Dr. Michael Foster of DARPA,
the instigator of DARPA’s interest in prediction markets, opened the
workshop. Dr. Foster acknowledged the
work done in the IEM project, which has been using markets to predict election outcomes
and other events for over a dozen years.
He noted that the IEM project was the inspiration for proposed new work
within DARPA. If markets can be used to
predict elections, why not employ them to predict other things of interest to
military and security agencies? Dr.
Foster noted the existence of two ongoing pilot projects, which are
investigating such possible uses. Those
projects, by Neotek and its partner MarTek, and by Net Exchange, were organized
as Small Business Innovative Research (SBIR) projects and have now completed
Phase I. Dr. Foster then mentioned some possible uses of prediction markets for
military purposes. He outlined a
proposed new and larger research program within DARPA, which will serve to
measure the efficacy of markets as information aggregating devices for use in
guiding decisions made by military and security policy makers. That larger program is currently in the
proposal stage.