Before discussing the new Hypermind NGDP futures market, let me mention that the donations to iPredict are now coming in. As I mentioned in earlier, there was a glitch in the process for a few weeks due to the fact that (for tax reasons) donations in the US must go through several layers of bureaucracy. If you planned to donate and were frustrated a few weeks back, please try again. All the information including the correct contact address are included in this post. I plan to complete the donation process in mid-January, and start the program with whatever funding we have received by that time.
Gabe Newell (CEO of Valve) has generously donated $10,000 to Hypermind, and they plan to run 5 markets, 2 of which are now up and running. The plan is to have 4 quarterly GDP prediction markets, 2014:4, 2015:1, 2015:2, 2015:3, and one annual market; 2014:4 to 2015:4. The first quarterly market currently trades at 43, which means 4.3% expected (annualized) NGDP growth in Q4. The annual market began just minutes ago, and is the one I’m most interested in for monetary policy evaluation purposes. For that reason, the total prize money in the annual market is 4000 euros (about $5000), whereas each quarterly market offers prizes of $1000 euros (about $1250.)
Update: Actually all five markets are now running.
This is not gambling, as you do not put up your own money. Thus it is perfectly legal for Americans, but you do need to go through a brief registration process. You can’t get rich doing this, but I’m told the winnings are skewed, with some individuals winning much more than the average.
Here is the way Hypermind describes the payoffs:
Cash rewards are based on a fixed EURO amount and translated in US Dollar according to the current exchange rate.
A contest’s cash reward is split among the participants pro rata of their performance in the contest. For instance, if Jane achieves twice Joe’s performance, then Jane receives a share of the reward that is twice as large as Joe’s. Only the participants who made a profit in the contest can share in the reward. The sharing formula is detailed in Article 7 of the rules.
Your cash earnings are cumulative across contests. You can request a payment at any time in the form of Amazon Gift Certificates. The amount is of your choosing, with a minimum of 20 USD.
So you can win money, but you can’t lose. And you would be helping to save the world economy by supporting a demonstration project for NGDP futures. Note that this market is not intended for the general public, but rather for people who are well informed on the issue. Readers of this blog are some of the most well-informed individuals on NGDP.
PS. I’d like to thank Emile Servan-Schreiber at Hypermind for helping to create the market.