Hartford Courant (Connecticut)
                    July 30, 2003 Wednesday, 7 SPORTS FINAL
SECTION MAIN; Pg. A1
LENGTH: 744 words
HEADLINE: TERROR BETS ARE OFF; PENTAGON DROPS PLAN FOR FUTURES MARKET
BYLINE: MICHAEL REMEZ; Courant Staff Writer

DATELINE WASHINGTON --

BODY

   The Pentagon on Tuesday killed a controversial project that would have
allowed online traders to bet on the possibility of events in the Middle East --
including coups, assassinations and terror attacks.

   Just three days before traders were to start registering for it , the
experiment was scuttled -- after a flood of criticism from lawmakers about the
wisdom of government involvement.

   Backers of the project, known as the Futures Markets Applied to Prediction,
or FutureMAP, said it was based on solid science and could have given the
government another way to try to predict crises and foil terror attacks.

   Critics, though, said it was ill-conceived, immoral and vulnerable to abuse.

   "This program could provide an incentive actually to commit acts of
terrorism," Sen. Tom Daschle, D-S.D., said on the Senate floor Tuesday morning.
He called it "a plan to trade in death," which could give new motivation to
terrorists.

   Elsewhere on Capitol Hill, lawmakers of both parties lambasted FutureMAP, and
it was history by midday.

   The Pentagon agency that had funded FutureMAP, the Defense Advanced Research
Projects Agency, or DARPA, announced that it was pulling its funding. The agency
provides money for a wide range of cutting-edge military programs. The Pentagon
had requested $3 million for the program for next year.

   "FutureMAP was a small program that faced a number of daunting technical and
market challenges," Tony Tether, the research agency's director, said in a
statement. "Reconsidering those challenges in light of the recent concerns about
the program, it became clear that it simply did not make sense to continue our
participation in this effort."

   The website for the public-private partnership was called the Policy Analysis
Market and it described itself as "a market in the future of the Middle East."

   In FutureMAP, smart investors -- most important, Middle East experts -- would
buy and sell futures on the possibility of certain events taking place.

    Robin Hanson, an economics professor at George Mason University who was
working on the program, said planners hoped to attract a wide range of analysts
-- from the Middle East and elsewhere -- whose buys and sells could give
analysts a better sense of the likelihood of future events.

   He said a fuller analysis of the program might have mitigated lawmakers'
concerns. "If you think about it, intelligence is basically paying people to
tell you about bad things that might happen. That is what we are doing here."

   Eric Zitzewitz, an economics professor at Stanford Graduate School of
Business, said commodities markets can be revealing.

    "In certain contexts, markets can work as very efficient aggregators of
information," said Zitzewitz. Those making predictions, he said, have a greater
incentive to think their scenarios through when they have money and the
possibility of profit at stake.

   But the program's quick demise was no surprise to Stephen Hess, a veteran
political analyst with the Brookings Institution in Washington.

   "This is the kind of thing that could survive only if done in the dark," Hess
said, adding that the possibilities for abuse are scary.

    "What if you have a group of rich terrorists who start playing this thing?
They could mislead the other side. Or what about a group of poor terrorists who
think they can make their fortune by predicting what they are going to do?" Hess
asked. "The possibilities for misuse are stunning."

   Thomas Michaud, director of the Center for Applied Ethics at Wheeling Jesuit
University in Wheeling, W. Va., said the plan raises moral concerns.

   "What you are talking about is indeed profiting from predicting a horrific
act," Michaud said. "Whether that would justify whatever slim predictive
possibilities this kind of market might offer is a serious ethical question."

   But Hanson, working as a subcontractor for Net Exchange of San Diego, the
lead contractor, said he is convinced it could work.

   "To most people this is an alien concept and pretty foreign," he conceded.
But he said the methodology is sound. Similar markets help predict political
races and commodity prices, for example.

   "We presumed DARPA was willing to fund risk projects. That is what they do,"
Hanson said. "It turned out this was more risky than they intended."

   Lawmakers also have been sharply critical of DARPA's Terrorism Information
Awareness Program, a computerized surveillance program that has raised privacy
concerns.

LOAD-DATE July 30, 2003