Niall O’-Connor (who maybe ate grilled snake for his Sunday morning breakfast ):
The current trend to promote almost illiquid betting markets as being predictive, looks set to backfire bigstyle. In a nutshell, to date the so called “-prediction markets”- have called it wrong in New Hampshire (Democrats), Michigan (Republicans) and South Carolina (Republicans). Prediction market advocates, in many instances weighed down with the baggage of being too closely associated with the prediction market industry, are guilty of churning out subjective, biased research, in an attempt to promote the industry and lure traders into the markets. Unscientific comparisons are continually made between prediction markets and polls, and, moreover, markets are deemed to have been predictive, when all they have actually done is [respond] to the unwinding of the vote count. The publication of such utter garbage does nothing but a big disservice to the fledgling prediction market industry. Moreover, it is unfortunate that prediction market industry watchers, who purport to be independent and subjective, indulge the writers of such nonsense, in the process revealing themselves to be nothing more than placemen and sycophants of unquestioning loyalty. […]
Names, please, Niall.
- Who are those corrupted “-prediction market advocates”-?
- Who are those rotten “-prediction market industry watchers”-?
By the way…- I will have the charts of the expired BetFair contracts, soon, I hope- and I will publish them here for all to see.
1. To be weighed down by the baggage of your association with an industry, is not to be corrupt; but it does suggest that your research is not objective. Sadly, such associations are a fact of life in most academic institutions.
2. Anybody who blindly claims that these markets are predicting something, or indeed anything.
3. You prove my point!
“By the way… I will have the charts of the expired BetFair contracts, soon, I hope; and I will publish them here for all to see.”
It is not the expired contracts that matter! The betting market is dynamic, it responds to the results as they are being called. When it expires it will of course have expired in favour of the winner.
The actual point that matters, is at what point in time and in response to what info, the market began to call the winner as the winner.
At what point in time are we to agree that these markets are being predictive; one day before voting opens; just before voting opens; six hours after voting opens.
This is a very serious question that all prediction market advocates must answer.
Producing expired contracts proves precisely nothing, except a subjective bias in favour of the predictiveness of predictive markets.
The expired contracts need to be subjected to rigorous analysis; something that has not been done to date. (Including, I will add, in Vaughan Williams’ most recent piece on the Betfair blog).
A prediction is floated on a market in an *attempt* at forecasting. Which other forecasting tool does better?
I publish prices of historical prices for all to see. I don’t want to prove anything when I do so. I just publish facts. The analysis comes later.
i publish election predictions on election eve. the predictions are from a well known pollster and a well known prediction market.
i’m not doing any analysis; just publishing some facts.
Cav, you’re great. I read your blog, first thing in the morning.
What’s wrong with trying to predict the future? Does it go against your religion?
“The close relationship between the prediction market industry and academics may raise some concern about the objectivity of some of the research into this area. In that prediction markets are often markets in which the participants may lose money, it is imperative that those that do publish research about and into the prediction market industry, at all times give full-disclosure as to their connection/s with the said industry. Only the most paranoid amongst the academic community should/would find such disclosure a problem.”
I thought that Zogby actually designs experiment samples for each state, conducts interviews according to those designs, and reports the results.
What is the nuance on TRACKING that I’ve missed.
And really, I’m not due any respect. So talk to me like you might speak to Rodney Dangerfield.
It seems that we agree on most of this, but diverge on what I would call the “Spot vs. Forward” spread. We both see the last trade as “tracking”. I am using the spot as a proxy for the set price, i.e. the expiring forward price
I ignore transaction costs, costs of carry and dividends.
Are you looking at the set price as an independent variable from the spot price?