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| URL | http://ppx.popsci.com/ |
|---|---|
| Type of site | Prediction market[1] |
| Owner | Popular Science |
| Created by | Virtual Specialist |
| Launched | June 11 2007 |
Popular Science Predictions Exchange (PPX) was an online virtual Prediction market run as part of the Popular Science Magazine website. The application was designed by the same group behind the Hollywood Stock Exchange using their Virtual Specialist Application. Users traded virtual currency, known as POP$, based on the likelihood of a certain event being realized by a given date. Stock prices would range between POP$0 and POP$100 and were intended to reflect the general confidence of the users about that event. A stock at price POP$95 would mean roughly that users believed there to be a 95% chance of the event happening. If an event was realized by the given date, the stock will pay out POP$100 per share. A stock that did not occur by the closing date was worth POP$0 per share.
On May 8, 2009, PopSci announced that the PPX exchange would close on May 31, 2009, almost two years after it first opened. At the time of the announcement, there were 33,339 registered users. The top 100 traders at the time of closing were listed in a hall of fame.[2] Another news post on the site suggests that the site was planned to only have a two year run.[3]
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[edit] General
Each user begun with POP$250000 which could have been invested in any of the available stocks. By taking a short survey, users were awarded an additional POP$10000. Each Monday, Wednesday and Friday a new IPO was introduced to the market. Following an IPO, users could buy or short shares of the stock based on their feelings of its practicality. To maintain fairness to new users, no user could own more than 1000 shares of a particular stock at one time and no one could buy a particular stock for several hours after a new stock is introduced to give everyone a fair chance of purchasing it at its introductory POP$50 a share. The price of the stock was then used as an indicator of user confidence in that event and also as a way to increase one's net worth. As new information became available to the public, stocks prices were further refined as users moved to better their position on that stock.
[edit] Types of Trading
There were four ways to trade. The first two were to buy and sell. When you bought an IPO, you were investing in the fact that the prediction of that IPO will come true. If you owned shares of that IPO when the predicted event occurs, you were awarded 100 POP$ per share. When you sold owned shares of an IPO, you were given the amount of POP$ that the IPO you sold was worth for each share you owned. The next two types of trading were shorting and covering. When you short a stock of an IPO, you are investing in the fact that the IPO will fail. If you own shorted shares of the IPO when the prediction fails, you no longer must pay back your original price. A stock shorted at POP$60, on a failed IPO would have been awarded POP$60 a share, as well as their original investment, essentially doubling their investment. The investor pays back the price borrowed to own the stock at POP$0. When you cover shorted shares of an IPO, you are awarded the difference between your original short price and the cover price.
[edit] Contests
On the first of each month a prize was awarded to the user with the greatest percentage increase in their portfolio value over the previous 30 days (minimum value POP$250000). Prizes were typically consumer electronics such as an 80 GB iPod or an LG Prada Phone.
The winner of July's prize (80GB iPod) was ScarletPimple. However, Popular Science sent the prize to TheRooster. The mistake was caught and rectified. There has been much debate about the handling of the mistake as well as the contests for the following month(s).
[edit] Types
PPX dealt with technology futures in six categories.
- Consumer Tech and Entertainment
- Military, Aviation & Space
- Extreme Science
- Energy and the Environment
- Web Trends
- Automotive Tech
[edit] Examples
Stock end dates range from a few months to several decades.
Example of a short-term stock:
- Will Transformers have the highest total box office in North America to date of all films that premiered in 2007 through Labor Day September 3, 2007?
Example of a long-term stock:
- Will a team of androids beat the human World Cup champions at a game of soccer by December 31, 2050?
Most stocks dealt with subjects featured in the Popular Science Magazine, such as SPOREQ2, a stock on whether the upcoming video game Spore will be released by the 2nd quarter of 2008. Others dealt with current events, such as DIETDRUG, a stock on the whether the new FDA approved Alli, a diet supplement, will be recalled in 2007.
[edit] Closed Stocks
| Symbol | Description | Success | Date of Completion | Deadline for Completion |
|---|---|---|---|---|
| IPHACK | iPhone hacked to run 3rd party program within 2 months of release | Yes | Jul. 31st, 2007 | Aug. 28th, 2007 |
| SUBPC | Apple releases a computer for sale weighing 3 pounds or less | No | Sept. 1st, 2007 | Sept. 1st, 2007 |
| TRANSF | Transformers is the top grossing movie of 2007 through Labor Day | No | Sept. 3rd, 2007 | Sept. 3rd, 2007 |
| HIGAS | Gas will reach a national average of $3.50 per gallon | No | Sept. 3rd, 2007 | Sept. 3rd, 2007 |
| NEWIPOD | Apple releases wide-aspect ratio touch screen iPod | Yes | Sept. 5th, 2007 | Sept. 30th, 2007 |
| NOICE | Total Arctic sea ice dips to 4.25 million square kilometers or less | Yes | Sept. 11th, 2007 | Dec. 31st, 2007 |
| FASTEST | Bugatti EB Veyron 16.4's production-car speed record broken | Yes | Sept. 14th, 2007 | Dec. 31st, 2007 |
| MOSPAM | Spam reaches a record according to SoftScan by end of September | Yes | Sept. 17th, 2007 | Sept. 30th, 2007 |
| GASTRTY | China and U.S. sign treaty to reduce greenhouse gas emissions | Yes | Sept. 25th, 2007 | Jan. 1, 2009 |
| DAWNOK | NASA launches the Dawn Spacecraft by October 15, 2007 | Yes | Sept. 27th, 2007 | Oct. 15th, 2007 |
| IPRECAL | iPhone recall within the first 3 months of release | No | Sept. 28th,2007 | Sept. 28th, 2007 |
| DIGGRIP | Digg is shut down for posting AACS decryption keys | No | Oct. 1st, 2007 | Oct. 1st, 2007 |
| PNKSLP | NASA loses at least one top job over the drunk astronaut scandal | No | Oct. 1st, 2007 | Oct. 1st, 2007 |
| Facebook becomes a publicly traded company | No | Oct. 1st, 2007 | Oct. 1st, 2007 | |
| RKPLOVR | NASA terminates its contract with Rocketplane | No | Oct. 7th, 2007 | Oct. 7th, 2007 |
| SEGWIN | Both challenges are met at the 2007 Space Elevator Games | No | Oct. 21st, 2007 | Oct. 21st, 2007 |
| A380FLIES | A major airline flies the A380 with ticketed passengers | Yes | Oct. 25th, 2007 | Dec. 31st, 2007 |
| LANDR | Level One of the Lunar Lander Challenge is completed | No | Oct. 28th, 2007 | Jan. 1st, 2008 |
| V22FLY | The V-22 Osprey flies a combat mission | Yes | Nov. 28th, 2007 | Jan. 1st, 2008 |
Total Successes: 9
Total Failures: 10
Shortest Time on the Market: 5 Days (MOSPAM)
[edit] Forums
PPX also ran a forum for its users to discuss current market trends, suggest new IPO's and discuss improvements for the exchange.
[edit] Criticisms
Problems with the exchange existed (according to its detractors) from its claim to be a reliable way to predict long-term into the future. It was actually only a commodity market of public opinion involving those internet subscribers who invested into it. The magazine's June 2007 article claims that promising results from market based predictions was first seen with the 2006 congressional election. While in the end the market predicted right, it was only a few hours before final results were announced that the trend developed, meaning that the market predictions were wrong until nearly the end.
Much of the predictive nature of the IPO market is lost as the use of a speculative market is to make money. The exchange was much more like a commodity market than a stock market. Investors in this market will in some cases invest in what they think the market will do, and not what they actually believe. An example of this is the opening of a new IPO on Monday, Wednesday, and Friday. The stocks almost always opened going up, even if the particular IPO did not have good odds of occurring. After the first few days, the stock usually settled down to a more reasonable price as more players invested into it. Additionally, Popular Science offered a prize each month to the account which had the greatest percentage increase in value. This has further weakened the predictive nature of the market as only players treating the market in a speculative nature and trying to trade on the ups and downs would see the significant increases needed in order to gain funds and further their account totals.
Further criticisms exist around the pricing methods employed on the PPX exchange. Of the four types of actions, Buy and Short affect the price of a stock, while Sell and Cover do not. In addition there is no matching of orders, and price impacts occur after your order is processed. This led to a series of heated debates on the site forums around the viability and fairness of the PPX exchange. Critics contend the effect of this stock pricing formula has damaged the predictive nature of the market and turned it into a who can push the button the most often type of affair. Popular Science has said since the beginning that they had methods to detect players who abused this system. And at least one player admitted to manipulating the system. No PPX accounts have been known to be banned. Several accounts and/or people have been hit with the anti-manipulation measures enacted by PPX administration. From the About section of the PPX website:
"Market manipulation will not be tolerated. PPX defines market manipulation as engaging in any activity which may artificially affect the market price of a security, or any other PPX market information. Market manipulation may include, but is not limited to: coordinated trading by different PPX accounts, unauthorized computer-assisted trading using a single or multiple PPX accounts, inappropriate disclosure of trading activity, and misrepresentation of information to the PPX community. PPX will impose heavy fines and/or trading restrictions on traders who make use of market manipulation for any purpose. Any determination as to whether market manipulation has occurred will be in the sole discretion of the PPX Administrator; all determinations are final and noncontestable.
- 1st offense: a fine of 25% of Portfolio Value.
- 2nd offense: a fine of 50% of Portfolio Value.
- 3rd offense: the confiscation of the Account Portfolio by the PPX Administrator."
Criticism was also directed at the PPX Admins. They have shown a willingness to be very loose with their interpretations of existing rules and possibly even retroactively enforce new rules.
[edit] Elements of Cheating
Four of the top players in the game admitted to using scripts to scrape the PPX site to provide them with up-to-the-minute changes in stock prices. This allowed them to know about every up and down movement and thus rake in huge increases. At the time, there were no rules in place to outlaw such actions so the PPX Admins instead ruled that collusion occurred based purely on the fact that three accounts all had a large number of logins. As punishment, PopSci deducted 25% from their account balances. That fine, levied on the 30th of August, caused one player to lose the monthly contest and thus, an LG Prada phone.
The PPX rules state that PPX Admins had the right to interpret their rules however they saw fit. They also state that PopSci had the final word in all disputes.
In a somewhat ironic turn, PopSci later implemented new rules outlawing trading and logging in with scripts, as well as adding a limit on prizes won by households. Both of these additions were based on recommendations from the same players PopSci chose to fine.
Other criticisms of the PPX involve it frequently crashing. At times the site operated very slowly, but it was frequently down. The crashes were explained by administration because of certain players scraping the database frequently with bots, but the problem has continued even after the bots were stopped.
[edit] References
- ^ http://www.popsci.com/popsci/whatsnew/e77ff35e5990e010vgnvcm1000004eecbccdrcrd.html The Science behind PPX
- ^ "PPX: The Final Countdown". Popular Science. http://www.popsci.com/ppx/article/2009-05/ppx-final-countdown. Retrieved 2009-07-19.
- ^ "PPX is Closing, but Its Not Over Yet". Popular Science. http://www.popsci.com/content/ppx-closing-its-not-over-yet. Retrieved 2009-07-19.
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