1. MAKING A KILLING: THE ETHICS OF PREDICTING TERRORISM WITH MARKETS DR DAN WEIJERS VICTORIA UNIVERSITY OF WELLINGTON

2. COST OF 9/11 Up to 42,000 human lives ~3,000 on 9/11 ~3,000 increased road deaths post 9/11 ~3,000 coalition soldiers in Afghanistan ~3,000 civilian deaths in Afghanistan ~30,000 Taliban deaths in Afghanistan Up to 7trillion US dollars ($7,000,000,000,000) ~$100,000,000,000 lives & property on 9/11 ~$2,000,000,000,000 in stocks, tourism etc. ~$5,000,000,000,000 for war in Afghanistan Psychological costs Dan Weijers 3/12/2012 Introduction 1

3. WHAT ARE THE CHANCES OF A WMD ATTACK? Total volume >1,300 Lowest = 5% Highest = 59% Current = 12% Dan Weijers 3/12/2012 Introduction 2

4. PLAN OF ATTACK Talk Plan Prediction markets PAM Other PMs Several moral concerns Betting on death Wisdom of repugnance? Ethical assessment Dan Weijers 3/12/2012 Introduction 3 Argument Many moral concerns are non-issues or minor issues Manipulation is main worry Potential benefits are huge if it works US gov (or NATO?) should test

5. HOW PREDICTION MARKETS WORK http://www.intrade.com/v 4/markets/?eventClassId =82 http://www.intrade.com/v 4/markets/?eventClassId =82 https://www.ipredict.co.nz /app.php?do=portfolio https://www.ipredict.co.nz /app.php?do=portfolio Aggregating diverse knowledge Market aspect captures credence Pay vs. play Dan Weijers 3/12/2012Prediction markets 1

6. PREDICTION MARKETS & ACCURACY Wisdom of the crowd Marble # cow weight estimating Better than polls and experts in some domains Depends on # of participants Diversity of participants Participants access to new information Dan Weijers 3/12/2012Prediction markets 2

7. PREDICTING TERRORISM DARPA funds FutureMAP includes sub-project PAM Dan Weijers 3/12/2012 PAM 1

8. THE MAIN METHOD OF PREDICTING TERRORISM? Supposedly better than: Reports Delphi Experts Polls Dan Weijers 3/12/2012 PAM 2

9. THE FALLOUT Less than positive comments: just wrong ridiculous… grotesque, defies common sense absurd… disgusting loopiest manifestation of… belief… markets [can] solve all problems a new level of absurdity despicable… callous… retarded unbelievably stupid FutureMAP terminated asap Dan Weijers 3/12/2012 PAM 3

10. PRIVATE GROUPS TAKE OVER Future Exchange Play money Small Open to all Intrade Unlimited money Large Open to most, but not US now Ipredict $10,000 net limit on money in Small/med For NZers Dan Weijers 3/12/2012 Other PMs 1

11. INTRADE WMD TERROR ATTACK Open interest: 709 shares Open price: $1.15 11.5% Life low: $0.50 5.0% Life high: $5.99 59.9% Total volume: 1,314 shares Dan Weijers 3/12/2012 Other PMs 2

12. IT WONT WORK a new level of absurdity... almost seems a mockery of itself.Stiglitz The actual likelihood of the event can be influenced by the market price E.g. terrorists see the heat is on and reschedule their attack Open question Assume it works for this talk Dan Weijers 3/12/2012 Several Moral Concerns 1

13. FUNDING THE WRONG THING If our intelligence agencies are that incompetent, shouldnt we be more concerned with improving the intelligence than setting up some goofy-ass online casino?Blogger Greg Saunders Budget for trial of FutureMAP was 1-5 million US$ This goofy-ass casino might be what improves intelligence Non-issue Dan Weijers 3/12/2012 Several Moral Concerns 2

14. ENCOURAGING TERRORISM Most traders try to influence their investments–Sen. Daschle Could cause people to commit acts of terror to make a quick buck Less risky ways to make money Could make money from stock market anyway Non-issue Dan Weijers 3/12/2012 Several Moral Concerns 3

15. TERRORISTS WILL USE IT TO TRICK US [T]errorists themselves could… make false bets to mislead intelligence authorities. –Wyden and Dorgan Prediction markets very resistant to manipulation But maybe not for terrorist events Potential major issue Should be investigated further Dan Weijers 3/12/2012 Several Moral Concerns 4

16. FUNDING TERRORISTS Would be assassins and terrorists could easily use… clever trading strategies to profit from their planned misdeeds.–Pearlstein Paying bad guys for the greater good Paying informants Paying ransoms Its a big risk for terrorists They make their chances of getting caught higher… A minor issue Dan Weijers 3/12/2012 Several Moral Concerns 5

17. THE REPUGNANCE OF BETTING ON DEATH [T]he fact that our government is essentially setting up a terrorist bookmaking operation is despicable.–Blogger Greg Saunders Betting on death isnt new Life insurance Military spending decisions Non-issue unless… Dan Weijers 3/12/2012 Betting on Death 1

18. HOW WOULD YOU LIKE IT? Death pool Imagine a contract: On your death or assassination On a WMD attack on your city On your PMs assassination? Depends on if you were already a target Dan Weijers 3/12/2012 Betting on Death 2

19. INNOCENTLY PROFITING FROM TERRORISM Anyone profiting from successful acts of terrorism seems wrong… But many non-terrorists already accidentally profit from terrorism People who specialise in monitoring/preventing terrorism Some stocks Some businesses Accidental profiting is a non-issue Dan Weijers 3/12/2012 Betting on Death 3

20. PURPOSEFULLY PROFITING FROM TERRORISM Believing there will be a terrorist attack and deciding to profit from it Trying to benefit from an immoral act Analogy: Using Nazi medical research? Different motives: help others vs. self? Seems repugnant when done to benefit self But what is immoral about it? Who or what is harmed? Dan Weijers 3/12/2012 Betting on Death 4

21. WISDOM OF REPUGNANCE? …Or knee-jerk moralising? Person-affecting Desensitised to terrorism become terrorist? Some people would find it offensive Virtue ethics (character-tarnishing) Analogy: violent computer games? Disrespect of an important ideal Life, peace, freedom? Analogy: blasphemy? Dan Weijers 3/12/2012 Wisdom of Repugnance? 1 Shallow are the souls that have forgotten how to shudder.Leon Kass

22. MOTIVATIONS & MORAL EFFECTS Dan Weijers 3/12/2012 Wisdom of Repugnance? 2 MoralMotivations effect$$StatusFunManipulativeInformative Effect on character Induce greed, callousness, schaden- freude/mild sadism Induce pride, callousness, schaden- freude/mild sadism Induce callousness, schaden- freude/mild sadism Dishonesty, callousness, (morbid curiosity?) Beneficence Disrespect of ideals Life, peace, freedom Respect for life, peace, freedom PAM… should prove as engaging as it is informative.Official PAM website

23. THE HARMS OF PM S ON TERRORISM So PMs on terrorism could: Desensitise people to the point they become terrorists Offend some people Encourage greed, pride, callousness, schadenfreude/mild sadism, dishonesty, morbid curiosity, and beneficence Disrespect the ideals of life, peace, and freedom … just like computer games? Dan Weijers 3/12/2012 Wisdom of Repugnance? 3

24. WISDOM OF REPUGNANCE? So PMs on terrorism could: Desensitise people to the point they become terrorists Disrespect the ideals of life, peace, and freedom Encourage greed, pride, callousness, schadenfreude/mild sadism, Dishonesty, callousness, morbid curiosity, and benificence … just like computer games? Dan Weijers 4/12/2012Betting on Death 1

25. HOW SERIOUS ARE THE HARMS? Desensitise people to the point they become terrorists Very serious but very very unlikely Disrespect the ideals of life, peace, and freedom Not very serious (?) but very likely Encourage greed, pride, callousness, schadenfreude/mild sadism, dishonesty, morbid curiosity, and beneficence Not very serious (effects on character will be tiny) but very likely Offending some people Not very serious but very likely Dan Weijers 3/12/2012 Wisdom of Repugnance? 4 = Non-issue = Minor issue

26. ETHICAL ISSUES SCORECARD Dan Weijers 3/12/2012Ethical Assessment 1 Compared to no PMs OffensiveCharacter tarnishing Ideal disres- pecting Might fund terrorism Terrorists manipu- lating us Likely to produce useful information Govt. only PM No Yes ? PAMYes MaybeYes ?? IntradeYes UnlikelyMaybe ?? Net Exchange Yes NoUnlikelyNo ? Minor issue Potential major issue Major benefit

27. ETHICAL ASSESSMENT Dan Weijers 3/12/2012Ethical Assessment 2 Compared to no PMs Issues that should cause repugnance Terrorists manipulating us Likely to produce useful information Net benefit? Govt. only PMNoneNoYes ?Definitely PAM4MaybeYes ??Probably Intrade4UnlikelyMaybe ??Unlikely Net Exchange3UnlikelyNo ?No Minor issuesPotential major issue Major benefit

28. ADVANTAGES OF FUTUREMAP OVER OTHER PM S Both (govt. only PM and PAM) Control over predictions (more useful to prevent terrorism) Gather other relevant information No trading or sign up fees necessary (better market conditions) Aggregation benefits PAM Real money (better accuracy) Can run controlled experiments on manipulation Less trivialisation (focus on information, not fun) Dan Weijers 3/12/2012Ethical Assessment 3

29. CONCLUSION Investigate possibility of manipulation If some predictions seem robust vs manipulation, then… Test FutureMAP Make sure the test is big and international Diverse new knowledge 100s of terrorist attacks in world per year, but not many in US Dont advertise it as engaging Dan Weijers 3/12/2012Ethical Assessment 4