I’m thrilled to announce the launch of Predictalot, a combinatorial prediction market for the NCAA Men’s Basketball playoffs. Predict almost anything you can think of, like *Duke will advance further than UNC*, or *Every final four team name will start with U*. Check the odds and invest points on your favorites. Sell your predictions anytime, even as you follow the basketball games live.

The basic game play is simple: select a prediction type, customize it, and invest points on it. Yet you’ll never run out of odds to explore: there are hundreds of millions of predictions you can make. The odds on each update continuously based on other players’ predictions and the on-court action.

Predictalot is a Yahoo! App, so you can play it at apps.yahoo.com or you can add it to your Yahoo! home page. I have to admit, it’s an incredible feeling to play a game I helped design right on the Yahoo! home page.

That’s all you need to get started. If you’re curious and would like a peek under the hood, read on: there’s some interesting technology hidden in the engine.

#### Background and Details

Predictalot is a true combinatorial prediction market of the sort academics like us and Robin Hanson have been dreaming about since early in the decade. We built the first version during an internal Yahoo! Hack Day. Finally, we leveraged the Yahoo! Application Platform to quickly build a public version of the game. (Note that anyone can develop a YAP app that’s visible to millions — there’s good sample code, it supports YUI and OpenSocial, and it’s easy to get started.) After many fits and starts, late nights, and eventually all nights, we’re proud and excited to go live with Predictalot version 1.0. I can’t rave enough about the talent and dedication of the research engineers who gave the game a professional look and feel and production speed, turning a pie-in-the-sky idea into reality. We have many features and upgrades in mind for future versions, but the core functionality is in place and we hope you enjoy the game.

In the tournament, after the play-in game, the 64 top college basketball teams play 63 games in a single elimination tournament. So there are 2 to the power 63 or 9.2 quintillion total possible *outcomes*, or ways the entire tournament can unfold. Predictalot implicitly keeps track of the odds for them all. To put this in perspective, it’s estimated that there are about 10 quintillion individual insects on Earth. Of course, for all practical purposes, we can’t store 9.2 quintillion numbers, even with today’s computers. Instead, we compute the odds for any outcome on the fly by scanning through the predictions placed so far.

A prediction is a statement, like *Duke will win in the first round*, that will be either true or false in the final outcome. In this case, the prediction is true in exactly half, or 2 to the power 62 outcomes. (Note this does not mean the odds are 50% — remember the outcomes themselves are not all equally likely.) In theory, Predictalot can support predictions on *any* set of outcomes. That’s 2 to the power 2 to the power 63, or more than a googol predictions. For now, we restrict you to “only” hundreds of millions of predictions categorized into thirteen types. Computing the odds of a prediction precisely is too slow. Technically, the problem is #P-hard: as hard as counting SAT and harder than the travelling salesman problem. So we must resort to approximating the odds by randomly sampling the outcome space. Sampling is a tricky business — equal parts art and science — and we’re still actively exploring ways to increase the speed, stability, and accuracy of our sampling.

Because we track all possible outcomes, the predictions are automatically interconnected in ways you would expect. A large play on Duke to win the tournament instantly and automatically increases the odds of Duke winning in the first round; after all, Duke can’t win the whole thing without getting past the first round.

With 9.2 quintillion outcomes, Predictalot is to our knowledge the largest prediction market built, testing the limits of what the wisdom of crowds can produce. Predictalot is a game, and we hope it’s fun to play. We’d also like to pave the way for serious use of combinatorial prediction market technology.

Why did Yahoo! build this? Predictalot is a smarter market, letting humans and computers each do what they do best. People enter predictions in simple terms they understand like how one team fares against another. The computer handles the massive yet methodical number crunching needed to combine all the pieces together into a coherent overall prediction of a complex event. Markets like Predictalot, WeatherBill, CombineNet, and Internet advertising systems, to name a few, represent the evolution of markets in the digital age, empowering users with extreme customization. More and more, matching buyers with sellers — the core function of markets — requires sophisticated algorithms, including machine learning and optimization. Predictalot attempts to illustrate this trend in an entertaining way.

David Pennock

Mani Abrol, Janet George, Tom Gulik, Mridul Muralidharan, Sudar Muthu, Navneet Nair, Abe Othman, Daniel Reeves, Pras Sarkar

Wow, nice work!

Thanks aj.

Do the “sum of the seeds” predictions mean what I think they mean? So if the first, second, third, and fourth seeded teams our in the final four, is the sum of the seeds 1 + 2 + 3 + 4 or 10?

Questioner: yes, exactly right.

Well I’m not sure that the site/application is correctly inferring the odds of “sum of seeds” style bets. For example, how many of the 9.2 quintillion outcomes are there in which the sum of seeds for the Final Four would be less than 10? By my thinking it’s 0. The application seems to think it’s possible.

Questioner: I think you’re right that something is incorrect there; we’re investigating. Note it is definitely possible for the sum of seeds to be less than 10, because there are four #1 seeds, four #2 seeds, four #3 seeds, etc. However it should be impossible for the sum of seeds in the final four to be less than 4.

Oh, there are four #1 seeds!?!? Shows you what I know! My previous comment was predicated on there only being one #1 seed.

Predictalot could be gamed earlier in the day. You need to close the head-to-head betting as soon as a game ends. I’m also wondering how some folks on the leader board achieved their point totals before any of the games had been played.

Questioner: The sum of seeds math is fixed.

Polish: The actual game outcomes should be updated faster (almost real time) now. Those players probably got lucky based on buying and selling on price fluctuations.

Thanks for playing and for your feedback! Keep it coming: thanks for helping us improve the app.

Would be great if there was something like this available for soccer.

This is a great little game.Love the game, wish there were some prizes though. Also, I would like to be able to see my pick history. If that option is available I overlooked it, but overall its a great game.

Option Tips