Thursday, January 08, 2009


New Zealand Futures trader opens casino on Global Temperatures

In an interesting development on the Climate Prediction a registered securities trader has opened a global temperatures prediction casino.

As the two indices are posed as a binary question ie yes/ no. this is in essence a coin toss question. As we have previously discussed.

Describing the mathematical problems (some years before the celebrated Hilbert’s list) Poincare divided them into two parts: the binary problems (similar to the Fermat problem, where the answer is a choice between the two possibilities: “yes” or “no”), and the interesting problems, where the progress is continuous, studying first of all the possibility of the variations of the problem (like, say, the variation of the boundary conditions for a differential equation) and investigating then the influences of these variations on the properties of the solutions (which would be hidden, if the problem were formulated as a binary one)…an inverse temperature“state” is in essence a binary transformation or bifurcation.. The transformation as a velocity inversion has the same effect as a time inversion,(v to -v ) (t to -t)An interesting property is the probability P+=P- = 0.5

Is 2009 going to be the hottest year on record?

iPredict launches new climate change stocks

With the New Zealand summer already reaching record temperatures, online prediction market iPredict today launched new stocks asking just how hot we think 2009 will be.

For as little as $5 traders can buy and sell stocks that pay out depending on whether global temperatures in 2009 are warmer than last year, or are the hottest ever.

"Everyone has an opinion on climate change, it is the defining environmental issue for our time. Indications are 2008 was the coldest year since 2000 – is this a one-off anomaly? Could 2009 do the opposite?" says iPredict CEO Matt Burgess.

Two climate change stocks are being traded. The first stock asks whether 2009 will be warmer than 2008. A second stock asks whether 2009 will be the warmest year ever, beating the record set in 1998.
Victoria University Professor of Climate Change Martin Manning says traders will not have an easy time predicting the climate.
”While scientists are quite confident about our understanding of long term climate trends, the large amount of year to year variability in global average temperatures makes the question behind each of these stocks a challenge for anyone, including the experts,” said Professor Manning.
“This new initiative by iPredict should tell us more about how people think about climate, and I hope it can be used to improve the way we communicate what science does and does not know.”
Mr Burgess says the stocks are based on the HadCRUT3 time series from the University of East Anglia, Norwich. “This is a well-respected global temperature data series going back to 1850,” says Mr Burgess.
iPredict is authorised by the Securities Commission as a futures dealer and is owned by Victoria University and the Institute for the Study of Competition and Regulation. The primary purpose of iPredict is research and education. Anybody can browse iPredict and see the predictions for free by going to www.iPredict.co.nz. Traders must be 18 years and older to set up an account. Accounts are free to set up and people can start trading with as little as $5.


As we see Victoria University Professor of Climate Change Martin Manning says traders will not have an easy time predicting the climate.in the short period of 1 year we can see they have not been better at other long scales either, with error bars exceeding the amplitude of the temporal evolution.

Whilst most scientific models have error bars within the amplitude This is definitely not the case for a typical atmospheric variable(such as temperature) where large deviations around the mean are comparable to the mean itself. More generally, this should hold true in any nonlinear dynamical system in which the evolution equations admit multiple solutions or give rise to chaotic dynamics,

The divergence in the temporal horizon suggest the predictive values are of limited qualities.ie there is a temporal boundary.on longer predictions. Here the house always wins.

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