Re: death market: It seems the Pentagon (Wolfowitz) has caved on the DARPA project.

Facing outraged Democratic senators, Deputy Defense Secretary Paul Wolfowitz said he learned of the program in the newspaper while heading to a Senate Foreign Relations hearing on Iraq.

"I share your shock at this kind of program," he said. "We'll find out about it, but it is being terminated."

Translation: "I know nothing about this, but if I'd known it was going to be such a political cat in a sack I damn sure wouldn't have approved of it, which I probably did anyway, because surely nothing of this magnitude was going on without senior leadership's knowledge." There are a lot of very good reasons for trying a program like this, and probably some good ones for being cautious. DARPA is supposed to come up with wild ideas and see if any make sense. This is a great example and now we'll not get to find out if it's workable. What's worse is the over the top reaction from politicians trying to pile on for political points.

Sen. Barbara Boxer, D-Calif., told Wolfowitz "I don't think we can laugh off that program,"

"There is something very sick about it," she said. "And if it's going to end, I think you ought to end the careers of whoever it was thought that up. Because terrorists knowing they were planning an attack could have bet on the attack and collected a lot of money. It's a sick idea."

As for the main criticism of the plan, that it encourages terrorists to bet on an attack and then clean up when they pull it off, this misses the point. Heavy betting on a particular incident indicates the market finds it more likely to occur, so authorities can take necessary precautions. There is a danger of hoaxes by traders creating a lot of wasted security effort. But with such a limited number of traders (10,000) we can screen for criminals like this.

Another question, though, is how likely am I to wager on an outcome that my wager makes marginally LESS likely to occur. Just reduces what I'm willing to pay for the contract, I guess. Still seems counterintuitive, but such is much of life.