Arbitrage in the InTrade Dem VP Market

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There has been an unexploited arbitrage opportunity in the Intrade Democratic VP market (&#8221-2008 Democratic VP Nominee (others upon request)&#8221-). As the attachment shows, you can sell the slate of candidates for 123.2 (just sum the bids) while you will only have to payout 100. This possibility has existed for at least three weeks, and is particularly puzzling now given that the announcement is likely to occur this week.

What is also a bit odd is that Intrade has another market (&#8221-2008 Democratic Vice-Presidential Nominee (with Field contract)&#8221-) on the same outcome which includes a catch-all field contract which does not have the same arb&#8211-again see the attachment below. It is substantially cheaper to buy the field contract in the second market than the omitted candidates (Kaine, Sebelius, Hagel, Schweitzer, Gephardt, Kerry, and others) in the first market.

Any thoughts on why this is occurring?

attachment: intradedemvp_summedbidsexceed100.pdf

The New Republic profiles the next Vice President of the United States of America -Jim Webb, maybe.

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Via mister Bo Cowgill

The New Republic

Some British betting bloggers are completely out of the loop. :-D

UPDATE: Andrew Sullivan on Hillary Clinton&#8217-s exit statement. (He liked it.)

UPDATE: InTrade forum thread.

InTrade

Democratic Vice President Nominee

Price for 2008 Democratic Vice-Presidential Nominee at intrade.com

Price for 2008 Democratic Vice-Presidential Nominee at intrade.com

Price for 2008 Democratic Vice-Presidential Nominee at intrade.com

Price for 2008 Democratic Vice-Presidential Nominee at intrade.com

Republican Vice President Nominee

Price for 2008 Republican Vice-Presidential Nominee at intrade.com

Price for 2008 Republican Vice-Presidential Nominee at intrade.com

Price for 2008 Republican Vice-Presidential Nominee at intrade.com

Price for 2008 Republican Vice-Presidential Nominee at intrade.com

BetFair

Next Vice President:

Democratic Ticket

Democratic Vice President Nominee

Republican Vice President Nominee

NewsFutures

Barack Obama will pick a woman as running mate.

© NewsFutures


Explainer On Prediction Markets

Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that traders bring when they agree on prices. Prediction markets are meta forecasting tools that feed on the advanced indicators (i.e., the primary sources of information). Garbage in, garbage out&#8230- Intelligence in, intelligence out&#8230-

A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 6 times out of 10, the favored outcome will occur- and 4 times out of 10, the unfavored outcome will occur.

Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism.

2 days after my ringing the alarm bell… THE FREE FALL

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– My first warning: June 4. + My second warning: June 4, later that day. + My third warning: June 5.

– Now, spot the timeline in the event derivative chart below.

Take that, Mike R. :-D

TAKEAWAY: If you are a UK-based or British trader on prediction markets, don&#8217-t believe a single word of what UK-based or British bloggers say about US politics. Go to US-based or American blogs to get the information you need to inform your US bets.

If you followed that British blogger, you&#8217-d be in the red today.

Get your information from sources close to the action &#8212-not one ocean away.

Get your information from vibrant sources who use intelligently both the information technology and the wisdom of crowds to comprehend the news &#8212-see my point #5 on yesterday&#8217-s post.

Pay attention to what I&#8217-m going to say in the coming weeks about &#8220-prediction market journalism&#8220-. Thanks.

This is why I said that those who believe that Hillary Clinton has a chance to be on the Democratic ticket are clueless.

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– Michelle [Obama] Vetoes Hillary [Clinton]. – by Robert Novak – May 20, 2008 &#8212-&#8211- mirror link.

A veto &#8212-it&#8217-s a strong word. Those British betting bloggers are out of the loop.

Previous blog posts by Chris F. Masse:

  • The best prediction exchanges
  • “There will be no media consumption left in ten years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form.”
  • Hillary Clinton won’t be on the Democratic ticket. — It’s not going to happen. — N-E-V-E-R. — Not a chance. — Period.
  • Suggestion for WordPress — Subscribers’ Capabilities
  • WEB EXCLUSIVE: — The annoted, historical, compound chart that those triple morons at the BetFair blog are hiding from their readers’ view. — It is located in a secret cache, linked to behind a picture of Hillary Clinton. — Curious place to locate a prediction market chart. — I bet nobody downloaded that chart. —
  • Knows the similarity between Google, Craig’s List, and the Drudge Report?
  • “Listening to each other is core to our culture, and we don’t listen to each other just because we’re all so smart. We listen because everyone has good ideas, and because it’s a great way to show respect. And any company, at any point in its history, can start listening more.”

VIDEO: Why Hillary Clinton will never be the Vice President of the United States of America.

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Commenter &#8220-Just Hinting&#8221- gives us this link:

Dick Morris phone interview

Previous blog posts by Chris F. Masse:

  • Midas Oracle is only 6 times smaller than Fred Wilson’s blog, “A VC”.
  • The best blogs on prediction markets
  • The New Republic profiles the next Vice President of the United States of America —Jim Webb, maybe.
  • No Trades (other than at the start) —-> Not a reliable predictor, as of today
  • How you should read Midas Oracle
  • The best prediction exchanges
  • “There will be no media consumption left in ten years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form.”

Dick Morris (ex-strategist for Bill Clinton) devoted, not one, but two, strong columns against the Hillary-Clinton-as-VP scenario.

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Dick Morris:

It would be an act of terminal insanity for Barack Obama to name Hillary Clinton as his vice presidential candidate. […] Finally, having Hillary in the West Wing would be a nightmare.

Dick Morris:

Instead of conceding defeat and campaigning for Obama, auditioning for the spot of loyal teammate, Hillary insists on keeping her options open and vies for the spotlight with Obama, exactly what you do not want a vice president to do. […]

But the more serious problem is the public record that Todd Purdum, an excellent journalist, laid out in his Vanity Fair piece. Bill’s relationships with billionaires, his pursuit of financial gain, his alliance with the emir of Dubai, and his acceptance of speaking fees and income from some of the least savory of types is not what you need to carry around with you in a presidential race. […]

More Info: See Andrew Sullivan&#8230- who views Hillary Clinton as a detestable lady&#8230-

So, stay away from the &#8220-Hillary Clinton As VP&#8221- prediction markets&#8230- :-D