This post has been updated.
The U.S. military plans a worldwide on-line futures market to help it predict events in the Middle East. Traders could bet on the likelihood of events ranging from the overthrow of a government to the collapse of an economy or the assassination of Palestinian leader Yasser Arafat. [more]
Now, we know that for financial markets to operate properly (for good values of "properly") the participants require accurate information. The implications here--disregarding any assertions that what is being attempted may be morally wrong or not--for intelligence analysis, or even for that matter as an additional avenue for intelligence gathering, could easily be quite profound.
If this is completely opened up such that anyone is able to open an account, you're going to see a hell of lot of information flooding in. People on the ground in affected areas will be able to provide some sort of centralised indicator. Of course, there's the rather large problem of ensuring that people have access to this futures market in the first place, and I'll be the first to admit that any amount of hand-waving will magically provide 'net access to those in critical areas - it'd be easy for those backing this to devolve into a "well, of course, if we just put lots of terminals in poverty stricken areas, we can farm work out to them at dirt cheap rates and everyone's happy". But I digress.
It's this kind of collaborative filtering "let thousands of people do the hard work, so you don't have to" idea that seems to give many people involved in blogs wet dreams (mention the phrase "smart mob" and someone will try and sell you a book about it) that at first glance seems incredibly useful, but it's hard for me to tell whether there's something missing that will make it as valuable as appears.
Unfortunately, I really don't know enough economics to properly understand the mechanisms behind such markets, so I'm going to attempt to prod Brad into taking a quick look at this...
Updated 29 July 2003, 17:17 BST: BBC News is reporting that the idea has been axed by the Pentagon:
The Pentagon has abandoned plans to set up an online trading market to help predict terrorist attacks. Senator John Warner, chairman of the Senate Armed Services Committee, said he had spoken by telephone to the programme's director "and we mutually agreed that this thing should be stopped".
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