The Tech Buzz Game

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The Tech Buzz Game

• Rael Dornfest
• Bernard Mangold, Mike Dooley,Gary Flake, Havi
  Hoffman, Tej Kasturi, David Pennock

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Tech Buzz Gamehttp//buzz.research.yahoo.com
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Outline

• What is the Tech Buzz Game?
• Status and war stories
• And the winners are ...
• Buzz Game Version 0.2focus on Open Source

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Tech Buzz Game v0.1

• Launched at OReilly ETech Conference
• Powered by software
• 47 markets, 352 stocks in bleeding edge tech
• BitTorrent, podcasting, knoppix, open Solaris,
  ...
• Technologies on OReillys radar
• Goal Predict what technologies people will be
  searching for tomorrow
• Research goals
• Can market be a leading indicator of
  buzz/popularity?
• Test new Y! invention dynamic pari-mutuel market

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Exchange InterfaceDynamic Parimutuel Market
Maker
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Wi-Fi vs. WiMax
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v0.1 Stats

• Press Wash Post, NPR, G4TV, CNet, ZDNet, eWeek,
  Business Week
• Blogs /., Battelle, widespread
• Stats as of 10am March 23 2005
• 13,310 accounts
• 117,530 orders
• 88,480,577 total market capitalization
• 46,379,241 outstanding shares
• 2.7M page requests

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v0.1 Stats

• last week last 2 weeks last 3 weeks
• logins 679 1078 1378
• new users 138 324 561
• transactions 4124 8855 13,728
• pages
• served 420,000 850,000 1,245,000
• As of June 20 2005

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Hacker Spirit

• Blackhat
• Cheating, multiple accounts, auto account
  creation, collusion
• Whitehat
• Scripts, scrapers, bots, api programming
• Equations, math, simulations
• Sharing solutions, data, code
• Finding market loopholes
• Greyhat
• Exploiting market loopholes

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Market Crash March 27, 2005
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Arbitrage Loophole
2) BUY
4) SELL
1) BUY
3) SELL
Cash 10,000
Cash 10,500
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Dynamic Pari-mutuelPrice Function

• Money-ratio price function
• Arbitrage flaw
• Share-ratio price function
• No arbitrage possible
• Currently running with no problems
• Vetted by academic peer review, internal testing,
  two weeks live, ...
• Took a couple of 17 year olds to find, exploit
• Once discovered, spread fast

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Rumor Mill
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Droolworthy
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P2P
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Linux Ubuntu
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Maps Google Maps
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Browser Wars
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Operating systems
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API
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Tech Buzz Game
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Dynamic pari-mutuel market

• New financial mech for speculating on or hedging
  against an uncertain event Cross btw PM CDA
• Combines good properties of both
• No risk to market institution (DPM,CDA,PM)
• Infinite liquidity for buying/selling (DPM,PM)
• Continuously incorporate new infoallow cash-out
  to lock gain, limit loss (DPM,CDA)

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Pari-mutuel marketBasic idea
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Dynamic pari-mutuel marketBasic idea
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How are prices set?

• A price function pi(n) gives the instantaneous
  price of an infinitesimal additional share beyond
  the nth
• Cost of buying n shares ?0n pi(n) dn
• Different reasonable assumptions lead to
  different price functions

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Price functions
Share type Constraint/Assumption Result
Losing money p1 P2 p2 P1 Closed form cost() shares()
Losing money pi/pj Mi/Mj Closed form cost() shares()
All money pi/pj Mi/Mj Closed form shares() Numeric cost()
All money pi/pj Si/Sj Closed form cost() shares()