I do believe it was over 12 years ago that I first had the experience of paying for a shopping bag - in the Netherlands, buying groceries most people tended to take cloth bags with them. Because if you wanted a plastic bag to put your groceries in, you’d have to pay 10 cents or so… they also started doing this a couple of years ago in my native South Africa. But of course, I haven’t yet come across this market-based technique for encouraging people to use reusable bags or (what I now do sometimes) not take a bag at all if they can easily carry something, put it in a backpack or so on.

BUT, living of course in San Francisco we get to be at the cutting edge of consumer environmentalism: SF recently became the first US city to ban plastic shopping bags (though I’m not sure when that actually goes into effect — in March they said 6 months but I haven’t noticed it yet) and over the last few months many stores have been pushing their cloth bags quite heavily. This is great, but I thought to myself — if I weren’t a conscientious consumer as I am, and push came to shove and it was a question for me of really really remembering to bring those cloth bags with me, or of simply coughing up to carry my goods home in a non-recyclable non-reusable form, what would encourage me? Shouldn’t I (as someone who can afford more) have to pay more for a less-reusable, less-green resource than someone else who earns less?

In Finland, a variety of fines are progressive and linked to publicly-available earnings information on Finnish citizens from their tax records (as reported by the WSJ vis a vis the $71,400 speeding fine in 2001). Now what if that approach was taken to green violations? Surely if we want to change behavior, we have to modulate the market mechanism to truly take into account the individual situation? The bag example is a bit extreme for this (though it’s what got me thinking), but I bet we could come up with quite a few environmentally-evil things to differentially fine people for if they were caught doing them. Because there are certainly some externalities being imposed by offenders

This fascinating Valleywag piece has a financial consultant who has studied the Second Life economy in detail, and he discusses his inability to move large sums into or out of the game world. So much for free flow of dollars — a good reminder that it’s all fine and well to focus on price but what most people forget to obsess about in new markets is liquidity.

This is the most fun you’ll have today; check the chances and hedge the risk of it snowing on you this weekend! Thanks to Howard for the link. Anothr fun way to gamble, and of course link up with weather which is one of the top US obsessions. I can see it now — office “weather” pools!

Last week I chatted with Adam Siegel, founder of Inkling Markets. Inkling has put together some neat (Ruby on Rails) software that lets companies or individuals run their own prediction markets for fun or (intellectual not real) profit. I like what they’ve done because it’s easy and simple to get started and for something like an internal corporate “play-money” application, that’s key. They use an automated market maker (see this entry on the indispensible Chris F. Masse’s journal for more details) based on scoring rules created by Robin Hanson.

This type of stuff is very exciting in two ways - obviously I love trying to figure out how to advance the “it seems like it’s gambling” widespread consumer applications of prediction markets that are still currently stuck in that gambling-or-weak-app-no-liquidity space, but also the (2nd) is being able to use them to create better incentives for people in certain closed environments to share information they may not know they have to help inform better decisions! So much in life is about (1) having the right motive forces / motivation and of course the inexorable (2) timing!

Lew Ranieri and Seth Goldstein’s conversations about the mortgage market and internet leads are simply a must-read.

I was one of the SF people invited to lunch at Prosper’s offices here at 153 Kearny. It was interesting to hear more from CEO Chris Larsen and also hear questions from some of the early adopters. I liked their approach and it really highlights to me some of the differences between what I saw 6-7 years ago in the ways companies approached (didn’t) their consumers vs today. There are certainly going to be some flameouts and a lot of firms whose be-acquired-only exit doesn’t pan out, but there is a much greater sense of authenticity and purpose and passion with many of these new companies.

Reading the NY Times today, not too surprised to see that the FEMA aid program has been riddled with fraudulent applications - but the extent thereof should anger all taxpayers. In this time of sophisticated anti-fraud software it appears even the most rudimentary of precautions were not taken. “at least 900,000 of the 2.5 million applications for all forms of individual assistance were potential duplicates” - and the GAO was itself able to extract significant funds in a test using fake info. This type of mismanagement should anger us all as it will means less money for the needy and will chill the future giving of firms and individuals alike.

Poker has become more than a flash in the pan phenomenon. Another interesting article in MarketWatch discussing the poker economy. Poker is just fun, but the following quote from the article cuts to the heart of some of this resurgence:

“They are selling a dream,” Morris said. “I love baseball but I know I am never going to play right field for the Giants. However, I also know that I am one tournament away from being a professional poker player.”

Michael Parekh has some good thoughts concerning the Grokster ruling and the Party Gaming IPO

Astonishing that a multi-billion dollar Internet company has 90% of its customers in the US and has “no assets” in the US. As Michael says it is the ultimate outsourcing story!

Looks like Party Gaming is having trouble getting investment banks excited about taking it public ~ with an estimated valuation of $10 billion. Again, the legal problems these companies have in the US are all the more intruiging when you consider how many of their customers are in the US and how much money they spend on advertising online (a LOT even though many of the larger sites won’t take their money).

Good article on Reuters this weekend concerning online gambling and how it has skyrocketed in size. The point it makes is that over half of the funds gambled online are coming from the US. The US is where it not legal, and these companies are thus based offshore — begging the question of when the US will embrace this instead of foregoing the tax revenues and other benefits. I just saw PartyPoker.com (whose parent PartyGames is looking to go public in London at a $6 *billion* plus valuation!) has a television advertisement here in the US telling people about the “world’s largest poker school” where they can play for free. Of course, from there it’s a short jump to the paid version! Time to get real - this stuff is going on, and we should stop pretending that it is not!

I liked Charlene Li’s post about the Harvard-Yale prank… I hadn’t realized that Forrester analysts now had blogs too, but I guess I haven’t really been following the market watchers at Forr, Jup et al that closely lately.

It’s relatively easy to set up “event” sites to try to capitalize on an item such as the above, or a brief appearance on TV. Remember William Hung? his first site was clearly slapped up with some amazon affiliate links, it’s now a more serious affair. The original was charming, now it’s just another advertising-network-hub (more about that later: when I visited I got at least 6 third-party cookies).

But with domains being fairly inexpensive (and somewhat available if you don’t mind a .us or a couple of hyphens in the name), web-authoring (not just blogging, but in general) being quite easy to master or to hire someone for a small amount of money, we’re likely to see more and more of these types of sites. So then the big item left is “how do I monetize my 15 minutes most effectively?” and that is where the affiliate links, the advertising networks (another ad for a screensaver, please!) and the tip jars come in (the last are my favorite, but probably are the least lucrative).

I have little doubt if not already, soon some enterprising folks will create a 15minutes service site that provides soup-to-nuts monetization “want to cash in on that single-episode-before-you-got-fired/voted off/shot with paintballs reality TV appearance?” complete with website, Google/Overture keyword purchase and tracking, optional “quaint homegrown look/feel” to be later replaced with “shameless commercial” look and feel… the options are endless!!

ING Direct sponsored five hours of free train rides on BART in SF for $250k according to this story. I wasn’t there to take advantage of the 4am - 9am fillip, but this kind of promotion smacks of ‘99, doesn’t it? No worries, I like ING Direct and their services… certainly high PR value, but not so sure it will deliver a tonne of customers for them in the near term…

I read with interest this morning in this week’s Economist that the Pentagon is going to scrap its controversial Policy Analysis Market program, aimed at buying/selling futures in terrorist attacks, assassinations and other similar events. Actually a very interesting idea in giving stakeholders incentives to bet along the lines of information they have (what are the odds of a North Korean missile attack? want to buy futures on that?), but most people would and should think this would be hard or impossible to get off the ground. Also, isn’t the assumption that the US government has both the most intelligence and the most money to be the biggest player in such a market? Who’d take the other side of their trades? This article discusses the role of Dr. John Poindexter who it appears might take the fall for this ill-conceived idea… I suggest some reading on the subject, the fascinating and wonderful book, The Shockwave Rider where such betting/futures systems are widely used for all kinds of current events and news.

Yet again, new privacy legislation in California failed to make it out of the Assembly (in spite of support from embattled Governor Gray Davis) [SF Chronicle story]. As this article points out, the amount of money that various financial institutions make from selling customer information is hard to get a handle on, but clearly must be a lot to justify the large amounts being spent to lobby against legislation like SB1 here in California, not to mention nationwide measures.

These amounts of money must be really large (or benefits in terms of reduced marketing dollars needed to buy lists of potential customers for complementary financial providers), because you would think that financial institutions would say to themselves “Gee maybe in the long-run consumers will buy more from my company if they trust us not to share their (sensitive) information all over the place?”. For the most part, no, they don’t think this way.

I will point out that ING Direct sent out it’s annual GLB privacy notice to customers recently and was very upfront about being completely opt-in, and not ever sharing any information without explicit consent of consumers. As they say in the letter “you’ve come to expect us to do things differently”. Sadly, this forward-thinkin behavior among FIs is the exception and not the rule.

In an article that’s sure to make my friend Michael Moore happy, it’s not just here in the US that guns are easy to come by, in South Africa a second-hand AK47 is cheaper than buying a book. Actually a great idea: reduce/remove taxes on books, as an incentive to get more people to read — makes sense!