Microsoft has applied for a patent to control interface to prediction market.
Here is an abstract from their patent application
A user participates in trading securities in a prediction market which represent different outcomes of an event, using an interface which allows the user to understand a trade in terms of a bet. The interface also allows the user to explore different bet amounts while receiving feedback on potential payoffs in real time. In one approach, a tool is used which is moved in one direction by the user to indicate a larger trade for an outcome, or in the opposite direction to indicate a larger trade against the outcome. A bet for an outcome can be translated into a purchase of a corresponding security which represents the outcome. A bet against a particular outcome can be translated into a purchase of securities which represents all other outcomes. The user interfaces hides complexities of the market from the user while surfacing relevant information. – more
The patent was filed in 2007 and published in the month of March, 2009.
Though the patent mainly covers interface for prediction market, the honest truth is that most of the prediction systems work on similar interfaces (interface here implies controls).
How do you think this impacts the prediction market players?
Update: Post has been updated after kartik’s comments.
Ashish, it is just a patent application which has been published in March 2009, and not a granted patent.
Now coming to the probability of a patent grant for this application, in my opinion, it will most likely be rejected by the US patent office under prevailing circumstances, irrespective of whether what they are claiming is know a practice or not. Those interested in knowing why it will be rejected, google “Bilski case” and dig deep.
One thing that is noticeable here is that Microsoft has not invented the method(s) of prediction market(PM). It is a clear case of patenting someone else’s invention/method.
“Yes, severely broken”– This is the reaction of a well known Economist in prediction market( Robin Hanson, he invented Scoring rule for PM).
Prediction Markets are running in the US for past 15 years in different forms and whatever Microsoft has mentioned is already present and they are doing business happily.(Ex http://www.consensuspoint.com, http://www.us.newsfuture.com)
From Patent description(Claim)
1. A computer-implemented method for trading in a prediction market, comprising: receiving a user input, via a user interface, for placing a bet regarding a possible outcome of an event, the input indicating a bet amount; and providing an output, via the user interface, in response to the input, indicating a potential payoff of the bet, the payoff is determined from a prediction market.
2. The computer-implemented method of claim 1, further comprising:executing a trade in the prediction market according to the bet.
3. The computer-implemented method of claim 1, wherein:when the bet is for the outcome, the potential payoff is determined by a cost of shares of at least one security in the prediction market which represents the outcome.
In my opinion MS has managed to patent rules and methods of a certain concept disguised as Interface. These methods include designing market, trading,aggregating price and payoff.
Kartik is right. The new Bilski case will definitely influence the PTO’s decision.
If any one deserves a patent, it is probably Prof Hanson.
This seems to be part of the ongoing “battle” to develop more intuitive and simpler interfaces for prediction markets. HSX has also put in a claim earlier.
There seems nothing new in the methods, scoring rules and AMMs have been around and Prof Hanson’s MSR is well known. I would question the relevance of applying AMMs in a play money environment.
Thanks for posting