modules/market/README.txt



TODO: Completely fill this out


This module provides markets to Drupal websites.  Markets allow users
to trade things with each other in exchange for points.  You can and
probably should think of points in terms of money.  One prominent use
of this module is to create "prediction markets" or "idea futures"
based on a continuous double action system modeled after the Iowa
Electronic Markets.  These markets are useful to aggregate the
knowledge of many separate individuals on one specific topic.

One goal of the module is to be general enough that it could also be
used to create other market systems like "cap and trade" systems.
These allow large companies or organizations to create internal 
markets for non-monetary goods that have no outside markets such as 
pollution credits.

## Suggested documentation for your users (add this to your about page): ##
<strong>What is This?</strong>
This is a prediction market which can be used to pull together knowledge about a topic and provide a simple answer to complex questions.

It is also simply a way for knowledgeable people to get fame, glory, points, (maybe money), in exchange for placing trades on specific outcomes.

<strong>How does it work?</strong>
An event is represented as a portfolio of outcomes (items).  For example: The portfolio of "Will it rain tomorrow" might contain the outcomes "Yes" or "No".  If you live in a rainforest the "Yes" might trade at 95 points while the "No" trades at 5 points.  This represents a belief by the traders in the market that there is a 95% chance of rain tomorrow.  <em>If you think there is more than a 95% chance of rain tomorrow you should buy that item.</em>

When people make purchases based on their beliefs, the markets often become accurate representations of the likelihood of the outcomes.

<strong>Advanced Trading: First Trades for an Event</strong>
When an event is first opened for trading the system requires some traders to buy the entire portfolio (paying 100 points for both the "yes" and "no" options in our rain example).  Then those traders should place orders to sell one or the other (or both) at a price that seems reasonable to them.  This enables other traders to simply buy one of the contracts instead of having to buy the portfolio.

<strong>Advanced Trading: "Short selling" an Outcome</strong>
If you think an outcome in a portfolio is trading at too high of a price you can "short sell" to take a position against it.  To do this you simply buy the portfolio and then sell that outcome.  Modifying the earlier rain example, we could have a market for Any form of Precipitation Tomorrow with the outcomes of Rain, Snow, and None and let's say that None is trading at 10 points.  If you think that there definitely will be precipitation but you are unsure which kind then you could buy the entire portfolio and sell the None for 10 points.  This allows you to own both kinds of precipitation.


For more information, be sure to check the project homepage at
http://openpredictionmarkets.org/

Module Author: Greg Knaddison (greggles)
greg AT knaddison . com
http://drupal.org/user/36762

$Id: README.txt,v 1.2 2008/01/19 17:52:52 greggles Exp $
1
2
3	TODO: Completely fill this out
4
5
6	This module provides markets to Drupal websites. Markets allow users
7	to trade things with each other in exchange for points. You can and
8	probably should think of points in terms of money. One prominent use
9	of this module is to create "prediction markets" or "idea futures"
10	based on a continuous double action system modeled after the Iowa
11	Electronic Markets. These markets are useful to aggregate the
12	knowledge of many separate individuals on one specific topic.
13
14	One goal of the module is to be general enough that it could also be
15	used to create other market systems like "cap and trade" systems.
16	These allow large companies or organizations to create internal
17	markets for non-monetary goods that have no outside markets such as
18	pollution credits.
19
20	## Suggested documentation for your users (add this to your about page): ##
21	<strong>What is This?</strong>
22	This is a prediction market which can be used to pull together knowledge about a topic and provide a simple answer to complex questions.
23
24	It is also simply a way for knowledgeable people to get fame, glory, points, (maybe money), in exchange for placing trades on specific outcomes.
25
26	<strong>How does it work?</strong>
27	An event is represented as a portfolio of outcomes (items). For example: The portfolio of "Will it rain tomorrow" might contain the outcomes "Yes" or "No". If you live in a rainforest the "Yes" might trade at 95 points while the "No" trades at 5 points. This represents a belief by the traders in the market that there is a 95% chance of rain tomorrow. <em>If you think there is more than a 95% chance of rain tomorrow you should buy that item.</em>
28
29	When people make purchases based on their beliefs, the markets often become accurate representations of the likelihood of the outcomes.
30
31	<strong>Advanced Trading: First Trades for an Event</strong>
32	When an event is first opened for trading the system requires some traders to buy the entire portfolio (paying 100 points for both the "yes" and "no" options in our rain example). Then those traders should place orders to sell one or the other (or both) at a price that seems reasonable to them. This enables other traders to simply buy one of the contracts instead of having to buy the portfolio.
33
34	<strong>Advanced Trading: "Short selling" an Outcome</strong>
35	If you think an outcome in a portfolio is trading at too high of a price you can "short sell" to take a position against it. To do this you simply buy the portfolio and then sell that outcome. Modifying the earlier rain example, we could have a market for Any form of Precipitation Tomorrow with the outcomes of Rain, Snow, and None and let's say that None is trading at 10 points. If you think that there definitely will be precipitation but you are unsure which kind then you could buy the entire portfolio and sell the None for 10 points. This allows you to own both kinds of precipitation.
36
37
38
39	For more information, be sure to check the project homepage at
40	http://openpredictionmarkets.org/
41
42	Module Author: Greg Knaddison (greggles)
43	greg AT knaddison . com
44	http://drupal.org/user/36762
45
46	$Id: README.txt,v 1.2 2008/01/19 17:52:52 greggles Exp $