The economists Justin Wolfers and Eric Zitzewitz have pointed out that Hillary Clinton’s chances of becoming president, as predicted by one betting market, InTrade, started to climb dramatically mid-May, topping 40 per cent after months of fluctuating between 20 and 30 per cent. Her odds of winning the Democratic nomination stayed around 50 per cent, implying that if nominated, her chance of then winning the presidency would be about 80 per cent. You can’t get much more electable than that. So is someone in Hillary’s camp trying to boost her chances by manipulating the market into a self-fulfilling prophecy? Or is it a rival candidate trying to make her look like a manipulator? [...] But it’s hard to manipulate markets for long. [...]
Robin Hanson and Ryan Oprea, economists at George Mason University, argue that manipulators can actually increase the accuracy of prediction in markets: by making big, unprofitable bets they are effectively subsidising the market and paying other traders to pay attention. [...]
Previous: There’s a deep-pocket Clinton pal who is pushing her event derivative way up. + Who could have masterminded the alleged manipulation of the Hillary Clinton prediction market??? + Manipulation can affect prices. – by Eric Zitzewitz + Is there manipulation in the Hillary Clinton Intrade market? – by Koleman Strumpf + Is there manipulation in the Hillary Clinton Intrade market? Redux. – by Justin Wolfers + Hillary Rodham Clinton – Event Derivatives & Prediction Markets – InTrade-TradeSports + BetFair + NewsFutures = the market-generated probabilities across the different real-money and play-money prediction exchanges + Win Justin’s Money? (re: Is there manipulation in the Hillary Clinton Intrade market? Redux.) – by Koleman Strumpf
I wait to be convinced that there is anything to these manipulation stories other than mere conjecture.
All of the traditional betting markets, and, indeed, spread betting markets have seen substantial support for Hillary Clinton since they opened up their markets. The level of this support, closely correlates with the level of support that has been seen for her on the so-called prediction markets.
In the light of this, somebody needs to come forward to substantiate the claim of manipulation. They need to reveal to us their methodology, so that we can all learn to identify market manipulation, when the broader betting markets suggest that there is none.
Thanks, Niall.
I’m neutral on this issue.
For Koleman Stumpf, a manipulation is a successful speculative action that durably manages to reinforce in our mind that Person X has a solid future.
In the case of the Clinton markets, finding the manipulation, is akin to finding a needle in a haystack.