WORLDS #1 PREDICTION MARKET GURU IMPLIES THAT THE PREDICTION MARKETS ARE NOT MATURE ENOUGH.
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Tag Archives: NewsFutures
Is Intrade out on a limb?
As I write this, Intrade gives the advantage to McCain over Obama and has the Republican party even with the Democratic party to win the election, whereas all the other prediction markets, meaning IEM, Betfair, and the NewsFutures play-money kind still favor a Democrat in the White House. That disconnect prompted Chris to wonder aloud whether Intrade is faster than the other markets to incorporate the latest polls, perhaps because of its “-bigger liquidity”-.
That’-s an interesting reaction on several levels.
First, reactivity and accuracy are not to be confused for one another. Given that market prices are supposed to be more accurate and more stable that fickle U.S. raw polls (Berg et al, 2008), one should not necessarily be impressed by the market that is quickest to mirror the latest polls. I very much doubt that traders in the “-other”- markets have not heard about the latest polls giving McCain an edge. Rightly or wrongly – it is too soon to tell – they just gave those polls less weight that the Intrade traders apparently did.
Second, the argument from “-bigger liquidity”- is not receivable. Recently, Paul Tetlock analyzed Tradesports data in depth and found that more liquidity may in fact make the market dumber. He concludes: “-In both sports and financial prediction markets, the calibration of prices to event probabilities does not improve with increases in liquidity- and the forecasting resolution of market prices actually worsens with increases in liquidity.”-
My personal theory is that Intrade has a hair-trigger Republican bias which is not found in the other markets, because Intrade appeals to, and is marketed to, the more Republican-leaning segments of the U.S. population. In my opinion, the Intrade/Tradesports Republican bias was already evident in the 2004 election, as this analysis shows.
Of course, I may be completely wrong. In any case, I find today’-s dual disconnect between the polls and most of the markets, on the one hand, and between Intrade and the other markets, on the other hand, to be two very interesting data points that should be duly recorded so we can come back to them later, with hindsight.
2008 US Elections Prediction: John McCain is now the favorite at InTrade, while all the other prediction exchanges still have Barack Obama ahead. Is InTrade quicker to incorporate the latest polls because of the bigger liquidity of its prediction markets?
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#1. Explainer On Prediction Markets
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Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that traders bring when they agree on prices. Prediction markets are meta forecasting tools that feed on the advanced indicators (i.e., the primary sources of information). Garbage in, garbage out…- Intelligence in, intelligence out…-
A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 6 times out of 10, the favored outcome will occur- and 4 times out of 10, the unfavored outcome will occur.
Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism.
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More Info:
– The Best Resources On Prediction Markets = The Best External Web Links + The Best Midas Oracle Posts
– Prediction Market Science
– The Midas Oracle Explainers On Prediction Markets
– All The Midas Oracle Explainers On Prediction Markets
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#2. Probabilistic Predictions = Charts Of Prediction Markets
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Put your mouse on your selected chart, right-click, and open the link in another browser tab to get directed to the prediction market page of your favorite exchange.
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2008 US Elections
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InTrade
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2008 US Electoral College
2008 Electoral Map Prediction = InTrade – Electoral College Prediction Markets = Probabilistic predictions for the 2008 US presidential elections based on market data from InTrade Ireland = electoralmarkets.com
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– This is a dynamic chart, which is up to date. Click on the image, and open the website in another browser tab to get the bigger version.
JASON RUSPINI FOR PRESIDENT: The Web of Misery tournament has ended, and Donna Hoffman will crown our Jason Ruspini with an olive tree branch-made kotinos.
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2008 US ELECTORAL MAP PREDICTION: The 2008 US elections thru the prism of the prediction markets – 2008 US presidential and congressional elections – US President Prediction + US Congress Prediction – Barack Obama vs. John McCain
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#1. Explainer On Prediction Markets
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Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that traders bring when they agree on prices. Prediction markets are meta forecasting tools that feed on the advanced indicators (i.e., the primary sources of information). Garbage in, garbage out…- Intelligence in, intelligence out…-
A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 6 times out of 10, the favored outcome will occur- and 4 times out of 10, the unfavored outcome will occur.
Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism.
–
More Info:
– The Best Resources On Prediction Markets = The Best External Web Links + The Best Midas Oracle Posts
– Prediction Market Science
– The Midas Oracle Explainers On Prediction Markets
– All The Midas Oracle Explainers On Prediction Markets
–
–
#2. Probabilistic Predictions = Charts Of Prediction Markets
–
Put your mouse on your selected chart, right-click, and open the link in another browser tab to get directed to the prediction market page of your favorite exchange.
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InTrade
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2008 US Electoral College
2008 Electoral Map Prediction = InTrade – Electoral College Prediction Markets = Probabilistic predictions for the 2008 US presidential elections based on market data from InTrade Ireland = electoralmarkets.com
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– This is a dynamic chart, which is up to date. Click on the image, and open the website in another browser tab to get the bigger version.
Why the HubDub model is superior to the InTrade, TradeSports, BetFair, HSX and NewsFuturess ones
Because HubDub is the only prediction exchange whose prediction market webpages are indexed highly by Google.
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That query leads to that prediction market webpage.
That query leads to that prediction market webpage.
That query leads to that prediction market webpage.
That query leads to that prediction market webpage.
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In the 4 cases above, you can spot HubDub in the top 10 Google results.
I speculate that HubDub is going to harvest hundreds of thousands of Google visits in the next 12 months.
Which is probably higher that the BetFair blog will get from Google —-and there is a low conversion rate (from the BetFair blog to the BetFair prediction market webpages), probably. With the HubDub model, the conversion rate is always 100%.
Nigel Eccles, this time, I am impressed.
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Previous blog posts by Chris F. Masse:
- Testing the new HubDub chart widgets
- Why InTrade CEO John Delaney, TradeSports acting CEO John Delaney, BetFair CEO David Yu, HubDub CEO Nigel Eccles and NewsFutures CEO Emile Servan-Schreiber should supplicate me to develop my prediction market journalism project
- The John Edwards Non-Affair: How on Earth did they get this photo, what does this photo prove, and which prediction markets should we trade on to profit from this alledged scandal?
- Nick Davis’ effort to clean up British horse racing
- Free Money On The Table At InTrade
- Google Web Search shows that I am the only blogger in the world to talk about “prediction market journalism”.
- Marginal Revolution vs. Freakonomics vs. Overcoming Bias vs. Midas Oracle
Google PageRank of the main Prediction Market Consultants
Inking Markets and NewsFutures are graded 6 / 10.
Consensus Point and Xpree are graded 5 / 10.
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My great friend David Perry of Consensus Point is making a strategic mistake by insisting on discretion and secrecy.
I told him 10 times.
To no avail.
Pissing in a violin in order to create a symphony would have been more fruitful.
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PageRank is important.
One day, we will learn in the Wall Street Journal that a Fortune-500 CEO is fired by the board for a low PageRank.
That will happen one day- you will see.
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The Prediction Market Consultants
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HubDub will get quoted in the future, just like the Hollywood Stock Exchange is, today… – PROBABILITY = 33%, AT BEST.
HubDub CEO Nigel Eccles:
I fully appreciate the work that Emile and others have done but just because something hasn’t worked before doesn’t mean it can’t happen. […] Sometimes ideas take time and a fresh perspective before they achieve their full potential. […]
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My thoughts:
- The future is present today as a seed. If we examine today’-s seed under a microscope, we can see part of the future. The fact is that the prices/probabilities from NewsFutures’- play-money prediction markets are NEVER quoted by journalists and bloggers. They quote only InTrade, TradeSports, BetFair and the Hollywood Stock Exchange.
- “-Time”- can change that, indeed, provided that HubDub multiplies volumes by a factor of one million —-which is what I wish for them.
- I don’-t see the “-fresh perspective”- that HubDub would be bringing to the table. HubDub resembles a lot to NewsFutures. (The differences in terms of market design, automated market maker, and breath of topics, are a minor.) HubDub is a generalist, play-money prediction exchange, just like NewsFutures is.
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I told you that vice presidential search committees and VP prediction markets are complete bullshit, didnt I?
The McLaughlin Group of mid-June (yes, I know, that’-s last month):
MS. BERNARD: Well, here’-s what I think. I think the dirty little secret is Barack Obama probably already knows who he’-s going to select to be his vice presidential running mate. You put out the search committee, probably because Hillary Clinton was all over his back last week –-
DR. MCLAUGHLIN: So this is a smokescreen. This is a smokescreen.
MS. BERNARD: I don’-t know if it’-s a smokescreen, but I think he has a good idea who his vice presidential running mate is going to be. And the search committee is much ado about nothing.
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I told you so.
No good advanced, primary indicators.
Don’-t trade on VP prediction markets.
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