Tag Archives: interpreting prices as probabilities
The proper way to predict Obama’s electoral vote count
I’m puzzled by the way Intrade projects the electoral vote count on its home page. Two methods are proposed: (a) add up the votes of all the states that are “leaning” (>50%) for a candidate, or (b) compute a price-weighted average. The latter is obviously meaningless because electoral votes are winner-take-all in pretty much every [...]
Don’t event derivative prices represent aggregated expected probabilities, rather?
InTrade CEO’s poodle got corrected on the concept of interpreting prediction market prices as probabilities:
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LoudNotes, please contact me, I do have a vacant blog author slot to fill:
cfm |-at-| midasoracle |.|-com-|
chrisfmasse |-at-| gmail |.|-com-|
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Posted in All Best Posts Ever, Analysis (Meta), Economics, Exchanges & Markets, Explainers, Forecasting (Science & Practice), Science
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Also tagged aggregated expected probabilities, betting markets, event derivative markets, event derivative prices, imputed likelihood of uncertain events, InTrade, Jason Ruspini, LoudNotes, preceived likelihood of uncertain events, prediction market prices, prediction markets, probabilities
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