In July 2003, press reports began to surface of a project within the Defense Advanced Research Projects Agency (DARPA), a research think tank within the Department of Defense, to establish a Policy Analysis Market that would allow trading in various forms of geopolitical risk. Proposed contracts were based on indices of economic health, civil stability, military disposition, conflict indicators and potentially even specific events, For example, contracts might have been based on questions like "How fast will the non-oil output of Egypt grow next year?" or "Will the U.S. military withdraw from country A in two years or less?" Moreover, the exchange would have offered combinations of contracts, perhaps combining an economic event and a political event. The concept was to discover whether trading in such contracts could help to predict future events and how connections between events were perceived. However, a political uproar followed. Critics savaged DARPA for proposing "terrorism futures," and rather than spend political capital defending a tiny program, the proposal was dropped.
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