(no subject)
On ElectoralVotes.net, the top map is the actual election result. The map below that is the election projection on the InTrade prediction market. See for yourself. Unless I misperceive, as I scroll back in time, Indiana and Missouri are the only states whose trading projections changed from red to blue or vice-versa since September.
Projection:
Democrat 364
Republican 174
Actual:
Democrat 364
Republican 174
"If Missouri ends up going for John McCain, Intrade had the electoral vote count dead on. Traders gave Obama a razor thin lead there, but it was truly a coin toss. The only state that was objectively wrong was Indiana."
You may wonder why I am posting this. After all, it's not in order to make a killing on the prediction market. That is actually not a high-yield investment. It only would be if (1) you are wildly disagreeing with the smartest people and actually turn out to be right, or if (2) you're betting honestly and objectively against ideologues who are going to lose their shirts. No, the reason is that there is an method of aggregating the best expertise and disseminating it to me reliably. This is just the latest confirmation in years of consistent results.
My take-home idea from this is a threefold plan. (A) Encourage prediction market contracts which are conditional: "If measurable X happens, measurable Y will happen. If measurable X does not happen, measurable Z will happen." (B) Put that in a section of all the newspapers, just like the stock reports. (C) When a politician makes a goofy claim, ask them why they aren't putting their money where their mouth is.
Comments
temujin9 on Nov. 6, 2008 12:16 AM
That is actually not a high-yield investment. It only would be if (1) you are wildly disagreeing with the smartest people and actually turn out to be right, or if (2) you're betting honestly and objectively against ideologues who are going to lose their shirts.
I made a 33% profit on Intrade Play$, going all in on Obama in early October when he was at 76.5% (I'd also put in a bit earlier, when it was lower). Assuming my double-down (at 50%) on voter turnout being over 60% is accurate, I stand to sit at roughly 160% profit (or nearly 100% loss: still risky) for a total of three informed decisions over a period of ~2 months.
Granted, I'm using play money, and not following any safe investing plan. My second call was based on ten minutes research and some fudge factors for the added gravity of the issues, and for Obama's well-coordinated campaign bringing out extra voters out (both for and against him). It could yet be wrong: Obama may have intimidated Republican voters, McCain might have alienated them, I might have relied on bunk analysis, etc.
Still, open and fair bets that don't wildly disagree with smart people or appear to be bets against ideologues, potentially making what I'd consider radical profit for the time invested. The opportunity exists for high-yield, assuming you're comfortable with high risk.
matt-arnold on Nov. 6, 2008 3:01 AM
Oh, it's really interesting to talk to a trader. But wouldn't you say that gambling never creates new wealth, it only redistributes it? Therefore, if your 33% didn't come from somebody swallowing some kind of conservative propaganda, who did it come from? Perhaps what I'm hearing you say is that if you make a fair-minded and safe bet against a very large number of smart people who are only a little bit more wrong than you, all those little bits add up to a lot for you.
temujin9 on Nov. 6, 2008 10:22 AM
I believed Obama should win for his message and apparent integrity. I believed he would win because he had a ton of innate advantages over McCain going in (running against Bush, populist in a recession, comfortably charismatic, etc.), and Palin plus the bailout grand-standing convinced me McCain would flame out early. Someone with a different political analysis could have come from either party: a Democrat more familiar with push-polls and less familiar with crowd-sourcing could have assumed very different priors for the "get out the vote" capabilities of each party. Vote ideals, bet beliefs.
My winnings in a mature market would come from two places: areas where I had more accurate information and could thus predict ahead of the curve, and market makers who intentionally lose money to increase trading volume for its external predictive value. That's only redistributing wealth in the way any knowledge work is only redistributing wealth. And wealth redistributed to people who can predict more accurately will almost certainly create new wealth, even if it doesn't do so directly.
Plus, I never said my bets were safe. I'd probably have been far more conservative on the voter turnout bet if it'd been real: unless things reverse shortly, it looks like I may take a simulated bath on that.
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