Information security researchers from academia, industry, and the U.S. intelligence community are collaborating to build a pilot “prediction market” capable of anticipating major information security events before they occur.
A prediction market is similar to a regular stock exchange, except the “stocks” are simple statements that the exchange’s members are encouraged to evaluate. Traders will buy and sell “shares” of a stock based on the strength of their confidence about the future outcome—with an overall goal of increasing the value of their portfolios, which will in turn earn them some sort of financial reward. Traders may choose to buy or sell additional shares of a stock, and that buying and selling activity pushes the stock price up or down, just as in a real market.
This is an excerpt from a story I wrote for MIT Technology Review. Read the rest of the piece here.