July 30, 2003 | Bloomberg.comAt first blush, it seemed like a goofy idea, which is probably why it was scrapped: a Pentagon initiative allowing folks to make trading bets on terrorist attacks in the Middle East. The Defense Department planned to harness the collective wisdom of the market to tip intelligence agencies off to any brewing coups, assassinations or other terrorist machinations. What the Pentagon intended to do with such information was unclear. "My first reaction was, trade in what?'" says, ROBERT FORSYTHE co-founder of the Iowa Electronic Markets, run by the University of Iowa Henry B. Tippie College of Business, where participants have been able to make on-line bets on political outcomes (elections), company earnings and stock market returns since 1988. Had the Pentagon plan come to fruition, it would have been the first time taxpayer dollars were used to finance what Congress thought was off-track betting (in the literal sense). The Pentagon had asked for $8 million through 2005 to set up the project, known as the Policy Analysis Market (PAM), to focus on ``economic, civil, and military futures of Egypt, Jordan, Iran, Iraq, Israel, Saudi Arabia, Syria, and Turkey and the impact of U.S. involvement with each," according to the web site. "It's unfortunate that it's being labeled as a harebrained scheme,'" Forsythe says. "There may have been good reasons not to proceed, but I wish there had been a good dialogue on the pros and cons in this case."
Contact: Robert Forsythe