It looks like rumors must have abounded in regards to Yahoo!’s acquisition of flickr before the deal was final. The deal was announced late on March 20th, but Yahoo!’s buzz game was hopping by around the 16th. If you look at the chart here, you’ll see that the trading price shot up from 10 to 20 in the days preceding the deal. Unfortunately for those who made the bets, the underlying statistics that set the payoff are searches on Yahoo!, which didn’t respond until the 21st. The masses didn’t know about the rumors, but should have been paying attention to Yahoo!’s buzz.

The data from March 25 to April 1 is missing (hence straight lines between those dates) because Yahoo! had to reset the markets after participants discovered ways to turn the market maker into a money pump. Yahoo! first mentioned the problem on March 29, and made a couple of changes over the next few days before settling on a new pricing mechanism: prices are proportional to shares outstanding rather than to stock market cap.

The black lines on the graph show times when the buzz game’s management reset values to correspond to the underlying fundamentals. They readjusted that way before the changes; now they pay out cash dividends proportional to current “buzz.”

For a while in the wake of market meltdowns, they outlawed buying more than one stock in any market, which meant the only thing you could do was bet on a single favorite in any market. Since the most common market aberration is one stock in a market being overpriced (the adherents in the game are more zealous than warranted by Yahoo’s underlying search statistics) it’s more common to want to bet against a stock than in favor. The buzz game doesn’t directly support betting against a stock–you have to buy yes in all the other stocks to get that effect.