Policy Analysis Market

Paper Summary:

The paper discusses the Policy Analysis Market, a revolutionary concept that combined the market economy, stock exchange rules and trading with geopolitical and geostrategical issues, especially based on the conflicts in the Middle East. The paper relates that this market was too exposed to the manipulation of terrorists that could use PAM as the best way to fund their actions. The paper also shows how the basic idea of betting that something bad will happen in the Middle East and of wanting an unfortunate event to occur so that one could gain on the futures market was something that was deemed by many to be deeply immoral and unethical.

From the Paper:

"As a short history, in 2000 Michael Foster convinced Defence Advanced Research Projects Agency about the importance of this kind of studies so that in 2001 the funding for these programs began. The funding should be made in two Phases. As a first negative result is that in Phase 1 after several studies and trades on different markets, a group of students used a complex simulation for a few days in which they made real money, but the result was a failure. The official site used as main images some violent acts with known political personages as the assassination of Arafat and the North Korean attack and this already brought the project in somewhat of a dark light, because it emphasized the bleak aspect of the project, its concentration on predicting assassinations and terrorist acts. On complaints from US senators, on July 29, 2003, the project was stopped."

Sample of Sources Used:

• Policy Analysis Market. On the Internet at http://en.wikipedia.org/wiki/Policy_Analysis_Market. Last retrieved on December 9, 2006
• Hanson, Robin. The Informed Press Favored the Policy Analysis Market. August 2005. On the Internet at http://hanson.gmu.edu/PAMpress.pdf. Last retrieved on December 9, 2006
• Khallow. The Policy Market Analysis. August 2003. On the Internet at http://www.kuro5hin.org/story/2003/8/13/33840/2554. Last retrieved on December 9, 2006
• Pennock, David M. Commentary: The Good Side of the 'Terror Futures' Idea (Yes, There is One). 2004. On the Internet at http://dpennock.com/pam.html/. Last retrieved on December 11, 2006
• Alan S. Gerber and Eric M. Patashnik, eds., Promoting the General Welfare: New Perspectives on Government Performance, 151-173, Brookings Institution Press, Nov. 2006. Chapter 7 - Robin Hanson: Decisions Markets for Policy Advice. On the Internet at http://hanson.gmu.edu/impolite.pdf. Last retrieved on December 9, 2006

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