Cosmic Log: Market places its bets on Oscar

By Alan Boyle

Markets online, at least as well as surveys, when it comes to predicting the outcome of the election, but they are as good at predicting the Oscar?

If the Hollywood Stock Exchange trading is any indication, you should bet big on "the King's Speech," a film about the struggle of King George VI to overcome his stuttering problem on the eve of World War II. AwardOptions of the exchange market works like an online futures market using play money, but rather than win real money. Actions in Oscar-nominated movies and actors can be bought and sold. When it's time to settle on a Sunday, the "investors" who chose the winners get a payout of $25-per share in money games. The losers get nothing.

With this in mind, here are the best prospects as of 5: 35 pm ET Friday:

Best picture: "King speech" for $ 17.83 per diluted share.Best Director: David Fincher for "The Social Network" ($ 12.90), in a tight contest with Tom Hooper for "Speech of the King" ($ 11.29).best actor: Colin Firth for ' Speech to the King "($ 22.01).Best Actress: Natalie Portman for "Black Swan" ($ 20.31).actor: Christian Bale for "The hunt" ($ 18.92).actress:Melissa Leo for "The hunt" ($ 15.47).Adapted Screenplay: "Social network" ($ 17.90).original screenplay: "Speech of the King" ($ 17.45).

The idea behind prediction markets is that they distill the wisdom of crowds — particularly knowledgeable crowds — about a complex phenomenon. Investors who are more confident about their informed opinion must be willing to invest more, and you can back out of its opinion to cut losses if the market is not going your way.

This is the way that works with the Iowa electronic markets, that is the only u.s. market estimation allowed to work with real money. Operation of the market from College of Business at the University of Iowa Tippie as a project of research and studies have shown that the IEM is at least as accurate as traditional surveys to project presidential election results.

Researchers of the IEM were using prediction markets to not only predict the elections, but also to predict the course of influenza epidemics ... and showing at the box office as well. So how about Academy Awards?

"Is the kind of thing that best adapts to your office pool online markets anymore," Tom Snee, a spokesman for the University of Iowa, said to me today.

Unlike the elections or performance at the box office, the outcomes of Oscar are decided by a relatively small group of members of the Academy and are not currently 5,991 — talking about how they voted. "There's really only a small number of people who know what's going on," said Snee. "There is no information to aggregate, it's just people speculating. Then there's a lot we can do. "

Although the IEM remains out of Oscar prognostication, business is increasingly heavily in business at the box office. M.b.a. students and Faculty of the University are already engaged in their most ambitious experiment yet, designed to predict the gross box office of four weeks for "The adjustment Bureau," a thriller with Matt Damon that opens next Friday. The prognosticators are developing algorithms that represent the past performance of Damon, movie co-stars of Damon (Emily Blunt and Jon Stewart), openings of other films of the weekend, the time of the year (March, isn't the biggest season for new movies), the buzz of advance and other factors.

"This is the same type of analysis performed marketing professional in their work, so that gives them an idea of what to expect in the workplace and helps you apply what you learned in a class where there are real dollars at stake," Thomas Gruca, Professor of marketing that is overseeing the competition, said in a press release.

As for the Oscars, a way to measure the wisdom of crowds is to compare the result with predictions from a living, breathing experts. Someone like, say, our columnist of "Scoop" very own, Courtney Hazlett. Here are his best guesses in seven categories similar to Oscar as of Friday afternoon:

Best picture: "Speech by the King."Best Director: Tom Hooper for "speech by the King."best actor: Colin Firth for ' Speech to the King. "Best Actress: Annette Bening in "The Kids Are all right."actor: Geoffrey Rush to "speech by the King."actress: Jacki Weaver for "Animal Kingdom" (with a nod Melissa Leo).Adapted Screenplay: Aaron Sorkin to "social network".

And just to pile things, here are the market leaders from the Intrade prediction market for six comparable categories of Oscar, expressed as a percentage of 5: 35 p.m. ET. Intrade, which is headquartered in Ireland, working with real money virtual rather than cash:

Best picture: "Speech of the King" (81.9%). Best Director: David Fincher for "The Social Network" (60%).: best actor Colin Firth for ' Speech to the King "(94.9%). best actress: Natalie Portman "Black Swan" (88.4%).: supporting actor Christian Bale for "The Fighter" (89.9%).: actress Melissa Leo for "The Fighter" (68.7%).

So it sounds like a classic competition human-vs-market to me. Check back here Sunday evening to see how the actual results compared to the forecast — and feel free to register their predictions as comments below. If you make a perfect prediction for the first six categories (best film, Director, actor, actress and supporting roles), I'll send you a pair of glasses 3D autograph as a reward. But the timestamp on the estimate must be within 12: 01 a.m. ET on Sunday, and will not accept only your first estimate (which means that multiple guesses are not allowed).

I realize that the cardboard 3D glasses aren't quite as glitzy as an Academy Award. On the other hand, the good thing is a statuette of gold when you're watching a film like this?

Read more on prediction markets (and the Oscars):

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