Can the prediction markets survive without the over-selling from John Delaney and his little fanboys?

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Emile Servan-Schreiber:

[…] 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. […]

Emile Servan-Schreiber makes a good point &#8212-see also Panos Ipeirotis, in the same vein.

But the over-selling is the reason [*] why InTrade (and not NewsFutures) has managed to infiltrate so many US media. If you suppress the magical touch, then InTrade is just a forecasting tool of convenience &#8212-for those too busy to look at the polls.

Give me one reason why the political analysts should follow InTrade instead of the polls, then?

What is the true nature of the prediction markets? How to use the prediction markets? Who should use the prediction markets? For what benefits? Once you have the answer to these 4 questions, you can tackle the next two problematics: How to market the prediction markets without over-selling them. How to report news thru the prism of the prediction markets while respecting their true probabilistic nature.

Welcome to the version #2 of the prediction market industry. Quite a horse of another color, now.


[*] UPDATE: The over-selling aspect is the topping over the real-money and the liquidity dimensions. The over-selling aspect wraps all that.

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