Tag Archives: HubDub

Would InTrade or BetFair have done a better job predicting how many people would see the Barack Obama infomercial?

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As I disclose on the other blog (Midas Oracle .COM), the HubDub traders wrongly thought that the (Socialist) Barack Obama informercial would have be seen by &#8220-more than 50 million&#8221-. No, no, no, no. It was 33.5 million, according to Nielsen. The HubDub traders were too optimistic.

Would the InTrade or BetFair traders have done a better job? Jesus, that&#8217-s a difficult question. Which boils down (mainly, but not uniquely) to whether some experts on TV business were quoted in the media with some predictions. To investigate that, I have run a Google News search for news articles published before October 30. I haven&#8217-t seen any expert predicting how many viewers would get that infomercial. However, here&#8217-s what I spotted in the New York Times article published in the morning preceding the airing of that infomercial:

Ross Perot, the last presidential candidate to run similar programming, broadcast eight long infomercials to an average of 13 million viewers, with one of them getting 16.5 million viewers.

Hummm&#8230- Obviously, the HubDub traders were too cocky with their &#8220-50 million&#8221- figure&#8230- but should we blame them when, obviously (too), the Barack Obama situation circa 2008 is very different than the Ross Perot situation circa 1992?

The HubDub traders were not informed by the Ross Perot history. They simply made the bet that the Barack Obama infomercial would get as many TV viewers as the Third Presidential debate got (56.5 million). They predicted in a gregarious fashion. They lost.

I don&#8217-t think that the BetFair or InTrade traders would have done better. Do you?

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How many people will watch Barack Obama&#8217-s primetime address on 10/29?

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2008 US electoral college: What I am betting on.

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PollTrack:

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I like the way they color this electoral college map &#8212-with 5 colors only (simplicity is good). It is very clear and usable, I believe. You can see 6 states in gray (&#8221-too close to call&#8221-). I am heavily betting on Barack Obama for Florida and North Carolina. There will be a good payoff, next Tuesday &#8212-maybe. :-D

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Price for Alabama - Florida at intrade.com

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Price for New Jersey - Rhode Island at intrade.com

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Who will win Florida in the 2008 Presidential Election?

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Who will win North Carolina in the 2008 Presidential Election?

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Explainer On Prediction Markets

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A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 60 times out of 100, the favored outcome will occur- and 40 times out of 100, the unfavored outcome will occur.

Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism &#8212-with or without an automated market maker.

Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that the traders bring when they agree on prices. These event derivative traders feed on the primary indicators (i.e., the primary sources of information), like the polls, for instance. (Garbage in, garbage out&#8230- Intelligence in, intelligence out&#8230-) Armed with these bits of information, the speculators then trade based on their anticipations, which will be either confirmed or infirmed. Hence, the prediction markets (which are more than just an information aggregation mechanism) are a meta forecasting tool.

The value of a set of prediction markets consists in the added accuracy that these prediction markets provide relative to the other forecasting mechanisms, times the value of accuracy in improved decisions, minus the cost of maintaining these prediction markets, relative to the cost of the other forecasting mechanisms. According to Robin Hanson, a highly accurate prediction market has little value if some other forecasting mechanism(s) can provide similar accuracy at a lower cost, or if very few substantial decisions are influenced by accurate forecasts on its topic.

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More Info:

– The Best Resources On Prediction Markets = The Best External Web Links + The Best Midas Oracle Posts

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More Charts Of Prediction Markets

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The definitive proof that HubDub is an indispensable prediction exchange. [*]

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As I told you, I am blogging as often as possible on the other blog (Midas Oracle .COM) about the 2008 US presidential elections as seen thru the eyes of the prediction markets. As I wrote there this morning, I have just found out a truly interesting set of prediction markets at HubDub. (I wasn&#8217-t able to find its equivalent on InTrade, BetFair, or NewsFutures.) It&#8217-s trying to predict where the Dow Jones will be, come November 4, 2008. (As you may remember, the deeper the financial crisis, the more likely it is that Barack Obama will be elected president of the United States.)

As of this morning, the Dow Jones is barely above the 8,000 level (8,175.77), and the futures say that the stock market will rebound, at least in the first hours. However, I am bearish. I would bet that the Dow Jones will stay around the current level (or lower) until Election Day. In other words, I am betting on the red, on the chart below.

At what level will the Dow Jones Industrial Average close on Election Day?

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[*] And if Emile (whom we highly respect, overall) is pissed off by that statement, then, great, that&#8217-s a cool unintended collateral consequence. :-D

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HUBDUB PUNDIT WATCH: TechCrunch is the bottom of the pool, while VentureBeat and Pat Buchanan are stellar.

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I am not surprised at all by the results.

Maybe a non-profit organization should sponsor PunditWatch.

Robin Hanson (mister &#8220-Track Records&#8221-), take notice.

2008 US Presidential and Congressional Elections Prediction: The Sarah Palin effect has partially evaporated, but its remains point to a close race, come Tuesday, November 4, 2008.

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#1. Explainer On Prediction Markets

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Prediction markets produce dynamic, objective probabilistic predictions on the outcomes of future events by aggregating disparate pieces of information that traders bring when they agree on prices. Prediction markets are meta forecasting tools that feed on the advanced indicators (i.e., the primary sources of information). Garbage in, garbage out&#8230- Intelligence in, intelligence out&#8230-

A prediction market is a market for a contract that yields payments based on the outcome of a partially uncertain future event, such as an election. A contract pays $100 only if candidate X wins the election, and $0 otherwise. When the market price of an X contract is $60, the prediction market believes that candidate X has a 60% chance of winning the election. The price of this event derivative can be interpreted as the objective probability of the future outcome (i.e., its most statistically accurate forecast). A 60% probability means that, in a series of events each with a 60% probability, then 6 times out of 10, the favored outcome will occur- and 4 times out of 10, the unfavored outcome will occur.

Each prediction exchange organizes its own set of real-money and/or play-money markets, using either a CDA or a MSR mechanism.

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More Info:

– The Best Resources On Prediction Markets = The Best External Web Links + The Best Midas Oracle Posts

– Prediction Market Science

– The Midas Oracle Explainers On Prediction Markets

– All The Midas Oracle Explainers On Prediction Markets

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#2. Objective Probabilistic Predictions = Charts Of Prediction Markets

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Put your mouse on your selected chart, right-click, and open the link in another browser tab to get directed to the prediction market page of your favorite exchange.

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2008 US Elections

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InTrade

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2008 US Electoral College

2008 Electoral Map Prediction = InTrade – Electoral College Prediction Markets = Probabilistic predictions for the 2008 US presidential elections based on market data from InTrade = electoralmarkets.com

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– This is a dynamic chart, which is up to date. Click on the image, and open the website in another browser tab to get the bigger version.

With regard to the 2008 US elections, both Justin Wolfers and Robin Hanson implied that BetFair is not as predictive as it should be.

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Previously: About Justin Wolfers&#8217-s column

Justin Wolfers&#8217- Freakonomics post (which suggests that BetFair would have a better predictive power if US traders could use it).