In the seven days leading up [Joe Biden's] share price on Intrade went up about three and a half times. In the seven days leading up his share price on Intrade went up about three and a half times. In a field of about four or five different viable candidates he became the clear leader on Intrade more than about 48-72 hours before he was named, even before anyone was floating his name as a serious candidate.

Chad Rigetti suggests that there was insider trading at work, which informed the InTrade prediction market on Joe Biden —well before the leak and/or announcement.

I have a different reading. The reality is that the Barack Obama campaign had been leaking the fact that they needed a VP experienced in foreign affairs (so as to counter-balance Barack Obama’s inexperience in this crucial area –that was before the financial crisis), and it happened that in the short list of potential VPs, Joe Biden was the only one who was fitting this narrative. It was thus easy for journalists (and for the InTrade traders) to anticipate that Barack Obama would choose Joe Biden.

This is typical of the overselling done by the InTrade pushers —they suppress the existence of the primary indicators (which event derivative traders rely on to get informed), and they tell gullible reporters that InTrade has magical power. It’s total bullshit. The life of the InTrade prediction market on “Joe Biden as the VP nominee” represented the simple reflection of what event derivative traders could read in the Press. There was no magic whatsoever.

(Sorry for my previous post about Mitt Romney. I consulted the political news websites before InTrade. )

Sarah Palin

The play-money and real-money prediction markets were easily fooled with the Pawlenty rumors, yesterday.

That vindicates my message that the VP prediction markets feed on unreliable primary indicators.

I said from day one to be careful with the VP prediction markets.

I told you so.

UPDATE: It’s probably Sarah Palin.

Below, I try to hot-link to the chart, I’m not sure at this point it will work. We will see.

Tim Pawlenty

Reading the Press this early Thursday morning does not give any insider’s clues.

New York Times

Politico

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Will Mitt Romney be McCain’s Vice Presidential nominee?

[...] Mr. Obama’s decision had as much to do with Mr. Biden’s appeal among white working-class voters and compelling personal story, and his conclusion that the Delaware senator was “a worker.”

The important information in the NYT piece is that Barack Obama personally called governor Bill Richardson “late last week” to announce him that he was not considered anymore. That’s around the time the Joe Biden rumor began to have more weight in the media circles —see the InTrade chart below.

Bo Cowgill, back in May 2008 (when I started to act as a prophet of doom):

This is dumb. Cover them if something interesting happens. Maybe your theory will turn out to be wrong. Anyhow: Although the decision is made in secrecy, the Presidential nominees have a number incentives which we have plenty of information about. Specifically:
* They want someone who will balance their tickets in terms of geography, race and class.
* They want someone who will help with weak areas of their campaigns.
* They want someone who will be a good campaign surrogate — giving good speeches and attacking the opponents effectively.
* They want to avoid a VP who will de-motivate or offend the base.
* They want to avoid someone with a bunch of skeletons in the closet such as angry ex-wives, out-of-wedlock kids, etc.
* Etc etc.
Anyhow, I don’t see any reason to ignore these markets in case something interesting happens. I read Midas Oracle so that I don’t *have* to read a whole bunch of other websites!

Bo Cowgill was on the right track, now that I think of it —in a society where everything leaks out.

On the opposite of the spectrum, Tom Snee was too much extreme in his view:

According to Tom Snee of the Iowa Electronic Market, at Iowa University, futures markets need more hard information than they get in the veepstakes, to reliably predict a result.

Markets are very good at predicting elections, he says – but not choices being made inside Barack Obama’s or John McCain’s head.

Justin Wolfers was more measured.

So, Bo Cowgill and Justin Wolfers are the winners, on that one.

I was partially wrong. I am a bit too extreme, sometimes. (Did someone else notice that? ) I need to learn more about… granularity.

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PS: On the Republican side, now…

Who will be the Republican Vice Presidential Nominee?

Some blogger says his wife is fantastic.

New York Times portrait of Joe Biden.

UPDATE: Barack Obama‘s speech + Joe Biden‘s speech

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I think it is the worst pick ever. What a blunder. Joe Biden (a D.C. insider) is unpopular and gaffe prone. Plus, that choice shows that Barack Obama is insecure when it comes to foreign policy. An emphasis on the economy and, thus, on a successful gubernatorial experience would have been better.

Kathleen Sebelius was the one to pick. She is my vice president. (And Ron Paul is my president. )

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I have over-estimated the secretiveness of Barack Obama’s decision process. The chart above obviously shows that the Joe Biden narrative leaked out to reporters was beamed out for a purpose: testing the Obama-needs-a-VP-who-is-strong-in-foreign-policy argument, and letting the Press do the final vetting on gaffe-prone Joe Biden.

InTrade CEO John Delaney (along with the HubDub and BetFair people) will now brag on his marketing material that his prediction exchange did forecast Joe Biden as the Democratic vice president nominee.

What’s bad in all that (other than I have an egg on my face [*] ) is that we won’t have a public debate on the different quality of the various primary indicators, and how that conditions the accuracy of the prediction markets.

[*] I have an egg on my face, but Caveat Bettor has a whole omelet on his.

According to Tom Snee of the Iowa Electronic Market, at Iowa University, futures markets need more hard information than they get in the veepstakes, to reliably predict a result.

Markets are very good at predicting elections, he says – but not choices being made inside Barack Obama’s or John McCain’s head.

Thank God for the BBC.

Thank God for the Iowa Electronic Markets.

Shame on John Delaney —over 3 generations of Delaneys.

Other than Tom Snee (the IEM spin doctor), Chris Masse and Justin Wolfers are the only prediction market analysts to have sent out warnings about the VP-candidate prediction markets.