According to Alan Abramowitz, John Tierney has been “-greatly exaggerating the accuracy of the betting markets.”- “-They follow the polls. That’s it.”-
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My comment to Alan Abramowitz and John Tierney:
“-They follow the polls. That’s it.”-
Yes, they follow the polls. No, that’-s not it.
Traders also dig the news of the day and make anticipations about the outcome. For instance, towards the end of the 2008 Democratic primary, the polls and the mass media were still giving Hillary Clinton a very good standing, whereas the prediction markets (informed by a bunch of political experts who did the counting of the delegates and super-delegates) were telling us that she was as toasted as Lehman Brothers in the middle of the credit crunch crisis.
Are prediction markets useful? If John Tierney wants to answer this question, he should pick up a prediction market and put it in the social context of that day. Some prediction markets are more useful than others. In the case of the 2008 Democratic primary (a complicated matter), the prediction markets sided with the best informed political experts against the mass media and the polls. So to speak, they were an umpire. In that case, we see the emergence of a social utility. We now have the case for the media citing more the probabilities of the liquid (play-money and/or real-money) prediction markets.
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Previously: #1 – #2 – #3 – #4 – #5
External Link: Club of Growth
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