Requesting donations for a new Hypermind NGDP prediction market

Several years ago, I raised money for two experimental prediction markets, one at Hypermind and the other at iPredict. The iPredict market ran into problems and was unable to continue. The donated money was returned. Based on what I learned from that experiment, I’m ready to try again.

This time there will be only one market—Hypermind—and only one contract, a one-year growth rate contract, the growth rate of nominal GDP from Q1 2017 to Q1 2018. Because the one-year contract is of more macroeconomic interest, this time around I’d like to focus all our resources on that single contract. It will be called “U.S. Nominal GDP: Trump’s 1st year”, as it will be one way of thinking about the “reflation trade”, that is, the idea that Trump’s policies would boost both RGDP growth and inflation.

Mercatus has a bit over $10,000 to start the ball rolling. This will be sufficient to pay $5,000 to Hypermind to set up the prediction market, with the remaining $5,000 going to a prize fund to incentivize people to participate.

Our goal is to have many, many more participants than last time in order to really boost liquidity in what is an admittedly niche market. I think that a significant prize pool would bring people onboard, and would establish this kind of market as a credible mechanism going forward.

This is where you come in. The more money raised, the bigger the prizes offered to winners, and the more liquidity in the markets.

We need to raise money for this project because Hypermind traders cannot invest any of their own money. That aspect of the prediction market allows it to avoid running afoul of either SEC or anti-gambling regulations. No money is gambled, and no money is invested. Instead, money is donated, and through successful predictions, traders are able to win money. And the more money we can raise, the more and bigger prizes we can offer to participants.

People interested in donating money can send it to the (non-profit) Mercatus Center at the following address:

Mercatus Center at George Mason University
Attn: Dan Butler
3434 Washington Blvd, 4th Floor
Arlington, VA 22201

And of course we’ll accept wire transfers and the like. If people want to give online, they can go to https://www.mercatus.org/support/moneyillusion and put “POMP” in the “Gift Instructions” box. Paypal donations can be made by making a gift to the email donations@mercatus.org. Bitcoin donations can be made through the button below.

Donations will be invested in this Mercatus project with Hypermind. All contributions are tax-deductible, and you will receive the appropriate receipt for your records. Note that a donation is not required to participate in the Hypermind market, nor does a contribution confer any special privileges. But you would be helping us attract more traders, hopefully leading to a more efficient and dynamic market.

Thank you in advance for your support.

Donate Bitcoins


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31 Responses to “Requesting donations for a new Hypermind NGDP prediction market”

  1. Gravatar of H_WASSHOI H_WASSHOI
    22. May 2017 at 05:20

    (memorial comment)

  2. Gravatar of H_WASSHOI H_WASSHOI
    22. May 2017 at 05:44

    how about bitcoin donation?

  3. Gravatar of Sam Sam
    22. May 2017 at 06:28

    Like H_WASSHOI, I would also be interested in donating via bitcoin.

  4. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    22. May 2017 at 06:36

    Scott, have you tried a crowd funding platform?

  5. Gravatar of copans copans
    22. May 2017 at 07:03

    Even having a Paypal option would make it much more likely for many (read “me”) to donate.

  6. Gravatar of Cloud Yip Cloud Yip
    22. May 2017 at 07:19

    Any online donation methods? It seems to be a bit difficult for me to send money to Mercatus Center from outside the US ~

  7. Gravatar of XVO XVO
    22. May 2017 at 07:25

    What about PredictIt(predictit.org)? They seem to be able to operate in the US legally.

  8. Gravatar of XVO XVO
    22. May 2017 at 07:26

    And they should be able to structure a contract that doesn’t require an initial investment, as they do with multi-candidate elections.

  9. Gravatar of David R. Henderson David R. Henderson
    22. May 2017 at 08:46

    I don’t follow. Can you bet money or not? If not, why would people have the right incentives?

  10. Gravatar of Matthias Görgens Matthias Görgens
    22. May 2017 at 09:01

    Thanks for setting this up. I am seconding the other commenters. Especially for us unAmericans options beside mailing cash might be useful.

    Crowdfunding might be interesting: they already did the legwork for setting up the payment options.

    Btw, getting ‘the other Scott’ to mention this effort on SlateStareCodex might be useful, if you can convince him?

  11. Gravatar of Scott Sumner Scott Sumner
    22. May 2017 at 10:14

    Thanks everyone. I am not particularly skilled at these logistical questions, so I will pass them along to Mercatus. If Mercatus is not able to set up these options, I suppose we could look at a direct Hypermind option, although I don’t know if that is tax deductble. I’ll try to get back to you in a few days.

  12. Gravatar of Scott Sumner Scott Sumner
    22. May 2017 at 10:16

    David, You bet play money. At the end of the contest the people who most successfully trade contracts with play money are awarded real money prizes. So you can win by forecasting accurately, and the worst case is zero profit. So there still is an incentive.

  13. Gravatar of Major.Freedom Major.Freedom
    22. May 2017 at 11:39

    What incentive is there to “donate” (the source of the “money prizes”)?

    The donors will incur a guaranteed nominal loss of -100% (everything).

    Gift giving charities offer the value of such things as the donors knowing they helped a child go to school, or being provided medicine. What is the (similarly exclusive) value being offered to donors to Hypermind?

    Is this really a “market”, given that it isn’t competing in offering goods and/or services to buyers?

  14. Gravatar of Christian List Christian List
    22. May 2017 at 12:01


    We need to raise money for this project because Hypermind traders cannot invest any of their own money. That aspect of the prediction market allows it to avoid running afoul of either SEC or anti-gambling regulations. No money is gambled, and no money is invested.

    This looks like a typical example of overregulation and government overreach. A really good NGDP prediction market could save the world and those f-tards are regulating it to death before it even started.

    I appreciate the effort very much but without betting real money this “market” might have problems with liquidity, accuracy and so on. I hope I’m wrong.

    I assume for example that you bet very differently with play money than with real money. You can observe this in online poker as well. For example with play money there’s just no loss involved and no real shorting either. Pretty much the same flaws of “voting markets” a.k.a. elections. Flaws that you like to mention when we asked why an “idiot” like Trump could win the elections.

  15. Gravatar of vak vak
    22. May 2017 at 12:32

    Why not circumvent (arbitrage?) regulation altogether and post this on betfair?

  16. Gravatar of dtoh dtoh
    22. May 2017 at 14:54

    Scott
    As I have said many times, a futures market is not the way to go… and it is very difficult to set up. (I’m not making this up. As I have mentioned before, in a previous life I worked on this to the extent of negotiating directly with the Chairman of the CME.)

    Furthermore, if you have to give stuff away for free or worse, pay people money to use something, it should give you a clue that there is something fundamentally wrong with the underlying concept.

  17. Gravatar of The new Hypermind NGDP futures market, by Scott Sumner – Indilens Times | Indilens Times The new Hypermind NGDP futures market, by Scott Sumner - Indilens Times | Indilens Times
    22. May 2017 at 15:19

    […] Requesting donations for a new Hypermind NGDP prediction market […]

  18. Gravatar of Benjamin Cole Benjamin Cole
    22. May 2017 at 15:21

    Scott Sumner–great idea.

    PayPal yes!

    If Mercatus cannot set up a PayPal account, please can you set up a personal PayPal account and I will send the money to you.

  19. Gravatar of Sam Sam
    22. May 2017 at 15:36

    @Major, the incentive to donate is the chance to promote the project of NGDP futures. Much like the incentive to donate to Against Malaria Foundation is to get bednets to poor people and hopefully prevent disease. Small steps to a better world.

  20. Gravatar of Major.Freedom Major.Freedom
    22. May 2017 at 16:49

    Sam,

    If I had $500 to donate, I should choose Hypermind over Against Malaria?

    Give me a reason to make that choice

  21. Gravatar of J Mann J Mann
    23. May 2017 at 06:16

    I’m in – good luck!

    1) The donation link wasn’t working for me – it kept redirecting me to an outlook system. I typed it in manually and it worked fine.

    2) I appreciate that Mercatus has opt-in for promotional emails. It drives me crazy when I make a one-time donation and get spammed by the charity.

  22. Gravatar of J Mann J Mann
    23. May 2017 at 06:19

    Major,

    1) I doubt anyone can tell you anything about NGDP targeting and futures market that you don’t already know, so let me say that

    2) *If you were a donor who found NGDP targeting promising*, then:

    2.1) This might provide data that would improve the proposal; and

    2.2) This might provide data that would convince academics or policy makers to do additional work on NDGP targeting or to implement some form of it.

  23. Gravatar of Bob Murphy Bob Murphy
    23. May 2017 at 06:34

    Scott,

    I promise I’m not trolling…

    I’m confused as David R. Henderson was. In a traditional financial market, people have skin in the game and that helps to yield the “wisdom of crowds” results that work so well in markets, but work poorly in (say) presidential elections.

    Are you just saying this is better than what we have now? I.e. it would be better still if true experts could put hundreds of thousands of dollars of their own money if they perceived a large mispricing of the NGDP futures contract, but letting people use this forum is still better than nothing?

    I’m sure you get my point but for others: Suppose that instead of having Google stock trade on the open market, instead we let everybody who wanted to play guess on Google’s 2017 profitability. And then at the end of the year we gave $10,000 in prize money to the person whose guess was closest. Surely that procedure wouldn’t be nearly as good as estimate of Google’s profitability as our current system.

  24. Gravatar of J Mann J Mann
    23. May 2017 at 07:03

    Bob,

    IIRC, even some limited upside potential concentrates people’s minds somewhat – there was a study that found much less partisan bias on questions if you offered a chance to win $100 by getting, say, the unemployment rate in Bush’s first year correct.

    On the other hand, people did argue that presidential markets were distorted by people either manipulating the market or betting their heart – hopefully, an NDGP futures market will be obscure enough that it mostly consists of people trying to win the prize money.

  25. Gravatar of Emile Servan-Schreiber Emile Servan-Schreiber
    23. May 2017 at 07:40

    There is actually very little data to back-up the idea that real-money markets make better forecasts than play-money market, but there is a lot of data to the contrary. One significant advantage of play-money markets is that they correlate much better wealth and past prediction accuracy. In forecasting the highest-impact recent political events in the U.K., U.S., and France, Hypermind systematically outperformed real-money markets such as IEM, PredictIt and Betfair. Even among real-money markets, those that are most regulated and constrained – IEM and PredictIt – tended to make better predictions than the largest, deepest, least constrained Betfair… Hypermind has been carefully designed to attract and retain only the most dedicated “superforecasters”, and it has an enviable track record of accuracy.

  26. Gravatar of ssumner ssumner
    23. May 2017 at 10:13

    Vak, I’d like to motivate trading by offering prizes. I don’t know if Betfair does that.

    dtoh. As I’ve said before, anyone with a better idea than me should set up their system. So far I seem to be the only one doing so, so I’ll set it up the only way I know how.

    Most of the suggestions I get are for systems that I do not know how to set up, or where I lack regulatory approval, or where I lack the funds to make the market liquid.

    You said:

    “Furthermore, if you have to give stuff away for free or worse, pay people money to use something, it should give you a clue that there is something fundamentally wrong with the underlying concept.”

    That would be true if I were trying to set up a business, rather than a scientific experiment. But I am not.

    Ben, I think you can probably pay by PayPal, contact Mercatus at the address above.

    Bob, Check out my new Econlog post.

    Thanks Emile, I quoted you at my new Econlog post.

  27. Gravatar of fxguy fxguy
    23. May 2017 at 14:31

    Scott – why not establish a legal entity outside of the USA to structure a proper market? I can recommend several jurisdictions :)

  28. Gravatar of H_WASSHOI H_WASSHOI
    23. May 2017 at 17:25

    I like the bitcoin button.

    nice UI

  29. Gravatar of vak vak
    24. May 2017 at 11:25

    Prof Sumner,

    Thanks for having taken the time to respond.

    There are economic bets on betfair (on BOE and Fed funds). There used to be more econ bets before (NFP numbers and CPI) but they withered away over time.

    I have no contact with betfair people but this shows me they are at least open to the idea of econ bets. In the UK there are no restriction on betting so this reduces the need to circumvent regulations.

    These markets really suffer from not having an active liquidity providers. I wonder if the funds you have collected would not go a longer way if you used them to act as voluntary market maker on a NGDP contract on betfair.

    Kind regards,

  30. Gravatar of Jonathan Seed Jonathan Seed
    24. May 2017 at 12:47

    I’m sure you are aware, but at least as a reminder: even with skin in the game and a robust market, the aggregate bets reflect true predictions only in a risk-free world. I can see plenty or reasons to bet on poor NGDP growth to hedge against a recession, for instance. This is the same reason option pricing doesn’t reflect true probabilities.

    Still, more information is always good so count me as a supporter.

  31. Gravatar of ssumner ssumner
    24. May 2017 at 17:42

    fxguy, I don’t want a proper market—no one would bet. I want a prediction market.

    vak, I actually tried that in 2015 with iPredict, but it didn’t work. That’s why I’m going with Hypermind this time.

    Jonathan, I agree in theory, but in practice there is almost no interest in hedging NGDP risk–otherwise a market would have been created. So this will give a pretty unbiased estimate of the NGDP expectations of participants.

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