InTrade is no psychic -but what if that bit of truth is systematically said BEFORE, as opposed to AFTER.

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David Leonhart in his New York Times blog, last week:

The political prediction markets just went through their version of the dot-com bubble. […]

Intrade’s odds have had a very good forecasting record over the last few years, having correctly called every Senate race in 2006, every state in the 2004 presidential election and all but one state in the 2004 Senate races. The odds also correctly called New Hampshire for John McCain this week and now make him the favorite for the Republican nomination- he is given a 38 percent chance, while Rudolph W. Giuliani is given a 29 percent chance.

Intrade’s executives, as well as the academic researchers who study the site, are careful to point out that its contracts provide only odds, not certainties. An outcome that’s given a 20 percent chance of happening should happen 20 percent of the time — not never. […]

The question I asked yesterday was: What would happen if that warning label were to be sticked on InTrade before each election, as opposed to after each predictive debacle? My bet is that, if you suppress the mention of InTrade&#8217-s magical touch, the Irish real-money prediction markets will be far less appealing to people. They want magic. All of the sudden, InTrade is not a psychic anymore, but simply a forecasting tool of convenience for busy people who don&#8217-t want to check the polls in details. This issue is crucial if we want to be able to define what is the &#8220-prediction market approach&#8221- &#8212-as opposed to the &#8220-betting exchange approach&#8221-.

Give me one reason why the political analysts should follow the US primaries thru the prism of the InTrade prediction markets instead of thru the polls. [My question is still unanswered, you will notice. Which shows to you the embarrassment of the prediction market luminaries (or so they think they are).]

Once the true nature of the prediction markets appears more clearly, it becomes evident that they are not tools for the experts, but tools for the ignorants, rather. Which is great, provided that this is said clearly from the start.

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