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DARPA - FutureMAP Program - Policy Analysis Market (PAM) Cancelled

FutureMap Program Objective:

The DARPA FutureMAP (Futures Markets Applied to Prediction) program is a follow-up to a current DARPA SBIR, Electronic Market-Based Decision Support (SB012-012). FutureMAP will concentrate on market-based techniques for avoiding surprise and predicting future events. Strategic decisions depend upon the accurate assessment of the likelihood of future events. This analysis often requires independent contributions by experts in a wide variety of fields, with the resulting difficulty of combining the various opinions into one assessment. Market-based techniques provide a tool for producing these assessments.

There is potential for application of market-based methods to analyses of interest to the DoD. These may include analysis of political stability in regions of the world, prediction of the timing and impact on national security of emerging technologies, analysis of the outcomes of advanced technology programs, or other future events of interest to the DoD. In addition, the rapid reaction of markets to knowledge held by only a few participants may provide an early warning system to avoid surprise.

Program Strategy:

The DARPA FutureMAP program will identify the types of market-based mechanisms that are most suitable to aggregate information in the defense context, will develop information systems to manage the markets, and will measure the effectiveness of markets for several tasks. Open issues that will drive the types of market include information security and participant incentives. A market that addresses defense-related events may potentially aggregate information from both classified and unclassified sources. This poses the problem of extracting useful data from markets without compromising national security. Markets must also offer compensation that is ethically and legally satisfactory to all sectors involved, while remaining attractive enough to ensure full and continuous participation of individual parties. The markets must also be sufficiently robust to withstand manipulation. FutureMAP will bring together commercial, academic, and government performers to meet these challenges.

(Source DARPA)

About the PAM Concept

'Analysts often use prices from various markets as indicators of potential events. The use of petroleum futures contract prices by analysts of the Middle East is a classic example. The Policy Analysis Market (PAM) refines this approach by trading futures contracts that deal with underlying fundamentals of relevance to the Middle East. Initially, PAM will focus on the economic, civil, and military futures of Egypt, Jordan, Iran, Iraq, Israel, Saudi Arabia, Syria, and Turkey and the impact of U.S. involvement with each.

The contracts traded on PAM will be based on objective data and observable events. These contracts will be valuable because traders who are registered with PAM will use their money to acquire contracts. A PAM trader who believes that the price of a specific futures contract under-predicts the future status of the issue on which it is based can attempt to profit from his belief by buying the contract. The converse holds for a trader who believes the price is an over-prediction – she can be a seller of the contract. This price discovery process, with the prospect of profit and at pain of loss, is at the core of a market’s predictive power.

The issues represented by PAM contracts may be interrelated; for example, the economic health of a country may affect civil stability in the country and the disposition of one country’s military may affect the disposition of another country’s military. The trading process at the heart of PAM allows traders to structure combinations of futures contracts. Such combinations represent predictions about interrelated issues that the trader has knowledge of and thus may be able to make money on through PAM. Trading these trader-structured derivatives results in a substantial refinement in predictive power.

The PAM trading interface presents A Market in the Future of the Middle East. Trading on PAM is placed in the context of the region using a trading language designed for the fields of policy, security, and risk analysis. PAM will be active and accessible 24/7 and should prove as engaging as it is informative. '

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PDF Version of News Release

News Release

Defense Advanced Research Projects Agency
3701 North Fairfax Drive
Arlington, VA 22203-1714

“Providing technological innovation for national security for over 40 years.”


The Director of the Defense Advanced Research Projects Agency (DARPA) announced today that DARPA’s participation in the Futures Markets Applied to Prediction (FutureMAP) program has been withdrawn. The related Small Business Innovative Research effort will be terminated for convenience, effective immediately. FutureMAP was one of the sponsors of the Policy Analysis Market web site that has been the subject of recent news articles. The FutureMAP research project was meant to explore the power of futures markets to predict and thereby prevent terrorist attacks. Futures markets have proven themselves to be good at predicting such things as elections results; they are often better than expert opinions. The program was part of DARPA’s overall thrust to find new ways to thwart terrorism.

“FutureMAP was a small program that faced a number of daunting technical and market challenges”, such as Can the market survive and will people continue to participate when U.S. authorities use it to prevent terrorist attacks? Can futures markets be manipulated by adversaries?” the DARPA Director said. “Reconsidering those challenges in light of the recent concerns surrounding the program, it became clear that it simply did not make sense to continue our participation in this effort. Our job at DARPA is to explore new ideas and innovative research to enhance national security. The resources that would have been applied to this project will be applied to other more fruitful pursuits.”

DARPA believes it is important to continue funding research that examines how to better use advanced information technologies and processes as predictive tools for terrorist acts. The U.S. will need such advanced capabilities to solve the problems identified in the Congressional report on the 9-11 attacks.


with questions, please contact Jan Walker, (703) 696-2404, or jwalker@darpa.mil


DoD News Briefing – Mr. Di Rita and Lt. Gen. Schwartz

On the web: http://www.dod.mil/transcripts/2003/tr20030729-0465.html

Presenter: Lawrence Di Rita, Special Assistant to the SecDef Tuesday, July 29, 2003 ...


Q: Larry, the Defense Department today terminated the Policy Analysis Market after it had come under sharp criticism from some members of Congress. What were the reasons for terminating this program? And why did the Defense Advance Research Project Agency allow it to proceed as far as it did before it was dropped?

Di Rita: Well, you're right, the director of the DARPA has agreed to terminate the program. I would, I guess, just better refer you to him, and we can get some more information.

They've evaluated competing requirements for resources across a broad front of programs that they're looking at, programs that are in large part focused on counterterrorism activities, and the director has determined that this is a program that, under further scrutiny, probably doesn't deserve continued support.

Q: I have a follow-up on that, please. It just seems -- you know, I've been around this building 12 years. It seems so absurd that a program like this could ever see the light of day, from what we know about it. I mean, did it pass your muster? I mean, did it pass anybody's muster, any --

Di Rita: What I understand -- and I really don't think we'll have much more to say on this point because the program's been terminated. But what I do understand is whatever procedures are in place to evaluate these programs, as DARPA starts to look at whether or not it's the type of program worth supporting were followed.

But I just -- there's really -- I don't think I have much more to say on that.

Q: Well, we go back --

Q: Senator -- (inaudible) -- suggested that --

Q: -- we go back to John -- just one more follow-up. We go back to John Poindexter again, who apparently had his hand in this program, as he did in one often called, you know, "big brother" about the computerized thing. Is he still on the payroll?

Di Rita: At the moment, Admiral Poindexter continues to serve in DARPA. As you know, the Total Information Awareness Program, we've established a number of internal and external safeguards. We've briefed those extensively up on the Hill. We're going to continue to evaluate those kinds of programs with respect to the protections that are necessary as we conduct this kind of really cutting-edge research for counter terrorist activities. But we have established an external review board for those kinds of things, and we'll continue to do that sort of thing.

Again, I just don't think I have a heck of a lot more to offer on this. So if you've got another subject, I'll take it.


Q: Just to get back to the questions that were asked at the outset about the market program, the futures program, can we get an answer for the record as to how that process -- how that was approved, who signed-off on it and when?

Di Rita: We'll provide that information. I don't have any information on it, but -- yes?


Q: -- talking about the DARPA program. It sort of slid under the radar there, but you mentioned "established an external review board." Was that established before this program, or --

Di Rita: I mean, it was several months ago now we established a board for the purposes of some of the research being done that people have concerns with regard to protecting personal information and those kinds of things.

It was established in view of the so-called Total Information Awareness Program.

So we've got -- I was kind of broadening out on the kind of -- some of the research being done is unusual, it's different, it's new, it's got -- there may be people who see this as cutting edge and maybe beyond certain limits that they're comfortable with. So, in order to make sure that we were always going to sort of do things in a way that everybody could be comfortable with, we asked a number of people with expertise in these issues to form this outside board. We announced that, gee, several months ago.

Q: And did this program pass through that external board?

Di Rita: Well, it wouldn't have necessarily. And I wasn't trying to make a direct connection.

Q: Oh.

Di Rita: I was only speaking to the -- I think somebody asked the question, "How could a program like this even see the light of day?" There's a lot of interesting, unusual and, in some cases, in this case, as it turned out, sort of not worthy research, but research that people at one point sort of thought let's think about this and let's decide if this is worth pursuing. In this case, the director of DARPA decided it was not worth pursuing.

But the fact is, because there's sensitivities out there on the kind -- on research that's new -- because we're in a new world -- we establish these protections. And as I said, we briefed these protections significantly.

Q: And was the decision made because of the public furor and congressional opposition, or because it was determined it was simply a bad idea?

Di Rita: I think I would just refer you to the man who made the decision, and we'll get some information for you on that point.

Q: Is that Admiral Poindexter?

Di Rita: No, no. The director of DARPA, who is a gentleman by the name of Dr. Tony Tether.

Q I thought you said "for the moment," Admiral Poindexter remains at DARPA. So there's no misunderstanding, is that moment going to continue?

Di Rita: I don't have anything to announce on that, I really don't.


PAM Pictures: