The Efficacy Of Prediction Markets

Intrade depends solely on those who play and do not constitute the vast majority who have either no idea how or want to participate. It is too easily manipulated by a very few. It may reflect a possible outcome, but it flies in the face of other well known polling organizations.
***Wrong on that one, as you can see by the article that this thread goes through. Intrade only has one bias: whether you can make money on trading the futures contract of a candidate. In that respect it has a negative bias against underdogs like Hunter because it is hard to sell the contract once you buy it and Intraders really value liquidity.

Even though Duncan is an honorable man, his campaign has failed from the begining.
***I see that sentiment that he is an honorable man a lot. He has respect. You can’t buy that no matter how much money you throw into the pot. His campaign has been frustratingly faltering in the polls — until lately when he started showing up at 4%. In that same time, Thompson’s campaign LOST 30 points at Intrade. Now that’s lousy campaigning.

It is honorable not to ‘need consultants, or have people do work for you, or write your own speeches’, but the downside is you are too busy doing the small stuff to concentrate on the major stuff, like RUNNING for POTUS.
***I agree, which is why we need to get some people on his side doing the small stuff. Back the best man during the primaries because character matters in the presidency — Clinton showed us that.

When you run a NATIONAL campaign, the objective is to get your message out to the people, not just in specific localities, but NATION-wide. And that takes people, and a management that understands what a NATIONAL campaign entails.
***Yup. And he’s running a national campaign and needs you and folks like you to help with it. Why back someone who has taken a gift of name recognition and turned it into a liability?

To that end, his campaign management has failed their man, and those of you who cannot see that are fighting a losing cause, as noble as that is, it is still a lost cause.
***It will be determined at the primaries. If anyone has lost the cause, it’s the guy who has lost poll numbers and 30 intrade points.

I know that pains you and the responses will be what they always are, childish and delusional. You will respond with all the failings of every other candidate just to make your self feel better and your guy look good, but only to you.
***We shall see. Thanks for bumping the thread.

There will be those who say... “it’s a conspiracy’....”the powers that be are not letting Duncan get his message out”......”the MSM is in cahoots with the Bush administration to muzzle Hunter” No matter that the MSM hates GWB, and there is no basis for them to even be in the same room.
***Yes, there will be those who say that. And that is what needs to be overcome for my candidate. But my strategy uses that fact as an ASSET rather than a LIABILITY.

The truth, as painful as it is, is still the truth.
***I agree. And we shall see.

When the NRTL endorsed FDT earlier this week, the Mitt fans, Duncan supporters, Huckabee promoters, and Rudy ravers had a complete breakdown on this forum. More inconsequential, minor-league obscure articles appeared to try and promote ‘your’ candidate.
***I didn’t have a breakdown. I congratulated the Fred supporters on their obvious coup.

Face it. The NRTL endorsement is one of the biggest chips to have on your side of the table in this high stakes game.
***I do face it and I think you are right. But that doesn’t mean the NRTL is right. They made a political calculation and it could backfire on them.

Next for Fred will be the NRA endorsement, with it’s 6-7 MILLION members. And that will be a very big chip, indeed.
***Again you would be right. That doesn’t mean the NRA would be right. Again it could backfire.

Sorry, Intrade is dependent on participation.

Say for example there are 100 conservative voters trading. 60 of them are Duncan supporters, 20 of them for Fred, 20 of them spread among the others.

The stock in Duncan is inflated artificially because the shares available are all bought and garnered by his supporters. Each is looking for a bargain to purchase any loose shares out there, creating a high demand/high price.

Now, the Fred supporters and the also-rans, are very few for the available shares, that means the price deflates as there is a glut of shares to purchase. And that is because not many other supporters care or want to take the time to play in Intrade.

It's a false-positive. It shows there is a desperation in the Duncan supporters to show their guy 'winning' somewhere. It doesn't hold water across the nation or in the national polls. And if Intrade had ANY influence, we'd see more activity in areas not controlled by the MSM, like the Internet. And that isn't happening either.

Sorry, the truth is still the truth.

You can promote Intrade as THE source of record, but if there is not universal participation by a vast majority, it is only another dog and pony show that can be manipulated.

Sorry, Intrade is dependent on participation.
Say for example there are 100 conservative voters trading. 60 of them are Duncan supporters, 20 of them for Fred, 20 of them spread among the others.
***Ok, so for the purposes of your illustration I’ll go along with this so that you can suggest there would be a disparate aggregation of support for one candidate. I will point out a couple of things though. One, that does not happen, it’s invariably a simple cross section and having such a bulge is rare. Second, such a level of subtle manipulation in the price would soon show up because the 20 other guys for Fred would know that the price is artificially inflated and maneuver to take advantage of it. There is an example of this actually happening on Sportstrade with the GWB contracts and, basically, the traders ended up taking a bunch of the guy’s money. It would only work if the traders are really stupid and really unobservant, and neither of those is the case.

The stock in Duncan is inflated artificially because the shares available are all bought and garnered by his supporters. Each is looking for a bargain to purchase any loose shares out there, creating a high demand/high price.
***So the Fred guys see the play, they buy Duncan and sell duncan for a little profit here & there back to the duncan supporters, eventually the price for duncan goes to $75, is way beyond what the market really would bear, and all the Thompson supporters are betting short. Eventually the duncan stock crashes and the duncan guys lost their money on the way up and on the way down and the price stabilizes to a real reflection of value.

Now, the Fred supporters and the also-rans, are very few for the available shares, that means the price deflates as there is a glut of shares to purchase. And that is because not many other supporters care or want to take the time to play in Intrade.
***Again this supposition requires the Fred supporters to be unobservant and stupid at the same time. Usually such people don’t play in futures markets and when they do, they lose all their money fast.

It’s a false-positive. It shows there is a desperation in the Duncan supporters to show their guy ‘winning’ somewhere.
***Yes, for awhile there would exist a $75 false positive duncan price, but eventually the roof crashes in and the game is up. It’s a relatively efficient market.

It doesn’t hold water across the nation or in the national polls. And if Intrade had ANY influence, we’d see more activity in areas not controlled by the MSM, like the Internet. And that isn’t happening either.
***That doesn’t make much sense. There are Intrade contracts for things that the MSM doesn’t control, like whether Osama Bin Laden will get captured by such&such date or the price of oil on Jan1,2008.

Sorry, the truth is still the truth.
***And if you intend to show that Intrade & other markets are being manipulated, it will not only be difficult but ultimately fruitless. It has been tried and it did not work. The truth is still the truth: Prediction markets have a better track record than polls.

You can promote Intrade as THE source of record,
***Straw argument. It is not THE source, but ONE of the sources, and if you combine the data of polls + predictive markets you start to see very similar trends. One trend is that early polls are not reliable. Another is that Intrade is getting better at leading the polls, and for that I will cite the fact that polls lagged Intrade on Ron Paul, McCain, and lately, Thompson. It may also be true of Huckabee but I haven’t seen the claim yet.

but if there is not universal participation by a vast majority, it is only another dog and pony show that can be manipulated.
***That’s asked & answered in the article.

People lie to pollsters but their market bets never lie. Money is a better predictor of voting intention due to its stable nature than sentiment which affective and volatile.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

Here’s an interesting article I found on the Intrade forum.

How to Forecast an Election
(And How To Win One!)
https://bb.intrade.com/intradeForum/forums/show/3.page

by Leighton Vaughan Williams

Leighton Vaughan Williams is director of the Betting Research Unit and director of the Political Forecasting Unit at Nottingham Business School, Nottingham Trent University.

My first personal experience of the relative merits of opinion polls and betting markets in forecasting the outcome of an election occurred in 1985 in a by-election called to fill a vacant seat for the UK Parliament. The by-election was taking place in a rural corner of Wales in a constituency called Brecon and Radnor. The key players were the Labour and the Liberal candidates. On the day of the election a poll was published in the Daily Mirror newspaper, commissioned from the MORI polling organization. This gave the Labour candidate a commanding 18% lead over the Liberal. Meanwhile, a short walk to the local office of Ladbrokes, the leading bookmaker, found a rather different picture. The odds-makers were making the Liberal the odds-on favorite with the Labour candidate the relative longshot. The late-breaking MORI poll did nothing to change the price. Who won? It was the Liberal, of course, and those who followed the money.

Indeed, it seemed to me even then, well before I studied the subject in any depth, that people’s responses to opinion polls are very sensitive to the form and structure of the questionnaire and that the validity of the findings are even more sensitive to the sample of voters taken and whether those surveyed are likely to vote. Meanwhile, decisions backed by hard-earned money are likely to be very carefully considered and to weigh and discount relevant and irrelevant information in a serious and appropriate fashion.
That’s the theory at least. The most convincing point, however, was that the market had done so much better a job of predicting the election result than the trusted pollster. It was several years before I realized that what applied to the small rural backwater of Brecon and Radnor applied equally well in a study of every U.S. presidential election between 1868 and 1940. In only one year, 1916, did the candidate clearly favored in the betting the month before the election end up losing, when Charles Evans Hughes lost to the incumbent, Woodrow Wilson, in a tight race. (See “Historical Presidential Betting Markets,” Paul W. Rhode and Koleman S. Strumpf, The Journal of Economic Perspectives, Vol. 18, No. 2, Spring 2004, pp. 127-141.)

The power of the betting markets in assimilating the collective knowledge and wisdom of those willing to back their judgment with money has only increased in recent years as the volume of money wagered has risen dramatically. Indeed, by 2004 the Intrade market model went stratospheric in predictive accuracy as the market favorite won the electoral votes of every single state in that year’s U.S. presidential election. Meanwhile more than one respected pollster and analyst called the race for John Kerry as late as election day itself.

The betting markets saw their best triumph of 2004 in Florida. Even though a number of polls put Kerry ahead in that state, or said the race was too close to call, the betting markets consistently showed Bush would win Florida comfortably.

Indeed, if the Democrats had paid as much attention to the markets as the polls, I am convinced that the election result would have been different. They could have downsized their effort in Florida and focused their efforts more on other swing states where betting sites showed the race was much closer.

Intrade followed up in 2006 when the market favorite won each and every Senate seat up for election. Moreover, in large part the stronger the favorite, the bigger was the margin of victory.

Follow the Money
The assumption, or at least the hypothesis, must be that the accuracy of the betting markets is created out of the information and intuition of many people rather than the conclusions of a few. Those myriad people feed in the best information and intuition they can because their own financial rewards depend directly upon them. And it really is a case of “follow the money” because those who know the most are likely to bet the most.
Moreover, the lower the transaction costs (there is no tax on betting in the UK) and information costs (in never more plentiful supply due to the Internet) the more efficient we might expect betting markets to become in translating information today into forecasts of tomorrow. The rise in the importance of person-to-person betting exchanges like Betfair offers another reason why the markets are becoming ever more efficient in predicting the future. These exchanges differ from traditional betting markets by eliminating the odds-setting bookmaker, instead providing the technology to match up the best offers to back and lay an outcome on offer from all the clients of the exchange. In so doing they ensure that the margins implicit in the odds are lower than they have ever been. For all these reasons, betting markets today are likely to provide better forecasts than they have done at any time in history.

Buoyed by this enthusiasm for the power of market forces I was sufficiently confident, when asked by The Economist magazine, to call the winner and the seat majority in the 2005 British General Election over two weeks out. My prediction of a 60-seat majority for the Labour Party, repeated in an interview on the BBC Today program was challenged in a BBC World Service debate with the chairman of the MORI polling organization. He wanted to bet me that his figure of a Labour majority of over 100 was a better estimate. I declined the bet and saved him some money. The Labour majority was a little over 60 seats.

In October of this year The Economist ran a follow-up article on election betting, asking me the likely outcome of the British General Election if Prime Minister Gordon Brown, then actively considering his options, decided to ask the Queen for the requisite dissolution of Parliament. After consulting the markets, I declared his odds of a majority just slightly better than even. “So,” I asked, “is the Prime Minister willing to risk his majority on the toss of a coin?” The answer was no.

Low-Volume and Play-Money Exchanges
This is not to say that all betting markets are always right. The Iowa Electronic Markets have been allowing selective trading for modest amounts of money on their exchange since 1988, with some success. Nevertheless, their odds were far off the mark in the 2000 election, predicting that Mr. Bush would win a larger share of the popular vote than Mr. Gore (meanwhile, the real-money “spread betting markets,” available to significant trading volume in the UK, had the electoral winner priced up as a dead-heat). Moreover, the Iowa markets failed to predict the Republican victory in the Senate in the mid-term elections in 2002 and have struggled to maintain their foothold at the top end of predictive accuracy since the rise of the high-volume exchanges. Perhaps this is because Iowa’s markets keep bets to a small size, which puts less pressure on traders to get their predictions right. Perhaps it’s a blip. Time will tell and these low-volume markets, as well as play-money exchanges such as Newsfutures, continue to command respect.

Forecasting elections is not simply a matter of comparing the accuracy of polls with betting markets, however. There is a sizeable literature on the value of econometric models, which take account of such factors as employment, inflation, interest rates, incumbency, in predicting election outcomes. Other methodologies include various ways of weighting the opinions of political scientists, political journalists, political pundits and experts of other stripes, in forecasting the winners and losers.

In my book, Information Efficiency in Financial and Betting Markets, published in 2005 by Cambridge University Press, I employed a blind “moment-in-time” case study, conducted exactly a month before the 2004 U.S. presidential election, to compare and contrast the forecasts implicit in each method. I was left with least confidence in econometric models and most in betting markets, which is what I expected.

One interesting angle, though, is whether a combination of one or more of these methodologies, weighted in one way or another, can do better than any individual forecasting methodology. Just as interesting is the extent to which the accuracy of forecasts derived from election betting markets is affected by altering the structure of the market. For example, is the accuracy of these forecasts affected by the nature of rewards within these markets — whether participants use their own money or “play money” to make trades in the prediction market; is it for example affected by whether artificial limits are placed on the amount of money used by market participants to trade? More generally, to what extent is the accuracy of forecasts derived from election prediction markets affected by altering the structure of the prediction market?

The bottom line, therefore, is not to assume that betting markets provide all the answers, though sometimes it seems like they do. We must always be looking to improve our predictions. And when the markets do fail, we must not be afraid to ask why. When these prediction markets succeed, we must also ask why, and whether they could do even better.

These questions and more are at the forefront of two new journals, published by the University of Buckingham Press, namely The Journal of Prediction Markets and The Journal of Gambling Business and Economics.
On recent evidence, then, some markets have seemed so powerful in predicting election outcomes that one might be forgiven for bothering to turn out to vote at all. Of course, that makes no sense. What does make sense, however, is that political operatives need to pay more attention to the markets in planning their election strategy. If those close to Mr. Kerry had listened to this advice in 2004, the senator from Massachusetts would in my convinced opinion now be President Kerry. Any sophisticated campaign needs to make sure that it doesn’t repeat that mistake.

For those who want to know more, the Betting Research Unit at Nottingham Business School, now linked to the newly-formed Political Forecasting Unit at the same institution, is just an e-mail (leighton.vaughan-williams@ntu.ac.uk) away.

In conclusion, recent years have witnessed groundbreaking shifts in the way in which betting is taxed, regulated and perceived by economic theorists. This means that betting markets will become more than just a major part of our future. Properly utilized they will be able to tell us what that future is likely to be! We seem therefore to have created, almost by accident, a “high-tech” crystal ball that taps into the accumulated expertise of mankind and makes it available to all. The challenge now is to make the best use of it.

.

According to Intrade, the winner of the December 12th GOP debate was... Duncan Hunter.
http://www.freerepublic.com/focus/f-news/1938773/posts

USC was a 41 point favorite over Stanford, in a much more informed, much more “efficient” market than this one. A few people made a lot of money on Stanford because they dismissed conventional wisdom for some reason. Gut instinct, emotions, or they knew something the rest of the market didn’t. The market blew that call. Markets are not about predicting. They are about opinions on predicting. With a finite pool of money (due to low participation), they will never be fully efficient.

Futures markets like this reflect conventional wisdom. That’s all you can really say about them.

bump

Just one more comment... if not for uncertainty about the predictions, there would be no market. It is the uncertaintly that makes it valuable. If the predicted results were certain, the market would move to one person, paying $1 for every $1 invested. Kind of a silly exercise at that point.

Futures markets like this reflect conventional wisdom. That’s all you can really say about them.
***Well, this article says one more thing about them: they’re more reliable than polls. Look through FR to see how much politicos and pundits rely upon polls.

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According to Intrade, the winner of the December 12th GOP debate was... Duncan Hunter.
http://www.freerepublic.com/focus/f-news/1938773/posts

Over on this thread, Johnnyz basically had this stuff to say about the efficacy of prediction markets, so I’m posting my response here.

http://www.freerepublic.com/focus/news/1941807/posts?page=75#75

To: Kevmo
Intrade has a new set of contracts, covering the possibility of brokered conventions. Bid is at 15%, ask is at 25%, earlier sold at 50%.
I don’t buy into the market predictions on politics.

They should be better than taking the straight result of a single poll, or even of a poll aggregate, because they use the wisdom of crowds — but the wisdom of crowds thing is predicated on people making individual judgements. Instead, you get a herd mentality, which results in improper valuations.

Much better is something like the Tarrance Group(??), where experienced pollsters examine detailed data, with experience and judgements and project a finish with great accuracy. Or, using my own political judgement, and my own reading of polls. I don’t have as much data as those guys but I have almost as much as something like Intrade, and much better judgement than the masses of people who bought Britney Spears CDs imo.

Cheers.

75 posted on 12/20/2007 5:39:00 AM PST by JohnnyZ (victim victim Mitt victim victim Romneyvictim victim victim so persecuted, poor me!)
[ Post Reply | Private Reply | To 74 | View Replies | Report Abuse ]

***Basically, what you say doesn’t hold any water in the light of what’s been posted on this thread. Also, your opinion isn’t worth all that much to me. If I want to know some strong data on how Giuliani is doing in Nevada lately and over the last few weeks, Intrade is a couple of clicks away. But JohnnyZ, I doubt JohnnyZ has been tracking data in Nevada and soon enough the data generated about brokered conventions will more than outweigh whatever Johnnyz can say with his single, shallow opinion.

If I want to know some strong data on how Giuliani is doing in Nevada lately and over the last few weeks, Intrade is a couple of clicks away.

If you had a clue, you would know Nevada is virtually meaningless.

Good political judgment goes far, far further in predicting results than the groupthink of something like Intrade. It's good at quantifying conventional wisdom, to a point, for whatever that's worth (not much).

If you had a clue, you’d realize that your own opinion is meaningless stacked up against a market place like Intrade.

Are you regularly paying out on odds that you knew so well beforehand? Nope. So why should we listen to you?

Are you regularly paying out on odds that you knew so well beforehand? Nope. So why should we listen to you?

YOU should listen to Intrade since your judgement is likely notsogood. I think you'd be better off listening to me, but I'm not out to convince you of that; I don't care.

I think my judgment and analysis is better than conventional wisdom, therefore I should listen to me.

The thing about the wisdom of crowds is that crowds are very often wrong, for very good reasons which the theory addresses. There are many caveats when applying the wisdom of crowds to the real world, and you seem to be ignoring them and ignorant of them.

I think my judgment and analysis is better than conventional wisdom, therefore I should listen to me.
***Why, that’s just plain beautiful. Thank you.

.

According to Intrade, the winner of the December 12th GOP debate was... Duncan Hunter.
http://www.freerepublic.com/focus/f-news/1938773/posts

Rasmussen has started using Intrade results.
http://www.freerepublic.com/focus/f-news/1945852/posts

They seem to openly admit that the data for Iowa between Christmas and New Year’s is unreliable: “Rasmussen Reports has not conducted polling in Iowa between Christmas and New Years. We have doubts about the ability to obtain reliable results during that time frame.”

Huckabee has surged because he won a couple of debates and he’s got evangelical support. If a quick rise can happen to the liberal pro-life evangelical Huckster, it can happen to the conservative pro-life evangelical Hunter.

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According to Intrade, the winner of the December 12th GOP debate was... Duncan Hunter.
http://www.freerepublic.com/focus/f-news/1938773/posts

Why the smart money is on Duncan Hunter
http://www.freerepublic.com/focus/f-news/1926032/posts

In this poll Hunter is up 3% and even with Paul and Thompson.
http://www.wxyz.com/news/local/story.aspx?content_id=3481ef60-8195-46a9-af04-b87b907bcfdd

Slip18 and I recently had this exchange a while back and I’ll be posting a reply to this thread, since it aims towards the efficacy of prediction markets.

http://www.freerepublic.com/focus/f-news/1925892/posts?page=131#131

http://www.freerepublic.com/focus/f-news/1946819/posts?page=45#45

To: Kevmo
How much have you earned from trading, Mr. Trader? How long have you been trading?
There are leading indicators and lagging indicators. The lagging indicators include COT (Commitment of Traders — the Commercial folks) on data, and it appears your Intrade is going by that. Doesn’t work that way. BTW, COT data only comes out every two weeks, which is different than what you are showing; however, it’s the same thing. You are using a lagging indicator to show who is winning the primary race.

“Pick your poison, either go with an acknowledged tool for determining futures percentages or your grammatical backtracking from certainty.”

What does that mean?

I don’t know if Fred Thompson is going to win the nomination, but I sure as heck am working on it.

Here’s a few other little clues for you. It’s called PAST.

P = Psychology (emotions)
A = Asset management, or I guess you could say “Watch your arse management
S = Selection
T = Timing

I do believe Sen. Thompson has all of the above.

131 posted on 11/15/2007 11:11:02 AM PST by Slip18 (Fred Thompson for POTUS 2008)
[ Post Reply | Private Reply | To 122 | View Replies | Report Abuse ]

To: Kevmo
How much have you earned from trading, Mr. Trader? How long have you been trading?
***This was asked & answered on the smart money thread. It’s a classic dilemma, because the first posters to ask me were directly saying that I was trying to cover a bad bet. So I’m not going to cooperate with handing you the whip you’ll use to strike me, so to speak.

Why the smart money is on Duncan Hunter
http://www.freerepublic.com/focus/f-news/1926032/posts

There are leading indicators and lagging indicators.
***I’ve been posting that throughout Free Republic. For the GOP races, I’ve noticed a couple of indicators from Intrade that were leading. One was that Huckabee won some debates by Intrade snapshot analysis, and then later on he started climbing in the polls. It’s my hope that Hunter follows this line. Another leading indicator was Ron Paul, who was trading in the high 9’s before the biggest fund raiser in GOP history, only to be greeted with a yawn on Intrade and bumps in the polls. Another leading indicator was Fred’s insidious drop on Intrade, followed by a drop in the polls. A Dem leading indicator was that Obama took the lead in Iowa on Intrade before the polls showed it.

The lagging indicators include COT (Commitment of Traders — the Commercial folks) on data, and it appears your Intrade is going by that.
***I suppose you’ll need to be more explicit. For instance, the snapshot approach to show before & after on debates is based upon Intraders buying behavior, which is not 2 weeks old, but only a few seconds old. That’s probably one reason why Rasmussen started including Intrade results on their polling website.

Doesn’t work that way. BTW, COT data only comes out every two weeks, which is different than what you are showing; however, it’s the same thing. You are using a lagging indicator to show who is winning the primary race.
***Nope, as demonstrated above.

“Pick your poison, either go with an acknowledged tool for determining futures percentages or your grammatical backtracking from certainty.”
What does that mean?
***Basically, you’ll need to read through this efficacy thread. Prediction markets have proven to be more reliable than polling results. If you acknowledge that, then we can talk about Intrade results with respect to the current race. When you speak with such certainty that “Fred will be president”, you are picking grammatical poison of pretending to have a crystal ball. When you say, “Your Intrade is crap, and you should know it”, you are showing that you have not read this particular thread, so that’s why I’m answering on this efficacy thread.

I don’t know if Fred Thompson is going to win the nomination, but I sure as heck am working on it.
***That is a “grammatical backtracking” from “Fred will be president.”

Here’s a few other little clues for you. It’s called PAST.
P = Psychology (emotions)
A = Asset management, or I guess you could say “Watch your arse management
S = Selection
T = Timing
I do believe Sen. Thompson has all of the above.
***Interesting acronym. We discussed the elements of an Intrade price here on this thread that I started:

What do people base their bets on political candidates on here at intrade?
http://bb.intrade.com/intradeForum/posts/list/1843.page
One expression that comes to mind is not to throw good money after bad. Thompson has dropped more than 30 points on Intrade, and he can’t blame it on lack of name recognition. It’s because he’s a poor candidate. Thompson tops the list of most likely to drop out in January, per Intrade. Judging from momentum, Thompson is the one who won’t be on the ballot in February.

Dropouts from 2008 Presidential Race. Jan 2008
DROPOUT.JAN08.EDWARDS
John Edwards to drop out of 2008 Presidential race on/before 31 Jan 2008 M 35.0 49.0 35.0 15 -7.0
DROPOUT.JAN08.MCCAIN
John McCain to drop out of 2008 Presidential race on/before 31 Jan 2008 M 10.0 30.0 10.0 31 0
DROPOUT.JAN08.HUCKABEE
Mike Huckabee to drop out of 2008 Presidential race on/before 31 Jan 2008 M 10.1 29.8 14.9 27 0
DROPOUT.JAN08.OBAMA
Barack Obama to drop out of 2008 Presidential race on/before 31 Jan 2008 M - 10.0 5.0 10 0
DROPOUT.JAN08.CLINTON
Hillary Clinton to drop out of 2008 Presidential race on/before 31 Jan 2008 M - 10.0 1.0 0 0
DROPOUT.JAN08.GIULIANI
Rudy Giuliani to drop out of 2008 Presidential race on/before 31 Jan 2008 M 5.0 10.0 7.0 40 0
DROPOUT.JAN08.ROMNEY
Mitt Romney to drop out of 2008 Presidential race on/before 31 Jan 2008 M 8.0 25.0 6.0 20 0
DROPOUT.JAN08.(F)THOMPSON
Fred Thompson to drop out of 2008 Presidential race on/before 31 Jan 2008 M 35.0 99.0 40.0 70 +12.0
DROPOUT.JAN08.PAUL
Ron Paul to drop out of 2008 Presidential race on/before 31 Jan 2008 M 10.0 15.0 15.0 24 +5.2

Here’s a snapshot from Intrade yesterday. There is evidence that Hunter is gaining ground in Iowa.

For the Iowa caucus, Thompson is at the bottom of the pack, Romney has regained the lead from Huckabee. Ron Paul and Hunter are both embedded together, so there’s no way of knowing if he’s gaining ground, but on the basis of the president.field contract moving, I’d say he’s probably at ~0.3 and Ron Paul is at ~4.8, which puts Hunter ahead of Thompson.

Caucus
REP.IOWA.HUCKABEE
Mike Huckabee to Win M 45.0 46.0 45.0 1690 +5.0
REP.IOWA.ROMNEY
Mitt Romney to Win M 40.2 54.9 50.0 1960 0
REP.IOWA.THOMPSON(F)
Fred Thompson to Win M 0.1 1.4 0.1 642 -1.4
REP.IOWA.MCCAIN
John McCain to Win M 0.6 4.4 0.2 860 -2.8
REP.IOWA.GIULIANI
Rudy Giuliani to Win M - 0.1 0.1 701 0

REP.IOWA.FIELD
Field (any other individual) to Win M 4.7 5.9 4.8 1384 +1.0

2008.PRES.FIELD
Field (any other candidate) to win 2008 US Presidential Election M 0.2 0.3 0.2 14910 +0.1

Rasmussen has started using Intrade results.
http://www.freerepublic.com/focus/f-news/1945852/posts

They seem to openly admit that the data for Iowa between Christmas and New Year’s is unreliable: “Rasmussen Reports has not conducted polling in Iowa between Christmas and New Years. We have doubts about the ability to obtain reliable results during that time frame.”

Huckabee has surged because he won a couple of debates and he’s got evangelical support. If a quick rise can happen to the liberal pro-life evangelical Huckster, it can happen to the conservative pro-life evangelical Hunter.

.

According to Intrade, the winner of the December 12th GOP debate was... Duncan Hunter.
http://www.freerepublic.com/focus/f-news/1938773/posts

Why the smart money is on Duncan Hunter
http://www.freerepublic.com/focus/f-news/1926032/posts

In this poll Hunter is up 3% and even with Paul and Thompson.
http://www.wxyz.com/news/local/story.aspx?content_id=3481ef60-8195-46a9-af04-b87b907bcfdd

Interesting and informed interaction on this thread:
http://www.freerepublic.com/focus/news/1952835/posts?page=61#61

To: Kevmo
Over at Intrade, Thompson shows a 3.8% chance of winning...

***Living on the other side of the world, before going to bed I took a look at Intrade a couple hours after the New Hampshire polls had opened.

Obama was at over 90% and to my surprise when I checked again 9 hours later the numbers had completely flipped and were in Clinton’s favor.

So much for the futures markets in my opinion and this coming from someone who used to follow them on daily basis.

48 posted on 01/12/2008 9:00:41 PM PST by Doofer
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To: Styria
I’m guessing Intrade made a bundle on people putting their money on a sure bet Obama win for the New Hampshire primary.
***Intrade makes money by setting up the website and taking a commission on trades, so they make more money when a contract is more liquid and there’s lots of trades. It does not matter to them who wins or loses. On the other hand, the folks who put shorted Obama and kept Hillary contracts in New Hampshire made a bundle. The winners tend to put more money into the system and the losers tend to wander away, so it’s a system that favors people who get it right. That’s probably why Intrade and other futures markets generate more reliable data than polls.

.

On Poll Results and the End of Conservatism
http://www.freerepublic.com/focus/f-news/1951282/posts

The Efficacy Of Prediction Markets The Liberty Papers ^ |
http://www.freerepublic.com/focus/f-news/1922961/posts

50 posted on 01/12/2008 9:03:58 PM PST by Kevmo (Duncan Hunter won’t “let some arrogant corporate media executive decide whether this campaign’s over)
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To: Kevmo
Okay. I guess I don’t understand where someone’s money goes on there, once it’s been lost.

51 posted on 01/12/2008 9:08:41 PM PST by Styria
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To: TN4Liberty
I would think that using this forum or any other to try to manipulate that market would be unlawful. If there are no regs to protect the market from that kind of manipulation, well, that’s why you stay out of those markets.
If the probability of a candidate winning is greater than the share ask price, buying shares of the candidate and holding them until the convention will be a winning proposition. If the probability is less than the share bid price, going short and holding that position until the convention will be a winning proposition. Unless market punters are a powerful enough force to change the convention results, those positions will be winners regardless of any other market manipulation. They may not be the optimal positions, but if probabilities are estimated correctly they will nonetheless have a positive expected value.

If one can predict that the market is going to behave in certain ways not consistent with the overall winning probability, one may profit from selling shares which are “overpriced” and then selling them higher, or shorting shares which are undervalued and then selling them lower. I would not advise such plays, however, because the intermediate behavior of the markets can be manipulated. Without knowing the nature and extent of such manipulation, it’s impossible to know what intermediate plays are apt to gain or lose money.

53 posted on 01/12/2008 9:14:28 PM PST by supercat (Sony delenda est.)
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To: Doofer
Did you happen to throw out poll results over the same phenomena? They were wrong, too, so by your standard you’ll need to throw them out.

You’ll always find places where something went wrong, especially something so esoteric as a predictions market. But the point is, for the times that futures markets and polls disagree, futures markets have proven more reliable.

I see polls cited all the time. In fact, they were used to undemocratically exclude my candidate from debates. Of the two, I’d say polls are more dangerous for this democracy.

.

The Efficacy Of Prediction Markets The Liberty Papers ^ |
http://www.freerepublic.com/focus/f-news/1922961/posts

On Poll Results and the End of Conservatism
http://www.freerepublic.com/focus/f-news/1951282/posts

56 posted on 01/12/2008 9:24:06 PM PST by Kevmo (Duncan Hunter won’t “let some arrogant corporate media executive decide whether this campaign’s over)
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To: Styria
Okay. I guess I don’t understand where someone’s money goes on there, once it’s been lost.

***I don’t know how Intrade works. On the University of Iowa Electronic Market, the transactions involving the “house” are guaranteed to neither gain nor lose money. All other actions are between participants. Those transactions may affect who gets paid when the event outcome becomes known, but they won’t affect the amount paid out by the University.

Unlike Intrade, the IEM does not charge any vigorish on transactions. There is a $5 account setup fee, and there is a dormant account fee if a user goes six months without logging in.

57 posted on 01/12/2008 9:26:49 PM PST by supercat (Sony delenda est.)
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To: Kevmo
But the point is, for the times that futures markets and polls disagree, futures markets have proven more reliable.
The reason futures markets are generally more reliable is that anyone who knows that the market is pricing someone significantly above or below that person’s actual probability of winning can stand to make a profit; that person, by doing so, will tend to push the price of that person’s shares toward the correct probability. Those who overvalue or undervalue a person’s shares will drive the market in the wrong direction, but they’ll pay a price for having done so.

The Iowa market is small enough it can probably be manipulated in the short term. If prices get too far out of whack, though, the market will become attractive to profit-takers who will set it right.

58 posted on 01/12/2008 9:30:57 PM PST by supercat (Sony delenda est.)
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To: supercat
vigorish
***new term for me

60 posted on 01/12/2008 9:34:44 PM PST by Kevmo (Duncan Hunter won’t “let some arrogant corporate media executive decide whether this campaign’s over)
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To: supercat
Good posts, and with your permission I’d like to copy them over to the Efficacy thread.

61 posted on 01/12/2008 9:35:46 PM PST by Kevmo (Duncan Hunter won’t “let some arrogant corporate media executive decide whether this campaign’s over)