I am a “calibrationistâ€.
But I am strongly with Chris in this: Predicting the decision of a private committee is inherently a task ill-suited for prediction markets. Olympic Games, Nobel prizes, and similar events cannot be predicted. I will commend Chris for being stable in his position, for a long time. Chris, please keep the same tone when some market in the future will succeed in predicting the outcome. Even a broken clock is correct twice a day and eventually some market will hit the target for Nobel or the Olympic games.
If there is no public information to be aggregated, what are we trying to aggregate? Even if we run markets for 1000 years, I doubt that we will see any predictive power.
If we assume Ladbrokes is calibrated, given that Fema was running as the frontrunner with 2/1, in the next couple of years, the equivalent front runner “should†win to revert to the mean.
For Intrade, the 0-volume can be interpreted in two ways: (a) Pathetic participation (b) The traders knew that it is impossible to predict, and they played the lottery instead. [*]
[*] For years, InTrade have been created Nobel Prize prediction markets on the Thursday or Friday prior to the announcement on the next Monday. That’s crazy. InTrade should start off one or two months prior to the Nobel Prize announcements in October.
Addendum: See also the comments on this other thread.
