BetFair Play For Fun – Only the English Soccer prediction markets.
It’s interesting, thus, to compare them with the real-money prediction markets —take Manchester United vs. Watford tonite. It seems that people with play money do not shy away from betting on/against the very weak challenger (Watford), whereas on the real-money exchange, all the money is on/against the favorite (Manchester United). Take a look:
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Real-Money BetFair:
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Play-Money BetFair:
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Question: What does this comparison tell you about the accuracy of play-money prediction markets? Or about their other aspects?
Yeah.
But a more interesting question is: How would tie together the BetFair / TradeSports real-money and play-money prediction markets.
http://www.midasoracle.org/2006/12/10/tying-play-money-and-real-money-contract-prices/
You are a cynic.
http://hanson.gmu.edu/metacynic.html
The only thing that bores American readers more than Betfair is play-money Betfair. (Joking… other things bore us more.)
Yes, the extreme longshot is priced higher in the play-money market. So it goes with rank-order reputational payoffs.
“play-money Betfair”: they might expand the range of play-money prediction markets in the future —e.g., into American politics.
“the extreme longshot is priced higher”: I was talking about the VOLUMES. Look the volumes of the play-money contract for the longshot!!! Any idea???
Aside from it being play-money?
Why would people with play money flock to trading the extreme longshot???
I don’t know how Betfair’s play-money area is set-up but typically there’s a leader board and the goal in trading is to get into the top 10 or so. How are you going to get into the top 10 when there are many traders? Not by buying contracts at 95 that you think are worth 100 (and thus tying-up $95). So there is a greater tendency to buy contracts at 5, even if you know you’re overpaying. Biases caused by such “payoff” structures and margining system features are magnified when accounts are disposable. Get rich or die trying, with many lives.
So play-money exchanges should try to make payoffs more continuous. User authentication helps so long as it’s not too time-consuming at the sign-up stage.
A short-selling-style margining system where new sales generate cash that can fund other positions could be interesting, but might just make prices more volatile.
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