Fantasy Futures Market - Fantasy Baseball Cafe 2014 Fantasy Baseball Cafe
100% Deposit Bonus for Cafe Members!

Return to Baseball Leftovers

Fantasy Futures Market

Moderator: Baseball Moderators

Fantasy Futures Market

Postby matdemos » Mon Mar 28, 2005 7:00 pm

For those of you who don't know, a futures market, or "prediction market", is an economic marketplace where investors buy "shares" in the likelihood of an outcome, and are compensated based on their accuracy. Most futures markets trade in commodities like gold, grain and oil. A seller tries to find a buyer of X amount of gold at a certain price after a certain period of time. If the seller is convinced the value of his gold will drop in the next six months, he will try to sell, today, a future contract delivering X amount of gold at its current price in six months. Ok. Still with me?

Now, because futures markets are open, speculators can trade in contracts ("speculators" used to mean people who don't have gold to sell and don't want to buy it, they just want cash). Say a speculator buys a contract, today, for Y amount of gold in six months at $50/lb. At the end of the six months, the price of gold has risen to $70/lb. Now, our speculator can sell his contract for $60/lb to a happy buyer, and make a handsome $10/lb profit. Right, so you're going, "what does this have to do with Barry Bonds?". Well.....

Because anyone with good information can make money in the futures market by correctly predicting a given outcome (i.e., the price will rise or the price will drop), the market isn't really about commodities at all; it's about data. So, smart people realized that if you give an incentive to predictive accuracy, people who believe they have good information (or even just good intuition) will buy into the futures market. Thus, markets like the Iowa Electronic Markets and DARPA's TerrorXchange have been created to predict outcomes in political elections and probabilites of terror attacks. And get this: they are really accurate. As in, more accurate, over the long-term, than any one person could be, no matter how well-informed. The underlying idea is that the informed and economically driven investing public will provide a better predictive model than pure statistical analysis when highly volatile variables (i.e., humans, or in our case, humans who play baseball) are introduced. The question is whether we can we apply this model to our boys of summer.

In a sense, we already do this in every preseason auction. When you buy Pujols for $45, you are investing in the future outcome that he will provide at least that much in value. But the auction suffers from three vaguaries we'd have to rectify (note: i like these vaguaries! just want to do a good analysis): first, the exchange rate between roto stats and $1 of expected value must be standardized to universalize statistical predictions; second, players must be evaluated in terms of production solely (i.e., consider positional scarity an artifact of roto; we're trying to standardize statistical prediction); finally, the idea of player ownership is contrary to our goal: we are seeking to develop a market structure based on future outcomes, not rights to those outcomes (i.e., the fact that Pujols' hits 40 dingers, not those HRs themselves).

So, if you made it this far, the idea is to create a Fantasy Futures Market here at the Cafe. If anyone is interested, I'd love to talk to you and start working something out. In any case, one model I've envisioned, without approaching the line between futures investment and sports gambling is: a weekly or bi-weekly marketpost at which each investor would have an annual $100 (imaginary) to invest in three outcomes for a player sometime in the future. A quick example:

Austin Kearns will play how many games in 2005?

a) 130-150
b) 100-120
c) 70-90

The dollars could be distributed in any way any week by each investor (with a max of say $10/week). At the end of the year (or whenever the future contract is up), the astute investor gains $1 on top of each invested dollar. The losing investor loses their shirt on that investment. Guy with the most cash money at the end gets compliments and (pleeeeease?) an avatar icon. And if we get enough investors, we'll have a chance to see what everyone is thinking and how right they think they are. So, ya, it's a clunky experiment, but if it works, maybe we can get even more crazy with it.




note: As a disclaimer, I just want to say I have no expertise in this field, and my knowledge of economics is limited to 100-level courses (i'm only a frosh). Also, this idea is too good to not have been thought of before -- so please don't get mad at me if you thought of it first, I'm not trying to take credit for anything! I just thought this board (it's the most active one I've found) would be a great place to start some small-scale futures experiments because of the high-volume traffic of rotoheads. Oh, and sorry about the looooong post. 8-o :*) [/url]
matdemos
Softball Supervisor
Softball Supervisor

User avatar

Posts: 96
Joined: 1 Mar 2005
Home Cafe: Hockey

Postby bleach168 » Mon Mar 28, 2005 7:17 pm

I think that's a great idea.
bleach168
Hall of Fame Hero
Hall of Fame Hero

User avatar
CafeholicFantasy Expert
Posts: 5058
(Past Year: 17)
Joined: 22 Apr 2003
Home Cafe: Baseball

Postby pomplona's finest » Mon Mar 28, 2005 7:22 pm

Very well thought out post, sounds like a great idea if it is possible to put it all together.
[URL=http://www.imageshack.us]Image[/URL]

AKA IRON CHEF

Member #5 of the Inaugural Yadier Molina Fan Club!!!
pomplona's finest
General Manager
General Manager

User avatar
Eagle Eye
Posts: 3062
Joined: 18 May 2004
Home Cafe: Baseball
Location: Dirt Farming in Madagascar

Postby Kelly Gruber » Mon Mar 28, 2005 7:41 pm

I like the idea, but there is one problem: we would all be speculators. The only reason that the futures market works is because there are speculators on one side of the contract and trypically hedgers on the other side (although there may be speculators on the other side too, but what is the likeyhood that 2 speculators will think completely opposite of eachother in every situation?):

Let me give you an example: A jeweler has already sent out his catalogue with prices for the next year, the only problem is that he does not have the gold yet, which he will order in 6 months. He realizes that gold prices fluctuate and he does not want to take the risk of having to buy gold at a price higher than it is now. So, he buys a futures contract for the gold, to buy it at the price it is now. Let's say the price of gold rises; he can either sell the contract (thus making money) and then buy the gold at cost (thus losing his gain and returning back to even) or just make good on the contract. Or, if the price of gold drops, then his contract will go down in value, etc.

You would need hedgers to take the side of the contract that may be undesirable for speculators.

Also, trading futures is a highly leveraged form of investing. It means that typically to get a contract the only cash need to secure it may be 10% or less. Therefore, there is the potential to make a lot, of course, or lose more than 100% of your principle. I just don't know how this would work with this game, because everybody only gets $100, right? When people make these higly leveraged bets, they have to be prepared to lose mare than their principle, and in this case they cannot because that is all they have.

I do like the idea though, of trading players like commodities, I know a site that used to do it, I forget what it was called but it was a lot of fun. Oh ya, it was called Wall Street Sports.
An unanswered question is better than an unquestioned answer
Kelly Gruber
Minor League Mentor
Minor League Mentor

User avatar

Posts: 357
Joined: 24 Jan 2004
Home Cafe: Baseball

Postby matdemos » Mon Mar 28, 2005 8:04 pm

You're definitely right that the market is faulty if there are no hedgers. If you look at the Iowa Electronics Market paper that I linked to in the orginal post though, I think they worked out a way to make it a zero-sum market (I might have read it wrong, it's dense econo-speak). Anyway, without "playing" with real money there's really no way to discourage bad investment. But if the questions are modeled well, the market will have a minimal aggregate sum; that's the whole point of the game, really -- not everyone will agree and thus there will be speculators with directly opposing predictions.

In any case, I think we can work around it. I'll do some more reading...
matdemos
Softball Supervisor
Softball Supervisor

User avatar

Posts: 96
Joined: 1 Mar 2005
Home Cafe: Hockey

Re: Fantasy Futures Market

Postby reiser » Mon Mar 28, 2005 8:11 pm

matdemos wrote:note: As a disclaimer, I just want to say I have no expertise in this field, and my knowledge of economics is limited to 100-level courses (i'm only a frosh). Also, this idea is too good to not have been thought of before -- so please don't get mad at me if you thought of it first, I'm not trying to take credit for anything! I just thought this board (it's the most active one I've found) would be a great place to start some small-scale futures experiments because of the high-volume traffic of rotoheads. Oh, and sorry about the looooong post. 8-o :*) [/url]


is this James Surowiecki? :)

it does appear you can trade futures in regular season wins at
http://www.tradesports.com/

lh
reiser
Minor League Mentor
Minor League Mentor

User avatar

Posts: 641
Joined: 17 Feb 2004
Home Cafe: Baseball

Re: Fantasy Futures Market

Postby Kelly Gruber » Mon Mar 28, 2005 9:33 pm

reiser wrote:
matdemos wrote:note: As a disclaimer, I just want to say I have no expertise in this field, and my knowledge of economics is limited to 100-level courses (i'm only a frosh). Also, this idea is too good to not have been thought of before -- so please don't get mad at me if you thought of it first, I'm not trying to take credit for anything! I just thought this board (it's the most active one I've found) would be a great place to start some small-scale futures experiments because of the high-volume traffic of rotoheads. Oh, and sorry about the looooong post. 8-o :*) [/url]


is this James Surowiecki? :)

it does appear you can trade futures in regular season wins at
http://www.tradesports.com/

lh


Is that a respectable site, do you know? Maybe I could actually make some money with my baseball knowledge after all! (I don't play in pools to make money, but just for fun because money always screws up friendships)
An unanswered question is better than an unquestioned answer
Kelly Gruber
Minor League Mentor
Minor League Mentor

User avatar

Posts: 357
Joined: 24 Jan 2004
Home Cafe: Baseball

Postby tal1286 » Mon Mar 28, 2005 9:43 pm

This sounds to me like you are basically gambling. If you wanted to start some sort of "gambling game" you could give everyone who wanted to play 10,000 points, I don't know, that is just a random number. Then, in a forum, we could have people make posts that say, "I think A-Rod will hit more than 45 homeruns this year and I'll bet 500 points on it." Then people could take the bet or not. Then at the end of the season, everyone could take their points, figure out where they stand, and have bragging rights. There also could be games during the season where you bet on a team winning 4 games in a week or on a team winning a series or wins by the all-star break.

Just a note, I don't know if this is actually illegal gambling but I figure that since it is just for fun and there is no actual money involved, well, it could be fun.
Image

Leyland said, "We thought we were getting a hell of a player, but Neifi simply did not perform well."

really?
tal1286
Major League Manager
Major League Manager

User avatar
CafeholicPick 3 Weekly Winner
Posts: 1830
Joined: 31 May 2003
Home Cafe: Baseball
Location: Verizon Center, Cheering on the Hoyas

Re: Fantasy Futures Market

Postby reiser » Mon Mar 28, 2005 11:15 pm

Kelly Gruber wrote: Is that a respectable site, do you know? Maybe I could actually make some money with my baseball knowledge after all! (I don't play in pools to make money, but just for fun because money always screws up friendships)


I believe that's the site that predicted Hussein would be captured. if you follow the decision-prediction market area, yes it's fairly respectable.

prediction markets are really fascinating to me. others that are highly successful are the Iowa Presidential Futures and the Hollywood Futures (not sure if either of those names are right). what's interesting is that economists are finding that markets, given certain criteria, outperform pollsters, experts etc. on a fairly regular basis.
reiser
Minor League Mentor
Minor League Mentor

User avatar

Posts: 641
Joined: 17 Feb 2004
Home Cafe: Baseball

Postby Cornbread Maxwell » Mon Mar 28, 2005 11:25 pm

Ill play - sounds like a good idea - although it probably was done before or at least some form of it.

The problem is setting the range so that the sellers equal the buyers based upon a price. Its simple gambling really - just like spreads at the casino.
Image
Cornbread Maxwell
Hall of Fame Hero
Hall of Fame Hero

User avatar
CafeholicFantasy ExpertPick 3 ChampionSweet 16 Survivor
Posts: 5694
Joined: 7 Jul 2003
Home Cafe: Football

Next

Return to Baseball Leftovers

Who is online

Users browsing this forum: No registered users and 8 guests

Forums Articles & Tips Sleepers Rankings Leagues


Today's Games
Sunday, Sep. 21
(All times are EST, weather icons show forecast for game time)

Toronto at NY Yankees
(1:05 pm)
Washington at Miami
(1:10 pm)
indoors
NY Mets at Atlanta
(1:35 pm)
Boston at Baltimore
(1:35 pm)
Milwaukee at Pittsburgh
(1:35 pm)
Chi White Sox at Tampa Bay
(1:40 pm)
indoors
Cleveland at Minnesota
(2:10 pm)
Detroit at Kansas City
(2:10 pm)
Seattle at Houston
(2:10 pm)
LA Dodgers at Chi Cubs
(2:20 pm)
Texas at LA Angels
(3:35 pm)
Philadelphia at Oakland
(4:05 pm)
Arizona at Colorado
(4:10 pm)
San Francisco at San Diego
(4:10 pm)
Cincinnati at St. Louis
(8:05 pm)

  • Fantasy Baseball
  • Article Submissions
  • Privacy Statement
  • Site Survey 
  • Contact