Chris Masse has the scoop (once again proving how indispensable he is) on a new real-money prediction market coming soon, one of the few with the CTFC’s blessing to operate in the United States: The American Civics Exchange. Their tag line focuses on the insurance angle: “Your greatest financial risks may be hiding in plain sight — market-based solutions for political risk management”.

Meanwhile, Carlos Saieh, a sharp student in Justin Wolfers’ class where I just gave a guest lecture, found an apparent pricing bug in another insurance-oriented prediction market, WeatherBill (proving how indispensable attentive students with laptops and wifi are):

Let’s see: for a mere $770, you can purchase a contract that pays out at most $700 in the absolute best case, possibly much less. Hmm, let me think about that one.

Finally, a financial contract that makes mortgage-backed securities look good.