Velocity + Inaccuracy

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One bit of criticism about my pamphlet (The Truth About Prediction Markets) goes like this: Velocity without accuracy is dumb.

That is not true.

Let&#8217-s imagine, for the sake of the exercise, that Barack Obama does not pick up Kathleen Sebelius to head HHS. The velocity argument remains valid: Fed by the vertical media (in this case, Yahoo News republishing the Associated Press), the prediction markets integrated expectations (informed by facts and expertise) much faster than the mass media did.

Any argument about the velocity of the prediction markets cannot be contradicted. No way.

9 thoughts on “Velocity + Inaccuracy

  1. Jason Ruspini said:

    I think you can put your thought succinctly as shifting the description of PMs from relative accuracy to relative efficiency in producing accuracy.

  2. Chris F. Masse said:

    That relative efficiency is interesting even in inaccurate predictions.

  3. said:

    Can we use the term “efficiency” instead of “velocity”? The term “market efficiency” is well understood and established.

  4. Chris F. Masse said:

    Yes. Well understood by the economists, but not by the main street people.

  5. Jason Ruspini said:

    The common definition does not contradict the more technical one. Velocity sounds pseudo-scientific.

  6. Medemi said:

    >> “That relative efficiency is interesting even in inaccurate predictions.”


    there is no such thing as “inaccurate predictions”, as markets express a probability, not a prediction. Degree of accuracy is what you’re looking for and it is a statistical phenomenon.

    One can’t make any conclusions based on 1 or 2 markets, 1 election even, no matter how motivated people are. All it tells us, is something about these people judging prediction markets – their motivation, their lack of knowledge.

    Market efficiency and accuracy are closely linked/intertwined.

  7. Medemi said:


    we should call them probability markets. You will not be the first.…..36f6?pli=1

    “Still, the predictions markets did forecast a Republican Senate. Should

    we dismiss them for getting that one so wrong?

    If you think so, then you’re probably forgetting the principles of

    probability. Prediction markets do not make absolute predictions about

    electoral outcomes, economic developments, product success, or anything

    else. Instead, their predictions are mere probabilities. That’s one

    reason why the markets expected the Senate to stay in Republican hands,

    even though so many Democratic candidates were favored. Senator-elect

    Jim Webb had roughly a 60 percent probability of success, and

    Senator-elect Bob Casey Jr. had roughly a 70 percent chance of success;

    but these numbers do not suggest that both candidates were likely to

    win simultaneously.”

    “Perhaps we should add ‘probability markets’ to the taxonomy… “

  8. Chris F. Masse said:

    Medemi, I get you.

  9. Chris F. Masse said:

    “The common definition” is better understood by main street people. That said, I will make an effort.

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