[extropy-chat] Noisy future day (was: silent night)

[Harvey Newstrom]

On Dec 23, 2004, at 7:15 AM, Robin Hanson wrote:

> It is already legal in the sense that if you spent a million dollars
> going through the usual hoops to lobby the CFTC you could do it.
> Problem is, the sort of markets can't generate enough revenue to
> pay such a high cost.  So the idea is to bring down the cost.  The
> lower the cost, the more chances a market can pay that cost.  And
> so the "more" legal such betting becomes.

What about a non-market service that does something similar?  Suppose I 
set up a research club on a website.  Anybody can sell research reports 
supporting a particular prediction.  These reports are then sold at 
whatever price the person wants to set.  People can download these free 
to review (like shareware), but are not supposed to keep them without 
paying.  A person who disagrees with a report can purchase the report 
for future reference.  All reports purchased through this website have 
a double-your-money-back guarantee.  If the prediction turns out as the 
report states, the report writer legitimately keeps all money from all 
sales of the accurate report.  However, if the prediction turns out 
wrong, the report writer must refund double the selling price to all 
purchasers, because the research turned out to be bogus and the 
prediction inaccurate.  Returning double the selling price means they 
refund the original purchase price, plus a penalty of the same amount 
for selling a flawed report with an inaccurate prediction.

Example:
I predict US troops will still be deployed in Iraq one year from now.  
I write a research paper to support my position.  I sell it on the 
research club website for $1000 a copy.  People download my paper and 
review it.  Those who strongly disagree buy it.  (I hope they write 
refutations and publish their own counter-papers, but this is not 
required.)  After a year, if US troops are still deployed in Iraq, I 
keep $1000 for every report purchased.  If US troops are not deployed 
in Iraq, I return all moneys and pay $1000 for every report purchased.  
This scheme allows me to make $1000 on every report if I am right, but 
I lose $1000 on every report if I am wrong.  Purchasers will lose $1000 
on every report if I am right, but they gain $1000 on every report if I 
am wrong.

Each purchase only entitles the user to one copy.  If they want more 
copies, they can buy as many copies as they want.  They will pay for 
all the copies or receive refunds for all the copies.  Thus, each 
person can purchase as many or as few copies of each prediction as they 
like.

Note that I am not a lawyer!  But in my non-expert opinion, this is not 
betting or investing.  You are buying copies of the report.  You are 
paying for the research.  As long as it turns out to be accurate, the 
original purchase of the white-paper stands.  If it turns out to be 
wrong, the double-your-money-back guarantee rectifies the sale of a 
defective product.  No one will lose money with nothing in return.  
Purchasers only lose money by purchasing good reports with accurate 
predictions.  There is always an exchange of money for a product, and 
the product is guaranteed to be accurate.  The purchase price is for 
the report only.  No investment, ownership, or shares of anything is 
involved.  The prices do not fluctuate or change based on demand or 
market share.  No one will buy items in hopes of selling them at a 
higher price late.  No betting or gambling in involved.

--
Harvey Newstrom <HarveyNewstrom.com>
CISSP, ISSAP, ISSMP, CISA, CISM, IAM, IBMCP, GSEC