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Berg, Rietz Comment on Policy Market

In an extraordinary day in Washington on Tuesday, a government-backed futures market aimed at predicting terrorist attacks and other events was both revealed and then cancelled. The Policy Assessment Market aimed to predict events relating to U.S. interests in the Middle East by encouraging anonymous investors to speculate in an online futures market. Using futures markets to predict future events is not new. US presidential elections have been analysed by the IOWA ELECTRONIC MARKETS (IEM) since 1986. It claims to be twice as accurate as pundits. THOMAS RIETZ, a director of the IEM, is doubtful speculators would really have provided helpful intelligence. When betting on presidential elections, he says, people can use their network of friends, family and workmates to form an opinion - that would not be the case for terrorist activity. JOYCE BERG, also a director of the IEM, believes PAM would have been worth a try: "I think that we need more ways to gather information. This project was a possible way and the only way to find out if it can work is to test it."

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