Science Plugs into Prediction Markets

Over the weekend, Warner Brothers released a science-fiction thriller serendipitously 

timed to feed off public fascination with a real-life scientific breakthrough. Biologist

Craig Venter announced May 20, to equal praise and alarm, that he had inserted

synthetic DNA into a living cell.

Then came Adrien Brody on the big screen in  Splice. He gets a little reckless splicing

together animal and human DNA — and this is hardly a spoiler alert — he discovers

he can’t control his creation.

“It was an interesting juxtaposition with science and science-fiction,” said David

Rejeski, who directs the Woodrow Wilson Center’s Science and Technology 

Innovation Program. As such, the film’s debut offered the ideal opening experiment

for STIP’s latest endeavor: a prediction market for science and technology questions

that range from near-term bureaucratic events (when will the FDA approve the next

oral antibiotic?) to far-off fantasy (who will make the first breakthrough with real

“artificially intelligent” machines?).

In the spirit of the moment, STIP asked its following of science and tech enthusiasts

last week to place a bet with virtual dollars in an online prediction market posing this

question: “How much money will the film ‘Splice’ gross domestically during its

opening weekend?”

B y the time the market “closed,” the leading prediction among several hundred bets

 was $5 million to $10 million.

  Alas for Adrien Brody — but to the credit of all the people who bet against him —

 Splice made a mere $7.5 million at the box office.

STIP’s prediction market is now turning the experiment to more monumental

questions. Which Millennium Prize math problem will be solved next? When will the

total number of known exoplanets reach 500? And as for that real “artificially 

intelligent” machine, will the breakthrough come from the entertainment industry,

toy makers, airlines, a random private inventor, government, the auto industry or

academic teams? (The leading opinion, as of Wednesday: academic teams.)

 

 

THE IDEA 

LOBBY 

Miller-McCune's

 Washington

correspondent

Emily Badger

follows the ideas

informing,

explaining and

influencing

government, from

the local think tank 

circuit to academic

research that

shapes D.C. policy 

from afar.

re ct on mar ets aggregate evo v ng op n on n t e same way t e

stock market does (albeit with virtual currency — to use real money 

  would constitute gambling). They’ve been used with success to

predict elections and to aid businesses in forecasting future events

like stock volumes and new product sales.

The U.S. government has even attempted to apply prediction markets

  before, although the lone foray was mostly a PR disaster. In 2003,

the Pentagon tried to set up a market to predict future terrorist

attacks.

“It basically ended up in the news as ‘Pentagon Plans Online Terror

Bets,’” Rejeski recalled. That project was scrapped, and government

has shied away from the idea ever since.

But no one has ever really applied the model to science and

technology questions before. And if the Woodrow Wilson Center

perfects the technique, currently with the help of a grant from the National Science

Foundation, perhaps these tools could be used one day to inform policymakers.

For now, Rejeski is interested less in the predictions themselves than in how to make

the market work.

“The biggest issue for us, and it’s a cutting-edge issue, is can we get people to play in a

science and technology market?” Rejeski said. “If we can’t get them in there, the rest

of this stuff becomes kind of irrelevant.”

The project is building up to a market that will open later this summer specifically 

around synthetic biology, one of STIP’s core interests. The emerging discipline draws

on experts who don’t typically work together, from biologists to engineers to

computer scientists. And so a prediction market may be a good place to corral their

expertise.

The field of synthetic biology also lends itself well to the quantifiable questions

necessary to run a prediction market: How many genes can scientists put together?

Can they create a synthetic organism that will allow us to produce hydrogen fuel?

 When will that happen?

  While people are mulling those questions, Rejeski is trying to answer many of his

own: Can you get people interested in a prediction market when there’s no real

money on the line? Can you identify the people who seem to be better at this than

 

others? And how do you keep people in the game when the really big questions won’t

 be answered for months, or even years?

“The goal here is to make it a fun experience,” Rejeski said. “The secondary outcome

is you might get some good predictions because people know stuff.”