Pfft comments on Open Thread, November 1-15, 2012 - Less Wrong

4 Post author: OpenThreadGuy 02 November 2012 02:11AM

You are viewing a comment permalink. View the original post to see all comments and the full post content.

Article Navigation

Comments (373)
Tags: open thread open_thread

Comments (373)

You are viewing a single comment's thread. Show more comments above.

Comment author: Pfft 06 November 2012 02:44:01AM *  4 points [-]

The Economist writes:

Although Intrade, the most widely cited prediction market, is fairly kind to Mr Romney and shows him with a 33% chance of victory, tight legal restrictions on deposits to the site have made it very difficult for Americans to wager there. That makes it very thinly traded and unreliable, since bets of just a few thousand dollars can move the market price substantially. The real money laid on the election goes to bookmakers, who uniformly see Mr Obama as an overwhelming favourite. Pinnacle Sports in Las Vegas shows him with a 77.5% likelihood of victory, and Ladbrokes in Britain has him at 81%.

Comment author: Douglas_Knight 06 November 2012 07:22:07PM 3 points [-]

The failure of that article to mention Betfair makes it hard for me to take it seriously.

If the Economist thinks the explanation is that Intrade is thinly traded, it should think it volatile. It is true that a small wager moves the market, but it consistently returns to 5-10 points below the bookies. Similarly, the prediction market Betfair is in exactly the same legal situation as the Intrade, has matched the same amount of money ($30 million) and has about the same amount of open interest, but consistently tracks the bookies. The question is not why do prediction markets diverge from the bookies, but why Intrade consistently diverges from everyone else.

Powered by Reddit Powered by Reddit