesday July 29, 2003 @09:20AM (#6558284) Homepage Journal
    The reason why this is sick is because next time you read that some coward terrorist decided to blow himself up on a Tel Aviv bus, killing him/herself and 15 schoolchildren, a gambler somewhere will go make himself a cool $50 because he "bet" on this.

    It is indeed a sick world when the response to a suicide bombing is "YES!"
    • by ryanvm ( 247662 )
      It is indeed a sick world when the response to a suicide bombing is "YES!"

      Uhh, it was already a sick world. How do you think the terrorists are responding?

      Anyway, the key point here is that since 2/3 of the "gamblers" predicted this bombing, the government was better prepared for it.

      Sticking your head in the sand and pretending that crazy assholes aren't killing people doesn't make it so. Any tool that doesn't hinder my rights and serves to make the world a safer place is definately worth consideration.
    • The reason why this is sick is because next time you read that some coward terrorist decided to blow himself up on a Tel Aviv bus, killing him/herself and 15 schoolchildren

      So you're saying when we kicked those "terrorists" out of their houses and told them new people were living there, they have no right to fight back? If I kicked you out of your house, told you to go somewhere else, and I was gonna kick back on your couch and watch your plasma screen, you wouldn't be at all angry? And then when you we
    • I understand your point. May I play devil's advocate for a moment?

      Wouldn't this market be the same thing as insurance? When you buy a fire insurance policy you're betting that your house will burn down.

      Isn't it likely that companies with Middle East contracts might use this to hedge their exposure? Then there'd be a swarm of speculators, which would serve the function of making sure there'd always be somebody to buy or sell a futures contract.

      The speculators would then have an incentive to study the regi
  • They want the same people who made the dot com bubble decide what happens in the middle-east?

    Just tell them about Wi-Fi startups in the middle east and they'll throw money at it...
  • Interesting idea (Score:3, Interesting)

    by Timesprout ( 579035 ) on Tuesday July 29, 2003 @09:23AM (#6558307)
    But, really there seems to be nothing people are not prepared to gamble on these days. I watched a program recently about a company the other day who took bets on whether the stock market would go up or down, same with the housing index in the UK. Despite the disclaimers this sort of gambling is tailored to those with high level insider knowledge.

    I want you all to know though then you may feel free to 'invest' as much as you want on a middle eastern state declaring me to be a messianic figure and bringing peace to the region as the first step of my journey to world domination
  • by jayhawk88 ( 160512 ) <> on Tuesday July 29, 2003 @09:23AM (#6558308)
    Isn't that a little like Greenspan running a pool betting on when and by how much the interest rates will change?
  • Another Similar Site (Score:5, Interesting)

    by ras_b ( 193300 ) on Tuesday July 29, 2003 @09:25AM (#6558321)
    there is a similar idea already running online: []

    you can buy/sell futures for most current events- for example, you can buy saddam futures based on when/if you think saddam will be captured, or you can bet on what kobe bryant will be charged with. this is a real site where you can make lose money- crazy stuff.
  • An Interesting Idea (Score:3, Interesting)

    by Anomylous Howard ( 666178 ) on Tuesday July 29, 2003 @09:25AM (#6558325) Homepage
    This is an interesting idea, and it should stay that way.
    I'd be afraid that if I were to bet on a longshot terrorist strike and it paid off for me, that the FBI might come knocking on my door (with a battering ram).
  • by Noryungi ( 70322 ) on Tuesday July 29, 2003 @09:26AM (#6558334) Homepage Journal
    Rumsfeld: How is it going?

    Expert: Not very good.

    Rumsfeld: What do you mean, "not very good"??

    Expert: Well... The market experts all seem to think attacking Iran is a bad idea, that staying in Iraq is a bad idea, and the probability that G.W. Bush will lose the 2004 election has reached 94.7%

    Rumsfeld: All Right! They have told us exactly what the surrender cheese-eqting monkeys don't want us to do! Therefore, let's do it!! Iran, here we come -- let's blast some mullah back to Kingdom come!

    Expert: But uh, sir...

    Rumsfeld: Great work, Johnson! Keep an eye on those Frenchies and Arabs for us, and you'll get that nice little raise we talked about! Ah, who needs the CIA when you can have contrarian web sites to point the way at the best interests of the USA?!

    [Donald Rumsfeld leaves the room with his entourage]
    • by Daniel Dvorkin ( 106857 ) on Tuesday July 29, 2003 @09:49AM (#6558534) Homepage Journal
      I'm guessing that the parent post got marked "flamebait" because it's a vicious satire of the intelligence, personality, and decision-making style of the people currently running the US government. But guess what? It's also dead-on accurate. This is pretty much a true-to-life portrayal of how Rumsfeld at al. have dealt with the intelligence community since 9/11, if not before.

      Sometimes, pointing out the foibles of those in power isn't just flamebait. Sometimes, it's called telling the truth.
  • Precedents (Score:5, Insightful)

    by Eustace Tilley ( 23991 ) * <> on Tuesday July 29, 2003 @09:26AM (#6558341) Journal
    The Iowa Electronic Markets [] operated by the University of Iowa Tippie College of Business has been n operaton since 1988 []. It has offered real-money futures contracts for U.S. and other political markets including"Control of Congress" as well as the Democratic & Republican Presidential nominee and the popular vote share, Senate seats, Russian and French Presidential contests, etc.

    Speculation can be strictly distinguished from gambling.

    The speculator makes a bet on the outcome of a risky event which would exist in the absence of speculators, such as bad weather and natural disasters.

    The gambler, finding nothing satisfactory for betting, sets up a slotted wheel, makes six-sided dice, designs cards which are identical from the back but different from the front, and then bets on what happens when these devices are randomized.

    Speculation shifts existing risk. Gambling adds to the universal total of risk.

    The Pentagon site is speculative.
  • by Llywelyn ( 531070 ) on Tuesday July 29, 2003 @09:30AM (#6558367) Homepage
    This is a way for the government to tap the expertise of people who do analysis of the middle east and other areas of the world. It is essentially opening the field to experts who, while they might not have insider information, might have a good "gut instinct" for what's going on.

    The Pentagon believes that knowing the probabilities that these people assign to different events will help them predict the likelyhood of those events (if I am reading this correctly)--there is something to be said for that.

    As another poster pointed out, this is a kind of gambling. What the Pentagon is interested in, however, is not making money off of it: they want to know the probabilities that people are going to assign.

    Will it be useful? Who knows. It has the potential to be and they think it is worth the cost of running such a service, I say let them. I'll be as interested in anyone in seeing how closely these predictions matrch reality.
  • by StressGuy ( 472374 ) on Tuesday July 29, 2003 @09:40AM (#6558452)
    I am now offically embarassed by the actions of my country.

    I wasn't totally behind Gulf War II as my opinion is that if it's UN sanctions, then it needs to be a UN call. OTOH, I am totally willing to acknowledge that there is probably a lot about this I don't know and, therefore, chose to try and keep an open mind.

    This however, is basically a country-wide "office-pool" on tragedy. At absolute best, its a ham-handed attempt at data-mining the population and even that is ethically "iffy" in my opinion.

    Have we really sunk that low? Damn, I can't even watch prime time TV anymore because lately its all "reality game shows" where people are encouraged to screw each other over for fun and profit. This move by DARPA makes all that look like episodes of "Father Knows Best".

    Sorry for the rant, it's just my initial reaction to this article. Maybe there is something about this I'm not understanding....I sure the hell hope so.

  • FutureMAP (Score:4, Informative)

    by Cplus ( 79286 ) on Tuesday July 29, 2003 @09:42AM (#6558468) Homepage Journal
    Here's DARPA's [] FutureMAP website [] which explains a little more about the idea than the article did. Note that this is a follow-up to a previous, similar program.

  • Precedent? (Score:3, Interesting)

    by Quixote ( 154172 ) on Tuesday July 29, 2003 @09:42AM (#6558470) Homepage Journal
    In the days before September 11th, unknown parties shorted US Airlines stocks [].

    Maybe someone at the Pentagon is trying to learn from this? Remember, greed makes people do stupid things. If some low-level operative knew of an impending attack, s/he might be tempted to make a quick buck on this "futures market".

    Theoretically, it seems like an interesting idea (aside from the various moral/political aspects).

    The question is: why the Pentagon? Couldn't they have just used a shell company to do this, and accessed the realtime data?

  • by adzoox ( 615327 ) * on Tuesday July 29, 2003 @09:53AM (#6558565) Journal
    Actually I would like to see a checkbox on a 1040 form (just as there is one for presidential election campaign funds) for Terrorism funding.

    I would like to see voting for tax dollars spent anyway. This would tell how truly popular/provisional government programs are:

    Give a multiple choice at the end of each state and federal 1040:

    I would like my first 10% of taxes paid to go towards the ________ fund

    I would like my second 10% to go towards the _________ fund

    and so on.

  • by ThinWhiteDuke ( 464916 ) on Tuesday July 29, 2003 @09:54AM (#6558568)
    This could work as an anonymous bounty pool.

    Think about it, you're a terrorist or just someone who's heard about some terrorist act. Sure, you could walk to the closest US embassy and tell the CIA representative what you know. But this option has many drawbacks. You don't know how the CIA guy will reward you; and if someone sees you entering the US embassy, you're history.

    Now with this system, you just connect to the net, bet $100 on "suicide bomber blows Knesset" (for instance); and anonymously reap your 10 or 100 thousands.

    But since the purpose of this program is to prevent terrorist attacks, they have an issue here. What happens if your bet on "suicide bomber blows Knesset" warns Israeli security and enables them to prevent the attack? Do you still win? If so, what defines the ocurrence of the attack that you predicted? Who decides? If not, the system won't work since betting on some event will reduce its probability.

    But the main issue is anonimity. You need to be sure that you can place your bets and collect your cash anonymously. Nobody wants his house to be targeted by a tomahawk missile. And who will trust the Pentagon's terms and conditions?
  • by Randatola ( 527856 ) on Tuesday July 29, 2003 @10:02AM (#6558637) Homepage
    Look at the Iowa Electronic Markets [], where people bet real money on the outcome of presidential elections and so forth. It has generally been more accurate than any poll. (Last presidential election was a rather unusual case)

    The book Blind Man's Bluff [] also gives a detailed account of how the lost submarine USS Scorpion was located. All the experts could only narrow it down to a 20 mile radius. With no other options, they resorted to taking real money bets from other submarine commanders on the probabilities of different scenarios. Result? The submarine was found within a couple hundred yards from where they guessed.

    Can you imagine some Navy officer going to his superiors at the Navy and explaining that we're going to try and find a submarine by having a betting pool on it? It sounds completely insane, and personally I can't believe anyone had the balls to suggest it. But it works. When people have a skin in the game, they tend to give their best, most honest appraisal. If it was up to me, I would require intelligence analyst types to participate in this kind of thing.

  • Missing the point (Score:5, Insightful)

    by QuackQuack ( 550293 ) on Tuesday July 29, 2003 @10:17AM (#6558804) Journal
    It's amazing how the majority of /. readers miss the point of this system.

    Futures-type markets are remarkably good at predicting future trends because they are essentially the consenses of thousands of people, who are confident enough in their outlook to put money on it. Because of this, the Pentagon launched this research project to see if they could harness that power in predicting terror. The point is not to make people rich off of terror attacks or assassinations, the point is to try to know where to focus your efforts in preventing such an attack.

    Now as to whether it will work, who knows? If the investors know that the goal is the prevention of the events, therefore no payoff, will they put up the money? How will individual investors know the likeliness of various scenarios if they don't have access to top-secret intelligence, so therefore how accurate can they really be? It remains to be seen.

    But again, this is only a RESEARCH project, to see if such a system is feasible, it isn't like we're betting the future of terror prevention on this.
  • by KjetilK ( 186133 ) <> on Tuesday July 29, 2003 @10:23AM (#6558840) Homepage Journal
    I think I could be pretty good at this, it is a long time since I predicted that the US would go in and finish what the Soviets couldn't in Afghanistan.

    The problem is, what I would want to happen is not often what I expect will happen. Give me a real way to influence policy makers instead, and I'll be much more happy.

  • by telstar ( 236404 ) on Tuesday July 29, 2003 @10:35AM (#6558950)
    I once saw an episode of COPS where they sent out contest-winning announcements to people they'd been trying to arrest for awhile, but never seemed to get able to get their hands on. The people gladly showed up to claim their prize where they were promptly arrested.

    Post 9/11 there was a lot of evidence indicating that there had been a great deal of activity short-selling holdings in the airline industry. 9/11 happened ... shares were repurchased at a drastically lower price ... and terrorists probably gained financially from information they had about the upcoming events.

    Translate that to this futures market. The very nature of this market can serve as an indicator for future terror events. Every major investments will serve as a lead for investigators to track where the money is coming from to see if there are terrorist ties. The feds may be allowing the average Joe to gamble on terrorism, but they're also opening the door ... waiting for the terrorists to come claim their prize.
  • by razvedchik ( 107358 ) on Tuesday July 29, 2003 @10:55AM (#6559117)

    Why does this sound eerily like a government-sponsored version of Assassination Politics [], the piece written by cypherpunk/crypto-anarchist Jim Bell, who is now suing the government under RICO to get his freedom because they conspired against him?

    Basically, his idea is the same thing, except people would be buying futures on the death of political personalities. It's strange, it's a bit fringe, it's not liked by the government except for when they use it for their own plans.

  • by Goody ( 23843 ) on Tuesday July 29, 2003 @11:20AM (#6559435) Journal
    The oil isn't going to last forever. This is a perfect investment opportunity for rich Saudis funding the terrorist activities. Talk about win-win -- kill infidels and make your money back, courtesy of the US government.

    1. Train fanatics in suicide bombing
    2. Invest in appropriate futures
    3. Execute the attack
    4. Profit !!

  • It occurs to me that since international events often impact stock prices, people interested in mitigating the risk to their investments could use this market to hedge. For example, if I have a big stake in a company whose fortunes would be adversely affected by terrorism in Israel, I could place a bet *for* terrorism in Israel. That way if it happens, my losses in the stock market will be partially offset by my profits from this futures market. If it doesn't, I'm out the money I put into the futures market, but that's the nature of a hedge.

    My bet on terror in Israel will probably also alter the odds on that issue, which may encourage the U.S. (and others) to work harder at preventing incidents in Israel, which is good for my investment. As such, a market like this will probably encourage the U.S. to work harder to manage threats which are financially dangerous, rather those which are dangerous to people. I'm not sure that's where we really want to go, but then again I doubt this market would be used as the sole basis for decisions, and it could be useful as long as its biases are understood.

    As others have said, the real problem here is what happens when bettors have the ability to influence the outcome of their bets. Terrorists could potentially fund their operations by betting on long-shot attacks and then carrying them out. The dynamics of that would be interesting in an intellectual sense:

    • Wouldn't long-shot targets be those that are either very hard to hit, or of very low value (to the terrorists)? Would such bets lead terrorists to attempt foolhardy attacks, increasing their odds of failure and capture? It seems like encouraging terrorists to attack hard or non-politically-beneficial targets would be good for the world, assuming it worked.
    • Would the market be big enough that the terrorists could bet enough money to make it worthwhile without triggering heightened awareness and counterterrorism measures?
    • In general, could the terrorists bet at all without "telegraphing" their attacks?
    • Could they place bets to manipulate the market, using it to spread disinformation? (Doesn't seem likely, assuming the rest of the market is relatively efficient).
    • Would they dare place bets, or would they fear that those bets would be used as a trail to track them down in the event an attack occurred.
    • Would they find it useful to bet against attacks, raising funds by not doing anything? Since there are many groups of terrorists, would they actively try to stop each other from doing anything to damage their investments.
    • Since they're obviously not reachable by any regulatory body, could the terrorists benefit from bold-faced market manipulation? For example, if the odds were high for a biological attack on Israel, they could bet against the attack, then annouce that they have formed a coalition of all of the terrorist groups capable of carrying out such an attack, and that none of them will do so. This would lower the odds on the attack (if anyone believed the announcement). For that matter, they could cash out their bets "against", place a bunch of bets "for" at now-better odds and then announce that they changed their minds, or just carry out the attack, perhaps even using funds obtained by manipulation.

    The answers to those questions might be interesting, but the potential cost of "wrong" answers, in terms of lives and property, could be huge. Speculators trying to make a quick buck voting against terrorism or investors trying to hedge against terror-derived risks could actually end up *funding* the mayhem.

    I suppose one way to mitigate this risk would be to carefully vet all potential bettors and verify that they have no potential ties to terror. This wouldn't be completely foolproof, but if done right it would pretty much eliminate the risk of terrorists profiting from the market in a big way. The cost of doing it right, however, especially if the pool of bettors is worlwide, would be staggering.

    There are so many implications and counter-implications that it seems impossible to predict with any accuracy what the effect of this system will be.

    Perhaps we should bet on it?

In less than a century, computers will be making substantial progress on ... the overriding problem of war and peace. -- James Slagle