Michael Schmahl:
I think I have a guess as to how the play-money bot at Intrade works.
Here are the order books for today at 2:48AM (2008-10-27) for NTH.DAKOTA.DEM on intrade.com and play.intrade.com:
intrade.com play.intrade.com
BID ASK BID ASK
Qty Price Price Qty Qty Price Price Qty
1 34.1 36.8 5 101 34.1 36.6 14
3 34.0 37.5 6 103 34.0 36.8 105
50 31.1 38.0 33 6 32.7 37.0 49
3 31.0 41.5 5 150 31.1 37.5 106
25 30.6 42.0 50 103 31.0 37.9 49
8 30.0 44.0 2 125 30.6 38.0 133
20 26.0 44.9 15 108 30.0 40.1 100
50 20.0 47.0 20 50 20.0 40.9 101
It looks like each order of n contracts that gets placed on intrade.com is echoed by an order of 100+n contracts on play.intrade.com. This breaks down for very high or very low orders (there is no bid for 120@26.0, for example). I’m pretty sure that when these bids get canceled, their mirror-bids are also canceled.
I’m not sure what happens when someone takes a price, though. My guess is that the order is broken up into its separately-matched parts, and each part is mirrored in just the same way, which usually results in an automatic price-match at play.intrade.com. For example, if someone entered an order to sell 10@33.0, which would result in selling 1@34.1, 3@34.0 and the remaining 6@33.0, play.intrade.com would match 101@34.1, 103@34.0, and put 106@33.0 on the order book.
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RELATED NOTE: As you have seen, Justin Wolfers at the Wall Street Journal has stopped promoting InTrade’s play-money prediction markets, and now links directly to InTrade’s real-money prediction markets.
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