Tag Archives: real-money prediction markets

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.

2008 US Elections Prediction: John McCain is now the favorite at InTrade, while all the other prediction exchanges still have Barack Obama ahead. Is InTrade quicker to incorporate the latest polls because of the bigger liquidity of its prediction markets?

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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. 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 Ireland = 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.

iPredict New Zealand

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iPredict New Zealand

iPredict New Zealand is a legal, real-money prediction exchange organizing real-money prediction markets. They can also provide support for enterprise prediction markets.

iPredict New Zealand has been declared a futures dealer by the New Zealand Securities Commission, which means iPredict is treated as an exchange under securities law.

Best wishes to them.

Tutorials

Getting Started

Trading

Short Selling

Questions to InTrade CEO John Delaney about InTrade .NET and InTrade .COM

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– InTrade .NET is a play-money prediction exchange while InTrade .COM is a real-money prediction exchange. Is there an automated market maker linking the InTrade .NET prices (or bids) with the InTrade .COM prices?

– Why is it that you ask the consumers of InTrade .NET to sign the terms of use of InTrade .COM, which mentions that: &#8220-2.2.4 You may lose money on Exchange trades.&#8221-? – [Thanks to Deep Throat for that remark.]

– InTrade .NET has a very good charting system. Will the same charting system be implemented at InTrade .COM whose charts are absolutely awful? (See this comparison between the InTrade .COM charts and the InTrade .COM v2 charts.) I insist to say that this should be a priority.

– Will InTrade .NET have chart widgets, just like InTrade .COM and InTrade .COM v2 both have?

– Will InTrade .NET have closed contracts (which are very useful in the accuracy discussions), just like InTrade .COM and InTrade .COM v2 both have?

– Finally, it is stated on the InTrade .COM frontpage (in a text promoting InTrade .NET) that:

When Intrade.net goes out of beta it will become the new default but the current version of Intrade.com will be retained indefinitely.

How should we understand that? Does this mean that you are going to merge your play-money and real-money prediction exchanges? (Might not be a bad idea provided that full information is given on each prediction market.)

UPDATE: Deep Throat tells me that their techies are testing their new user interface on InTrade .NET, which deals with with play money, and then if everything works out well, they may implement the same user interface on InTrade .COM, which deals with real money &#8212-while maintaining the legacy InTrade .COM on a dedicated server, for the nostalgic users.

2008 US ELECTORAL MAP PREDICTION: The 2008 US elections thru the prism of the prediction markets – 2008 US presidential and congressional elections – US President Prediction + US Congress Prediction – Barack Obama vs. John McCain

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–

#1. Explainer On Prediction Markets

–

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.

–

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

–

–

#2. Probabilistic Predictions = Charts Of Prediction Markets

–

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.

–

–

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 Ireland = 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.

Prediction Markets for the 2008 Electoral College = US Electoral Map

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Interesting blog post from Lance Fortnow on the VP prediction markets. (I will soon blog about those.)

InTrade – Electoral Markets Map

Their brand-new widget:

Tim… Who?

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Link to the InTrade prediction market.

Below, I try to hot-link to the chart, I&#8217-m not sure at this point it will work. We will see.

Tim Pawlenty

Tim Pawlenty

Quit mulling over the VP-choice prediction markets, todays real story is in the election winner markets.

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I would suggest that the VP selections and the performance of the VP-choice markets at InTrade and elsewhere lend some validity to Chris Masse&#8217-s views on such markets. But enough about the VP markets, already. The interesting developments are in the election-winner markets.

Price for 2008 Republican VP Nominee (others upon request)(expired at convention) at intrade.com

Since just after 2 PM Irish time, when the NEW.REP.VP.PALIN contract briefly fell into the 20s (rumors had it that Palin wasn&#8217-t on a plane to Dayton- subsequently established that the rumor was not true), the contract turned sharply up to about 98 and stayed there until the selection was made official.

During that same time period, the &#8220-Obama wins&#8221- contract has slipped down a few percentages and the &#8220-McCain wins&#8221- contract is up a few percentages. Since at most VP selections are typically expected to affect final vote totals by 2 or 3 percent, the fact that the Obama and McCain contracts (which are winner-take-all, not vote-share contracts) have moved by 2 or 3 percent themselves suggests the markets think Palin is a fairly strong choice.

(But as I write this, the Obama contract is rallying back. Live blogging the prediction markets is hazardous stuff.)

Price for 2008 Presidential Election Winner (Individual) at intrade.com

Price for 2008 Presidential Election Winner (Individual) at intrade.com

UPDATE: As of Tuesday morning, both presidential markets have slid back to their pre-Palin-announcement levels, but active trading suggests continued disagreement about the information trickling into the market. Also interesting, activity has continued on the NEW-REP-VP-PALIN contract, with the price dipping below 95 (but back to 97 as I write).  Since that contract expires at the convention – i.e. in a day or two – some folks are betting Palin will be off the ticket fast.

InTrade DOT NET – www.intrade.net

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This post is a very short review of their new website. I might publish a deeper review, later on.

The log line is that InTrade CEO John Delaney has ingested all the innovations that HubDub has brought to the prediction market scene since January 2007 (e.g., long and rich prediction market webpages that are indexed by the search engines, and use of social networking to boost trading) and has asked his technological team to clone those innovations for InTrade. This is great. I also appreciate that their charting system is satisfying. (The advanced charts seem to be of the right size, I have noticed. Neither too small, nor too big.)

On the negative side, the execution is not as good as it should be &#8212-and I&#8217-m polite. But to be fair with them, they say their website is still in &#8220-beta&#8221- &#8212-so let&#8217-s give them time to improve their work.

Overall, it&#8217-s a good move, and it shows, as I have said for months, that Nigel Eccles of HubDub is having a profound impact on the prediction market industry.

UPDATE: I forgot to mention that InTrade.net presents probabilities expressed in percentage, not prices, which they also took from HubDub.