And a slam at the InTrade fanboys:
[…-] The classic first line of defense in these cases is to remind people that market “predictions” are really just probabilities [*], so any one outcome cannot invalidate the approach. The argument is sound and backed up by loads of data. But it would of course be much more convincing if we, as an industry, would remember to show at least as much humility when our market “predictions” appear correct instead. If you’re going to spread the idea that your market called all 50 states in the last U.S. presidential election because each correct outcome was predicted with over 50% chance, then you can’t hide behind probabilities when an 80% prediction comes to naught, as in Obama’s NH collapse. […-]
Excellent point, my Lord.
[*] Note that Midas Oracle is stuffed with phrases like “-probabilistic predictions expressed in percentages”-, and full of charts showing these probabilities.
Go reading his second point, now.
[…-] capturing the consensus opinion in a much finer and dynamic way than all the amorphous media buzz […-]
Because NewsFutures is a strictly hierarchical company, I assume the piece is from EJSS, even though our smart man did not sign it. Bad Karma. Anonymous texts have no weight on the Internet.
Author Profile -Editor and Publisher of Midas Oracle .ORG .NET .COM —- Chris Masse’-s mugshot —- Contact Chris Masse —- Chris Masse’-s LinkedIn profile —- Chris Masse’-s FaceBook profile —- Chris Masse’-s Google profile —- Sophia-Antipolis, France, E.U. Read more from this author…-
Read the previous blog posts by Chris. F. Masse:
- Good news: The BetFair blog now features a prediction market column. — Bad news: Their columnist is an anonymous writer with long hair… and dubious skills.
- Once again, a BetFair spin doctor misunderstands the prediction market approach.
- Tss… Tss… Surely, you are joking Doctor Giberson.
- Comments are still open on Midas Oracle.
- “I am much more aligned with InTrade than you are, Chris.”
- And the award for the most technology advanced software vendor goes to… the envelope, please…. QMARKETS in Israel. … [Cheers and applauses in the crowd.]
Seems very similar to something that I wrote on here earlier in the week.
In truth, it is a veiled criticism of you Chris, and your past propensity to call almost every outcome that traded over a 50% probability and came good, as a case of the prediction market predicting; and also perhaps Vaughan Williams, who is quick to spin the line, PM’s predicted the outcome in every state in 2004 etc….
Having read the whole of the piece, there is one aspect of it which I would like to call into question, and, which I believe undermines the central message;
“But over here at NewsFutures we don’t think markets have anything to apologize for. We think, rather, that they performed perfectly in New Hampshire, doing exactly what they are designed to do: capturing the consensus opinion in a much finer and dynamic way than all the amorphous media buzz, and, remarkably, giving Clinton a significant chance to win — 20%, give or take a few — even while the pundits and the polls, and some in her own campaign, had already left her for dead.
In fact, it is possible that the people who, on election day, had the best notion that Clinton could still pull it off were those staring at the price of that Obama stock, having to make a decision to buy, hold or sell. Why, they wondered, is it stuck at 80% if it’s such a sure thing? Why are there still people on the other side willing to put down good money on Clinton?”
I have copies of the graphs from Intrade, Iowa and Betfair, at the moment voting started in New Hampshire (and subsequent) – at all times Obama was trading with a probability of over 90% – most often over 93% and at one point (as noted in the FT) at 99%. Where are the NewsFutures figures from and what point in time do they relate? Are we to assume that in fact NewsFutures market was the most predictive, or has the author simply got his numbers wrong.
“In truth, it is a veiled criticism of you Chris, and your past propensity to call almost every outcome that traded over a 50% probability and came good, as a case of the prediction market predicting”
I’m guilty as charge.
To my defense, I’d say that, if things are reported the EJSS way, it will sound dull.
There is a right balance to find between respecting the meaning of probabilities and bringing a bit of entertainment in the mix.
Up to now, it’s the “over-selling” that has made InTrade the prediction exchange of reference. NewsFutures is still the underdog. EJSS is smart, but John Delaney is more successful.
Niall, the price I’m referring to is approximately the price of the Intrade contract on election eve.