The Winner of Last Night’s Debate – Judged by the Betting Markets
The great economist Friedrich Hayek discussed several reasons why the free market is beneficial to humankind. One often-overlooked reason is the information that the market provides through prices.
A corollary of this is that if you want to know who’s doing well or poor in a political campaign, look at the prices provided by betting markets. Several studies have shown that they are much better than polls at predicting things.
My favorite political-betting web site is intrade.com. According to its prices, Mitt Romney won last night's debate, and Rick Perry did not do so well. Before the debate, the site suggested that Romney's chance of winning was 31%. Today it is 36%. Meanwhile, Rick Perry’s chances dropped from 40% to 35%.
Here are some other remarkable facts from the betting market: 1) John Huntsman has a 6.3% chance of winning and is currently in third place. 2) Sarah Palin, with a 5.0% chance, is in fourth. 3) Michele Bachmann and Ron Paul are tied for fourth, each with a 3.2% chance of winning. 4) The probability that one of these top 6 candidates will win the nomination is 88.5%. 5) The most likely Republican VP nominee is Marco Rubio (33% chance). No one else is even close.
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Jun '10
Re: The Winner of Last Night’s Debate – Judged by the Betting Markets
I suspect, a significant portion of Perry's or Bachmann's base doesn't bet on anything, period. Betting is almost as bad as drinking, smoking, or watching R-rated movies.
Aug '11
Re: The Winner of Last Night’s Debate – Judged by the Betting Markets
One wonders whether the rise in Huntsman's stock is connected to Democrats and Democrat-leaning independents looking for an alternative to the President. I don't any Republicans who take him seriously, but he seems to be the Democrats' Republican of choice.
Re: The Winner of Last Night’s Debate – Judged by the Betting Markets
Amusing. It suggests that Romney and Huntsman supporters are more likely to have money to burn than the supporters of Perry.
Tim, you ought to keep an eye on this data. My bet is that you could do an interesting article on market irrationality, using this material. The Huntsman data is particularly telling.
Edited on Sep 8, 2011 at 3:30pmAug '11
Re: The Winner of Last Night’s Debate – Judged by the Betting Markets
I think Professor Rahe and etoiledunord are both onto the real story here.
Jul '10
Re: The Winner of Last Night’s Debate – Judged by the Betting Markets
Paul A. Rahe: Amusing. It suggests that Romney and Huntsman supporters are more likely to have money to burn than the supporters of Perry.
· Sep 8 at 3:28pm
Edited on Sep 08 at 03:30 pm
Or Perry supporters are just smarter with Their money.
May '10
Re: The Winner of Last Night’s Debate – Judged by the Betting Markets
Tim Groseclose:
Before the debate, the site suggested that Romney's chance of winning was 31%. Today it is 36%. Meanwhile, Rick Perry’s chances dropped from 40% to 35%.
Here are some other remarkable facts from the betting market: 1) John Huntsman has a 6.3% chance of winning and is currently in third place. 2) Sarah Palin, with a 5.0% chance, is in fourth. 3) Michele Bachmann and Ron Paul are tied for fourth, each with a 3.2% chance of winning. 4) The probability that one of these top 6 candidates will win the nomination is 88.5%. 5) The most likely Republican VP nominee is Marco Rubio (33% chance). No one else is even close. ·
I'm not accusing you of doing this, Professor Groseclose, but let's be careful not to confuse these betting odds with real, factual probabilities.
Oct '10
Re: The Winner of Last Night’s Debate – Judged by the Betting Markets
The advantage of betting markets is that it forces people to put their money where their mouth is. For example, when a pundit makes a prediction on TV, he or she may actually be trying to effect the outcome, not predict the outcome. Betting markets to a large extent, solve this problem.
Jun '11
Re: The Winner of Last Night’s Debate – Judged by the Betting Markets
Interesting.
I give Huntsman no more than .006% chance in this environment.
Rubio is a 90% favorite to be the VP selection from any of the above. The 10% is ...well I can't even write it. It would be a self inflicted wound.
May '10
Re: The Winner of Last Night’s Debate – Judged by the Betting Markets
If you can't win on the law, argue the facts. If you can't win on the facts, try ad hominem.!
May '10
Re: The Winner of Last Night’s Debate – Judged by the Betting Markets
Todd
The advantage of betting markets is that it forces people to put their money where their mouth is. For example, when a pundit makes a prediction on TV, he or she may actually be trying to effect the outcome, not predict the outcome. Betting markets to a large extent, solve this problem. · Sep 8 at 6:31pm
There are what, a few thousand people who combine to set the odds on these bets? That doesn't necessarily reflect how millions of voters will vote. Do you know how their historical performance is?
Oct '10
Re: The Winner of Last Night’s Debate – Judged by the Betting Markets
It's not about the number of participants. Here is the advantage of betting markets according to GMU economist Robin Hanson:
A prediction market gives people an incentive, a clear personal incentive to be right and not wrong. Equally important, it gives people an incentive to shut up when they don't know... So if a reporter calls up almost any academic and asks them vaguely related questions, they'll typically try to answer them, just because they want to be heard. But in a prediction market most people don't speak up. ... Every one of you could have gone and said, orange juice futures forecasts are too low or to high, and almost no one did. Why? Because most of you don't think you know. And that's just the way we want it....we want is the few people who know the best to speak up and everybody else to shut up.
Edited on Sep 9, 2011 at 12:49pm