Last summer, a furor erupted over the Pentagon’s plans for funding—through the Defense Advance Research Projects Agency—a futures market in which participants could bet on the possible occurrence of various geopolitical events in the Middle East, including terrorist attacks. Such betting markets have been shown in the past to produce more accurate forecasts than polling or expert analysis. The Policy Analysis Market was quickly dubbed the "terror market," and many opponents thought the whole thing sounded positively ghoulish. Under political pressure, the Pentagon canceled funding for the project. But what should I find when I recently clicked on www.policyanalysismarket.com? The "terror market" is back, though in a new form. Here is a posting from November 17:
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"The intended March 2004 launch of the Policy Analysis Market has sparked some interest of late. Some comments and clarifications are in order:
"1. The Policy Analysis Market that is to be launched in March 2004 will not engage in the trading of terrorism securities, or any other securities directly linked to violent acts.
"2. No government money is involved.
"3. No government agency is involved.
"4. No government agency has been contacted in regard to the March 2004 launch of the Policy Analysis Market (and none have shown any interest).
"5. No individual currently engaged in government service or formerly engaged in government service is involved.
"6. No laws regarding securities trading or gambling will be violated."
It looks as if the most fascinating aspect of the Policy Analysis Market—the betting—has been stripped away, but it will still be interesting to see if the market can provide insights into the political and economic direction of the Middle East.
