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Oct 03, 2007


The supply of Lindens seems reasonably objective and hard to manipulate...
Unless you are a Linden employee, then your reports of M1 are whatever you wish them to be.

Unlike the prediction markets you cite, Linden Lab is a privately held firm with no audits and no accountability. There is no doubt about who gets inaugurated, but LL reports could be anything they want them to be which throws any predictability out the door. Indeed, they have perfect ability to alter any measures used by any potential "SLIC".

Picking up this gauntlet would be a fool's errand.


@ Robert

I am doing my PhD dissertation on the legal and public policy aspects of Robin Hanson's futarchy concept, which as you may know is a system of government based on prediction markets. The role of the legislative branch would be limited to determining the appropriate measure of national welfare, and the proposed laws would be automatically adopted or not based on the results of trading in the PM. I have approached Second Life about testing out a futarchy there, and am still waiting for a response. I had also approached Ted about piloting it in Arden, but that seems unlikely now in view of his recent announcement. Any suggestions? I would be pleased to e-mail you a copy of my dissertation proposal.




Gambling is banned in Second Life.


@ Ace

PMs conducted for purposes of academic research and teaching, such as the one I am doing my dissertation on, are exempt from CFTC rules. See, for example, the Iowa Electronic Markets conducted by the University of Iowa, that Robert referred to in his post. As for non-academic ones involving financial indicia, Robert has raised the hedging argument.


"...your investment comes with a serious risk: your fortunes rise and fall with the particular platform you have chosen."

The money most companies put into something like SL is sub-trivial when compared to advertising spends on traditional media. At this point, having a presence in multiple worlds isn't like the decision of whether to buy fewer spots in "The Office," or do more direct mail. It's more akin to, "Where should we host a conference." Yes, important for that event. But if it doesn't work out, you just go across the street next time.


I'd like to see something like this in virtual worlds with far more activity in them. Granted, most worlds don't offer the openness of SL. But I think this is offset by the sheer number of transactions that take place in worlds like Habbo and Audition.

I also think those worlds represent a better cross section of humanity than SL.


Thanks for the comments.

@Malachi, I agree that data reliability is a key issue. Money supply is just an example. Another possibility would be to cull data from SL itself, as there is so much that is publicly available (on land values, for example). In addition, an exchange would need to spell out what to do in case the data was changed in some drastic why by a Linden Lab policy. (This might be arbitration or cancellation of contracts and refunding of money paid).

@Ace, Peter has addressed your question just as I would have.

@Andy, this is a bit of chicken-and-egg. Why are firms investing so little now? Because they have such poor information! My SLIC proposal is hardly going to help the major players--this would just be a "proof of concept." After all, 100 lindens is only about 40 cents. But once we have more reliable data, we may be able to address this.

I am working in just this direction, with the Metaverse Market Index that will be formally announced by Christian Renaud of Cisco Systems at his keynote address at the Virtual Worlds Conference (see this Metaversed.com post for details.

@Peter, I would be very happy to see your proposal. (Before even seeing it, though, let me offer some standard advice--whatever you are planning, narrow your scope. The key to a better dissertation is almost always to do a more careful job on a more specific topic. For example, don't try to establish a futarchy in Second Life; identify one factor that is likely to alter one key element of futarchy outcomes, and then conduct research to test that theory.)


...oh, and my reply to Andy is for Darniaq too: the Metaversed Market Index will be providing data for many worlds, so eventually we could see the Habbo or even WoW Indicator Contracts too.


I'm looking in to creating a system to do this now. I'm the one the wrote www.slcapex.com and www.myllbt.com.

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