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A rapid quizz for the readers of Midas Oracle – and, in particular, Michael Giberson (our chief economist)
– What was the best prediction market ever?
– What was the worst prediction market ever?
Think about that, and I’-ll give you my answer very soon.
I want you to think hard about it over this week-end.
Eat fish, and drink fruit juices.
PS: I am not talking about a prediction exchange, but about a specific prediction market (i.e., about a specific topic, like whether North Korea will fire a missile, or whatever).
While InTrade CEO John Delaney is deceiving the journalists to sell his wares, Tom Snee of the Iowa Electronic Markets is telling them the truth: BEWARE THE VP-CANDIDATE PREDICTION MARKETS, THEY JUST AGGREGATE RUMORS.
BBC News:
According to Tom Snee of the Iowa Electronic Market, at Iowa University, futures markets need more hard information than they get in the veepstakes, to reliably predict a result.
Markets are very good at predicting elections, he says – but not choices being made inside Barack Obama’-s or John McCain’-s head.
Thank God for the BBC.
Thank God for the Iowa Electronic Markets.
Shame on John Delaney —-over 3 generations of Delaneys.
Other than Tom Snee (the IEM spin doctor), Chris Masse and Justin Wolfers are the only prediction market analysts to have sent out warnings about the VP-candidate prediction markets.
PREDICTION MARKET STARTUP GRABS REKNOWNED RESEARCHER AWAY FROM HP LABS. – TIPPING POINT FOR THE PREDICTION MARKET INDUSTRY?
ENDLESS VEEPSTAKES: Why you should never trade on VP prediction markets, and why their probabilistic predictions are as stochastic as Paris Hiltons daily dress picks.
As I explained in early June 2008, the VP speculations that appear in the Press should never be taken seriously. Most of them (and you don’-t know which ones) are a big orchestration of pure lies aimed at creating publicity, or wicked lies in the form of trial balloons. The aims of the political campaigns are to:
- creating suspense (sometimes false) so as to generate free publicity-
- sending a positive message to the supporters of each VP candidate-
- letting the Press do the vetting of the VP candidates-
- flattering the political journalists by leaking to them-
- sending out false leaks so as to preserve the surprise for the scheduled announcement day-
- sometimes, buying time to impose the head of the VP search committee as the most serious VP candidate (remember Dick Cheney in 2000). [Psstt… Funny enough, in the 2008 election, Michael Moore is pulling for Caroline Kennedy.
]
All that means that there are no good primary indicators for the prediction markets on the Democratic and Republican VP-candidate selections.
I want to offer 6 remarks:
- Not all prediction markets are created equal. Some have good primary indicators (e.g., the prediction markets on the presidential elections, thanks to polls), while some other prediction markets have unreliable primary indicators (e.g., the prediction markets on who will be on the ticket).
- The prediction exchange executives (like InTrade-TradeSports CEO John Delaney) will never tell you that, because their job is to sell their wares, of course.
- The public needs prediction market analysts, who can judge the quality of the primary indicators of one particular prediction market, so as to separate the grains from the shaft —-reliable prediction markets from unreliable prediction markets. (A prediction market analyst has also other functions, which I will blog about later on.)
- A prediction market analyst should have a dual competency —-in a vertical (in our example, US politics), and in prediction markets.
- The expertise in the vertical (here, politics) should be a major, and the expertise in prediction markets should be a minor. Take a look at these 2 mainstream media news stories: the one written Jack Shafer in Slate (which I linked to at the top of this post), and the one written by Justin Wolfers in the Wall Street Journal. Obviously, the one that shows the most mastering is the one written by Jack Shafer, an American professional journalist who follows US politics for a living.
- The consequence of that for prediction market journalism is that the writer should be an expert in a vertical, and the editor should be an expert in prediction markets —-and not the other way around.
That said, I wish the very best of luck to our good friends Caveat Bettor (who is betting on Tim Kaine) and Nigel Eccles (who is predicting Joe Biden).
UPDATE: My (informal) Democratic VP-candidate bet is on Kathleen Sebelius. Hint, hint.
UPDATE: Gawker says that Joe Biden would be a horrible choice. I agree. Plus, he has denied to be the pick. He could have lied to reporters, though.
UPDATE: New York Times publishes portraits of all VP candidates.
DEVELOPING…-
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Arbitrage in the InTrade Dem VP Market
There has been an unexploited arbitrage opportunity in the Intrade Democratic VP market (”-2008 Democratic VP Nominee (others upon request)”-). As the attachment shows, you can sell the slate of candidates for 123.2 (just sum the bids) while you will only have to payout 100. This possibility has existed for at least three weeks, and is particularly puzzling now given that the announcement is likely to occur this week.
What is also a bit odd is that Intrade has another market (”-2008 Democratic Vice-Presidential Nominee (with Field contract)”-) on the same outcome which includes a catch-all field contract which does not have the same arb–-again see the attachment below. It is substantially cheaper to buy the field contract in the second market than the omitted candidates (Kaine, Sebelius, Hagel, Schweitzer, Gephardt, Kerry, and others) in the first market.
Any thoughts on why this is occurring?
attachment: intradedemvp_summedbidsexceed100.pdf
PREDICTION MARKETS OFF THE GARTNER HYPE CYCLE 2008
Predict Olympic medal counts on YooPick.
Cross posted from Oddhead Blog.
We’-ve just added a new feature to Yoopick especially for Frenchmen Chris and Emile and citizens of nineteen other countries to place their swagor* on how many medals their country will win.
We’-ve argued that the Yoopick interface is useful for predicting almost any kind of number, and since medal count is indeed a number, we thought we’-d give it a try.
Besides, Lance told us it would be a good idea.
Sign up, play, enjoy, and don’t forget to tell us what you think!
Thanks,
Sharad Goel
David Pennock
Dan Reeves
* Scientific wild-ass guess, on record
Yoopick: Olympic medal count: Select
Yoopick: Olympic medal count: France: Make pick
You know what I thought when I first saw that picture (little Fogarty planted next to Master Of Credit Alan Greenspan)?… I thought, well, its about time that the prediction market industry does the product endorsement by celebrity marketing thing. BetFair premiered that with John McCririck.
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TV-famous horse racing pundit: John McCririck.
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John McCririck endorsing BetFair
Look at the inconsistency between the two faces. Mat Fogarty is jubilant like if he had just stolen a big client from Inkling. Alan Greenspan, on the other hand, has a constipated look that conveys that he is fed up with all those conference co-speakers asking him out for a photo op.