[extropy-chat] Re: peak oil debate framed from a game theory standpoint ?

[Brian Atkins]

Robin Hanson wrote:
> At 12:27 PM 9/7/2005, Brian Atkins wrote:
> 
>>> So why are you not speculating in these markets to make all the money
>>> you think is there to be taken.  Or are you also one of those fools?
>>
>>
>> I'm sure there are plenty of "peak oilers" who are indeed already 
>> spending their own money on futures, although I bet they also are 
>> stocking up on gold and other end-of-the-world items.
>>
>> However, they seem to still be a small minority of the overall market. 
>> The key question in my mind is: how useful really is it to look to the 
>> current futures markets as key predictors of peak oil when it seems 
>> that the majority (or "big money") players seem to trade based on a 
>> six month or at most year out view?
> 
> 
> The percentage of traders who think about a certain issue is just not an 
> indication of how well market prices reflect that issue.  That is just 
> not how these things work.  All it takes is for a small minority to 
> think about the issue, and for everyone else to have no opinion on the 
> issue.  Almost all relevant issues are only considered by a small 
> fraction of traders.  That is good - it allows a division of 
> intellectual labor.
> 

Well, my question was more like: I don't think everyone else is opinion-less; 
rather, I think they have an opinion based on current data and near term 
projections going out maybe a year, but after that they aren't using farther out 
guesses to significantly alter their current opinion/trading.

Essentially, they have a strong opinion that they aren't interested in trying to 
trade based on guesstimates that are that far out in time. They may rightfully 
decide that information that far out in time (12 months+) is too unreliable to 
use for trading. Therefore the market may potentially "wait" until closer to an 
event before significantly pricing it in.

Is there any economic research to support such a market hypothesis? If not, what 
causes the typical 6 to 9 month limitation on the stock/bond markets pricing in 
a recession?
-- 
Brian Atkins
Singularity Institute for Artificial Intelligence
http://www.singinst.org/