Comments on: New York Times on prediction markets http://www.midasoracle.org/2007/02/13/new-york-times-on-prediction-markets/ Prediction Markets, etc. Thu, 02 Feb 2012 23:13:18 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Justin Wolfers http://www.midasoracle.org/2007/02/13/new-york-times-on-prediction-markets/#comment-1046 Justin Wolfers Wed, 14 Feb 2007 11:09:52 +0000 http://www.midasoracle.org/2007/02/13/new-york-times-on-prediction-markets/#comment-1046 Chris: Your concern about the accuracy of markets two years out seems entirely well placed. But again - and I think it is worth saying this over and over - the relevant question is whether the markets do a better job than alternative information aggregation devices. My own analysis (with Andrew Leigh) of Australian polling data suggests that any polling done more than a year before an election is essentially useless. That is, you are better off simply guessing that the previous election results will repeat themselves, than you are using early polls. And I should add one more thing: The markets provide a useful measure of our ignorance. For instance, right now, the markets suggest that the Dems are only slightly more likely to win the election than the Republicans. Perhaps this is a forecast that it will be a close election, but perhaps more usefully, it is a forecast that: If nothing else changes the Dems will win, but it seems likely that a lot will happen that we just can't forecast. As such, prices near 50 are simply a recognition (and quantification) of the uncertainty we face two years prior to a poll. Chris:
Your concern about the accuracy of markets two years out seems entirely well placed. But again – and I think it is worth saying this over and over – the relevant question is whether the markets do a better job than alternative information aggregation devices. My own analysis (with Andrew Leigh) of Australian polling data suggests that any polling done more than a year before an election is essentially useless. That is, you are better off simply guessing that the previous election results will repeat themselves, than you are using early polls.

And I should add one more thing: The markets provide a useful measure of our ignorance. For instance, right now, the markets suggest that the Dems are only slightly more likely to win the election than the Republicans. Perhaps this is a forecast that it will be a close election, but perhaps more usefully, it is a forecast that: If nothing else changes the Dems will win, but it seems likely that a lot will happen that we just can’t forecast. As such, prices near 50 are simply a recognition (and quantification) of the uncertainty we face two years prior to a poll.

]]> By: Chris. F. Masse http://www.midasoracle.org/2007/02/13/new-york-times-on-prediction-markets/#comment-1041 Chris. F. Masse Wed, 14 Feb 2007 07:55:28 +0000 http://www.midasoracle.org/2007/02/13/new-york-times-on-prediction-markets/#comment-1041 Yes. I didn't excerpt that, I will tell you why. With all due respect to Justin Wolfers (who is quoted on the topic), I wary of the big margin error, two years away from the 08 elections. Pssttt... And there's an MP3 file of JW. I will listen to it today, and link to it directly. Yes. I didn’t excerpt that, I will tell you why. With all due respect to Justin Wolfers (who is quoted on the topic), I wary of the big margin error, two years away from the 08 elections.

Pssttt… And there’s an MP3 file of JW. I will listen to it today, and link to it directly.

]]> By: Mike Linksvayer http://www.midasoracle.org/2007/02/13/new-york-times-on-prediction-markets/#comment-1038 Mike Linksvayer Wed, 14 Feb 2007 00:31:41 +0000 http://www.midasoracle.org/2007/02/13/new-york-times-on-prediction-markets/#comment-1038 Nice article, I like the closing paragraph best:<blockquote>The main point, though, is that however the numbers change over the next two years, people whose business depends on politics would be foolish to ignore Intrade again. Knowing Intrade’s track record, wouldn’t you watch the television network that included the odds in its 2008 Election Night coverage? And if none of the networks did, wouldn’t you turn to your laptop?</blockquote> Nice article, I like the closing paragraph best:
The main point, though, is that however the numbers change over the next two years, people whose business depends on politics would be foolish to ignore Intrade again. Knowing Intrade’s track record, wouldn’t you watch the television network that included the odds in its 2008 Election Night coverage? And if none of the networks did, wouldn’t you turn to your laptop?

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