Opinion: Web service-driven markets will make sparks fly; we're as unprepared for the future as a cave man would have been for the wheel.
Im intrigued by the news that eBay is eliminating access fees for developers whod like to explore eBay Web Services (www.developer.ebay.com
). This turns the online auction site into an enormous playground for those with innovative ideas on how to improve the worldwide match between supply and demand.
I expect to see a corresponding flood of thesis topics at the worlds best graduate schools of economics.
Think about the combination of Web services, GPS-driven location-based data, wireless connections, secure electronic micropayments and a trusted market maker to tie the bundle together.
Were as unprepared for the results as a cave man would have been for the combination of gunpowder and the wheel.
When the speed and accuracy of computers are combined with the deviousness of human minds, fascinating things are going to happen.
If you havent yet read "Rules of Encounter: Designing Conventions for Automated Negotiation among Computers," by Jeffrey Rosenschein and Gilad Zlotkin (MIT Press, 1994), it might be worth a few hours of your time. The book describes the world in which youre going to live and buy.
Markets are much more than placesphysical or otherwiseto buy and sell things.
Market mechanisms have an impressive record, for example, in predicting the results of presidential elections.
The justly famous Iowa Electronic Markets (www.biz.uiowa.edu/iem
) predicted the popular vote shares in last years presidential election with an error just slightly exceeding 1 percent, which is typical accuracy for IEM.
Similar markets are being explored as mechanisms for predicting influenza hot spots, hurricane landfalls and business cycle behaviors.
(Recent research papers on the subject include one at www.hsxresearch.com/assets/VSM_Mgmt_Sci.pdf, here in PDF form,
and another at www.hpl.hp.com/personal/Kay-Yut_Chen/paper/infofrontierpaper.pdf, also in pdf form.
Auction markets, in particular, might seem to be something we understand by now, but there are still fundamental breakthroughs to be made.
Yahoo Research unveiled last year, for example, its "dynamic pari-mutuel market," or DPM,
for "risk allocation and information speculation," in the phrase of the abstract of the published paper at research.
"Like a pari-mutuel market, a DPM offers infinite buy-in liquidity and zero risk for the market institution; like a CDA [continuous double auction], a DPM can continuously react to new information, dynamically incorporate information into prices, and allow traders to lock in gains or limit losses by selling prior to event resolution," the abstract continues. Applications will doubtless emerge.
I get more than a little interested, therefore, in anything that further improves smart peoples access to a worldwide market mechanismincluding both conventional and auction facilitieswith proven capacity and enormous mind share.
Some might decry the transformation of the Internet from a playground of ideas into a playground of assets.
I welcome it, because theres nothing to clarify discussion like having something valuable on the line.
The challenge to "put your money where your mouth is" has a long and distinguished history of filtering uninformed and unhelpful content out of a problem-solving process.
A more marketlike Internet can become an efficient tool for busting hype at least as effectively as todays unpriced idea exchange promotes it.
If I seem to be rejecting the oft-repeated claim that "everyones entitled to their opinion," that perception is more correct than not.
Everyones entitled to his or her opinion, but Id like to have some way of charging a person for the privilege of inflicting uninformed speculation or hidden-agenda invective on me when Im looking for valuable insight.
I wouldnt mind paying what a more useful discourse would be worthand someone playing around with eBay may find a way.
Peter Coffee can be reached at email@example.com.
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