Predicting Earthquakes

InTrade has just launched a new contract:

The Exchange has listed a market on an earthquake of at least 9.0 on the Richter Scale ocurring anywwhere in the world in 2008…

This contract will settle (expire) at 100 ($10.00) if there is an earthquake measuring 9.0 or more on the Richter Scale anywhere in the world before 11:59:59pm ET on the date specified in the contract.

I’m generally a fan of prediction markets, but what on earth is the use of this one? No one has any real information on whether or not a big earthquake will strike our planet this year, which makes this contract essentially a pure gamble. I’ll happily predict that this contract sees negligible volume and crippling illiquidity for its entire lifetime.

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