Category Archives: Analysis (Accuracy Precision)

Never try to divine the IOC decisions on Olympics venues, Mike.

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Prof Michael Giberson,

No &#8220-careful observer knew this in advance&#8221- (about Chicago being a lemon), for the simple reason that if they knew, they would have downgraded Chicago on the InTrade and BetFair prediction markets, and Ben Shannon would have not bet $6,000 on Chicago.

I look forward to your contrite correction on the frontpage of Knowledge Problem &#8212-in bold, and with a link to Midas Oracle, stating that &#8220-Midas Oracle is the only website in the world to have told you *not* to bet on Chicago a€”and to stay (far) away from any Olympics venue prediction market.&#8221-

My thesis holds: The International Olympic Committee (IOC) is a close aristocratic group that does not leak out good information.

IOC

Previously: The Chicago candidacy, which was favored by the prediction markets (and gullible bettors like Ben Shannon), is the one that fared the worst.

Previously: Chicago wona€™t have the Olympics in 2016.

ADDENDUM:

– BetFair&#8217-s event derivative prices:

chicago-olympics-betfair

– InTrade&#8217-s event derivative prices:

chicago-olympics-intrade

– HubDub&#8217-s event derivative prices:

Who will recieve the winning bid to host the 2016 Olympics?

Could we have divined that Chicago was a lemon?

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IOC

Prof Michael Giberson:

Chris, isna€™t it odd for you to state a€?Chicago had not the slightest chance to begin with.a€? The phrase implies you believe that the probability of Chicagoa€™s selection was near zero all along, but you have been claiming that it is impossible to predict anything about the outcomes of IOC selection processes.

Also, the NYT article reports on backbiting and disarray at the USOC. While the article is published after the IOC decision, presumably any careful observer knew this in advance [*] and you are suggesting it was relevant to the outcomes of the IOC market, i.e. you are suggesting it is a reason to have believed the Chicago selection as particularly unlikely. Again, this suggestion is contrary to your earlier views suggesting IOC decisions are unpredictable because there is no good information to aggregate.

I look forward to your correction!

[*] You presume too much, doc.

If, as you said quite cockily, &#8220-any careful observer knew this in advance&#8220-, then the (mass or vertical) media would have reported about that, and, logically:

  1. the prediction market traders would have downgraded Chicago early on-
  2. Ben Shannon (who is a smart man and a well informed bettor) would not have bet 6,000 bucks on Chicago.

The proof is in the pudding, doc.

You are wrong and I am right.

Professor Thomas Rietz (Iowa Electronic Markets) was so wrong on the usefulness of prediction markets about the 2016 Summer Olympics in Chicago.

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Chicago Olympic Market Might Have Value, Says Reitz (Chicago Tribune, April 17)
A credible source of information about Chicago&#8217-s chances of hosting the 2016 Olympics would have value, says columnist Bill Barnhart. Local real estate developers, hotel operators, employment agencies, vendors of products and services to major events and others have a direct stake in whether or not an Olympics is staged here. Politicians and civic leaders presumably would want to know whether the city&#8217-s bid has a chance, so that they wouldn&#8217-t throw good money after bad. An auction market centered on whether Chicago will win could provide that information, even if there were no huge payoff for hedgers or speculators, said finance professor THOMAS RIETZ at the University of Iowa, a board member of the popular Iowa Electronic Markets. The Iowa market limits wagers to $500 but has an enviable track record in picking the winners of national elections. &#8220-Our goal is to aggregate information, which is a different goal than being able to hedge the economic risk associated with something like this,&#8221- Rietz said. &#8220-I don&#8217-t think it&#8217-s an outlandish idea.&#8221-

http://www.chicagotribune.com/business/yourmoney/chi-0704160447apr17,0,2547860.column?coll=chi-business-hed

Prof, you were 100% wrong.

Prediction markets on which country will host the Olympics have never worked.

– BetFair&#8217-s event derivative prices (on the far right of the chart, you can see that the price went down to zero):

chicago-olympics-betfair

– InTrade&#8217-s event derivative prices (on the far right of the chart, you can see that the price went down to zero):

chicago-olympics-intrade

– HubDub&#8217-s event derivative prices:

Who will recieve the winning bid to host the 2016 Olympics?

Can we really assess InTrades *very short* prediction market on Van Jones?

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Carlos Graterol has a partial analysis on the Van Jones prediction market at InTrade. Basically, Carlos Graterol (an InTrade fanboy) says that InTrade should be credited for the accurate prediction.

  1. Carlos Graterol should publish what the politicians and editorialists were saying last week (the resignation calls were numerous)-
  2. The InTrade prediction market should have been created much, much earlier &#8212-when Glenn Beck started his &#8216-anti-czars&#8217- guerrilla (at the beginning of August 2009).

vanjonespricehistory

intrade-van-jones-chart

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Ben Shannon on his misguided SELL stock market call delivered just before the stock market rally

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Ben Shannon on his &#8220-SELL&#8221- market call

Previously: Wiser Than The Stock Market &#8212- NOT

UPDATE: Andrew Page + Henry Blodget

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Wiser Than The Stock Market – NOT

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Ben Shannon (alias &#8220-Jesse Livermore&#8221-, who blogs at &#8220-Wiser Than The Crowd&#8221-) claims on his blog to have an uncanny ability at forecasting the future and profiting from it, whether it is speculating on InTrade&#8217-s prediction markets or on the US stock market. Here is his stock market call from July 10, 2009:

SELL SELL SELL

REALITY CHECK:

The stock market is up about 12% since Ben Shannon&#8217-s &#8220-sell sell sell&#8221- call on July 10th.

Spot the 10th on the chart&#8230- Ben Shannon sold the exact bottom immediately before the rally.

ben-shannon-stock-market

Thanks to Deep Throat for the tip.

UPDATE: Ben Shannon on his &#8220-SELL&#8221- market call

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Were prediction markets useless during the H1N1 breakout?

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Lance Fortnow:

Might this be an instance where prediction markets greatly out-performed the experts? In short, no. There were relevant markets but two big problems:

  • No one thought to create a market for the number of flu cases over a couple of thousand.
  • Prediction markets require a verifiable outcome so they were based on CDC confirmed cases. But after the flu turned out not to be that dangerous, the CDC stopped confirming most cases and there were less than 7500 confirmed cases by the end of May.

Still, as noted, it was a good election for [the] prediction markets and another piece of evidence of their superiority over the pundit[s] (and at least parity with the poll).

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Dixit Nigel Eccles in a comment.

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at least parity with the poll

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I agree with the above.

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their superiority over the pundits

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What documented evidence do you have about that, mister the cocky entrepreneurial Scotsman?

John Tierney linked to that Huffington Post that listed the pundits&#8217- predictions about the total number of electoral votes that each presidential candidate would take. But I disagree with that way of predicting the electoral college and assessing these predictions. With this completely flawed method, if you are damn wrong on a state and damn wrong (in the opposite way) about another state that has the exact same number of electoral votes, then you are a bright genius worth the Nobel prize of forecasting. Gimme a break. Enough with that voodoo way of assessing predictions about the electoral college. Do the assessment state by state.

InTrade and HubDub got lucky that their 2 mistakes (so to speak, in a non-probabilistic way) on Missouri and Indiana (both with 11 electoral votes) canceled themselves perfectly. IT WAS PURE LUCK. If their 2 mistakes had been made in the same direction (say, betting on Obama with the outcome going eventually to McCain), and/or their 2 mistakes had been done on 2 very dissimilar states (say, one with 6 electoral votes and the other one with 27 electoral votes), then we would have had reporters and bloggers bashing the prediction markets for the whole month of November.

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