There are many assumptions in this model which may not be valid . Although I believe that these are generally a fairly well-balanced set of assumptions relative to the universe of possible assumptions (i.e. alternate sets of assumptions would tend to cluster around the 25 percent number), it is hard to know for sure.
I’-ve spotted an interesting comment from Canadian trader Sacha Peter on the TradeSports forum:
This will be an interesting contract. Essentially, will Bush recess appoint him? I can’-t see him getting past the senate confirmation process.
I lost a few bucks (literally, it wasn’-t huge) in the previous confirmation debacle, so the way they worded this contract is very unambiguous and Tradesports appears to have learned one lesson.
So here’-s the contract statement:
This contract will expire at 100 if John Bolton is the US Ambassador to the United Nations at 11:59:59pm on the date specified in the contract.
This includes (but is not limited to) confirmation by the US Senate or a recess appointment by the President.
The contract will expire at 0 if John Bolton is not the US Ambassador to the United Nations at 11:59:59pm on the date specified in the contract.
This includes (but is not limited to) withdrawal of the nomination by the President, withdrawal by John Bolton himself, failure to be confirmed by the US Senate or appoinment to an “-acting UN Ambassador”- role under the Vancacies Reform Act.
Due to the nature of this contract please also see Contract Rule 1.9 Unforeseen Circumstances.
The Exchange reserves the right to invoke Contract Rule 1.8 (Time Protection) if deemed appropriate.
This entry is a follow-up on my previous blog post.
…- More exactly TradeSports-InTrade and Iowa Electronic Markets VERSUS The McLaughlin Group (PBS).
Reason Magazine writes:
Weirdly, the McLaughlin Group, the fustiest of all the talking head shows, had one of the best records this cycle, with Eleanor Clift, Lawrence O’-Donnell, and John McLaughlin all predicting Democratic takeover of the Senate and calling nearly all of the close races correctly. Still, that old line about stopped clocks comes to mind.
Vo, vo, vo. Not so fast. The McLaughlin Group is made up of five members. Three of them predicted the Dems in the US Senate, and so (if I’-m correct) the associated probability was 3/5 = 60%. It does not strike me as an unanimous consensus.
As for TradeSports, Professor Lance Fortnow wrote that all (NOT: “-nearly all”-) individual 2006 US Senate races were predicted correctly.
– The McLaughlin Group (PBS + CNBC Europe)
– 2006-11-03: Transcript – Audio (MP3) – Video (MP4) –
If the small-L and capital-L libertarians at Reason Magazine sides with the leftist bloggers and media in the anti-PM backlash, and if some from-day-one prediction market supporter goes amock, then the logical conclusion is: The Prediction Markets Have NOT Arrived Yet.
JC Kommer was prompt to comment on my 2006-Senate piece:
Double standard Mr Masse.
Betfair is doing exactly the same thing that Tradesports in the NKM “scandal”, going for the literal reading of the rules as they should.
My Answer To JC Kommer:
NKM Scandal: TradeSports made two grave errors. Number one, they engraved in marble that they would rely ON A SINGLE SOURCE OF INFORMATION (the US DOD) for the expiry of the contract. This is totally crazy. The truth should be established using as many reliable sources as possible or appropriate (including second-hand but reliable sources like the White House, which is fed by the DOD on military issues). What matters is the truth, gathered from multiple sources, not one particular source that could have an irrational or secretive behavior at some specific times. Number two, while establishing this one-single-source-for-expiry contract, TradeSports was not aware of the well known and public fact that the US DOD never issues detailed statements on North Korea matters. Information about North Korea is “-classified”-. Logically, the US DOD did not confirm directly and in a very formal way that North Korea fired missiles. (Note that a case can be made that the US DOD did indeed confirm the North Korea firing of missiles, directly and in an elliptic way, which many observers found it satisfying enough for expiry purpose). So, in my view, as I have described above, TradeSports made two grave errors. They apologized to their traders, but they did not take action to compensate the victims of their two errors. The victims here are the “-yes”- speculators on the NKM prediction market. They were correct in their prediction, but they lost their shirt in the end. Note that the “-yes”- bettors and virtual speculators at BoDog and NewsFutures were justly gratified for their accurate prediction on the NKM topic. Which shows once again that the problems originated from TradeSports, and not from the “-yes”- speculators. TEN CEO John Delaney (managing TradeSports) should have compensated the victims. Instead of that, the first action he took on the Monday when the scandal broke was to retaliate against Chris Masse, who gave airtime to the screwed-up “-yes”- speculators.
2006-Senate Case: There are no “-victims”- here, since BetFair sticks with the ORIGINAL contract —-as CLEARLY written ON DAY ONE on their “-RULES”- tab, and as understood correctly by everybody who can read plain English. NO SURPRISE, NO CONTROVERSY. “Which of these parties will have MORE SEATS in the US Senate following the 2006 US Senate Elections?” is a very different question than “-Which of these parties will CONTROL the US Senate?“-. There is no ambiguity in the first question. In the second question, it’-s understood that you could control the US Senate with your allies (the Independents).
Ex-BBC News Mike Smithson (of the Political Betting blog) wonders whether BetFair will count the two Independent U.S. Senators (Liberman and Sanders) in the Democratic camp.
Lieberman won re-election as the “Connecticut For Lieberman” party candidate – an independent political party he created after losing the 2006 Democratic primary election to Ned Lamont. He has said he will sit as part of the Democratic Senate caucus in the upcoming 110th Congress.
Sanders won yesterday in Vermont as an independent but will caucus with the Democrats and it is said will be counted as a Democrat for the purposes of committee assignments.
The problem that Betfair will have to resolve is that neither ran as a Democrat although they will be attached to the Democrats in the Upper House.
To add to the complication Nick Palmer, MP, posted this on the previous thread at 1.34pm – “I have it in writing from Betfair that they will count the two independents as Democrats. (I asked them a month or two ago before I put a tenner on.) If you have opposite advice in writing, they should be embarrassed!”.
Addendum: From one commenter…-
The question was “Which of these parties will have more seats in the US Senate following the 2006 US Senate Elections?”
The options were Republicans and Democrats. The result is 49-49 with two independents.
It’s a draw- I can’t see how anyone can see otherwise.
Addendum 2: From Yahoo! News (whose data are provided by the Associated Press)…-
Liberman (CT) and Sanders (VT) are counted as Democrats.
Addendum 3: From the Washington Post frontpage…-
Editor’-s Note: Independent members of Congress typically caucus with the Democrats.
Addendum 4: From the New York Times…-
Full Senate Results —- Republican: 49 —- Democratic: 50 – Includes independents who align with the Democratic caucus. —- [CFM’s NOTE: Virginia is still in play at the time of writing.]
Addendum 5: Mike Smithson…-
So punters who are tempted into this market are risking money on how they think Betfair will settle the market.
Hello Professor Tyler Cowen and all the commenters,
#1. Professor Lance Fortnow made a specific point: taken one day before Election Day, the TradeSports’-s prediction markets of the individual races for the US Senate were accurate (provided that Virginia and Montana go democratic).
#2. Professor Lance Fortnow DID NOT SAY that the TradeSports’-s prediction market for the control of the US Senate was accurate. Please, don’-t put words in his mouth.
#3. Analysis reports from economists and statisticians are coming, but, please give them time to digest the data…- once the dust has settled.
Thanks for your attention,