Saturday, September 29, 2012

So You Don’t Trust The Polls, But You Trust The Free Market



Are you one of those who have come to doubt the polls about the Presidential election after the relentless attacks by some elements of the media this week?

Do you long for an “unbiased” source that reflects the true sentiment of the public as regards the likely outcome of the race?

If only there was a free-market model that provided an accurate reflection of where the contest was headed, where people actually had to back up their beliefs with their dollars.

Well there is such a place. 

Intrade is an online trading exchange website. The website's members bet on the outcomes of non-sports-related future events. Intrade was founded by John Delaney in 1999 and acquired by Tradesports in 2003. Dublin-based owner Trade Exchange Network Limited also operated TradeBetX.com, which focused on European interests. As of January 1, 2007, Trade Exchange Network divested its interests in Tradesports and TradeBetX.com to a newly formed company, TradeSports Ltd. These two websites offered only sports-related trading markets until they were closed in 2008, while Intrade.com offers only non-sports markets (politics, finance, entertainment, current events, transportation, legal, weather, pop culture, etc.).

Intrade is a prediction market which allow individuals to take positions (trade 'contracts') on whether future events will or will not occur. An example event is a political election, which is almost always settled in a well-defined and easily verifiable manner. The contract might be "Barack Obama to win 2012 U.S. presidential election." Other events include financial predictions, such as "NASDAQ Average to close higher today." Intrade facilitates trades between members, charging a monthly fee, but does not participate in trading itself.

Trading positions are provided in the common nomenclature of long (will happen) and short (will not happen). The trading unit is a contract with a notional settlement value, typically $10, and the contract may trade in range of 0–100 where 1 point equals US$0.10 in value. If the event specified in a given contract occurs, the contract settles at 100 points or $10; otherwise, the contract settles at 0 or $0 in value. Thus, the current price of the contract can be imputed as the market's global opinion of the probability that the specified event will occur.

Because most events take place over a well-defined time span, traders can trade both before and during an event. The exchange likes to have dedicated market makers in its benchmark markets to provide a two way price at almost all times.

Intrade provides both real money and play money prediction market trading. The minimum deposit for opening a real money account is US$25.00, but US$100 is recommended to "fully appreciate the trading experience".

So what does this “free market of opinion” predict about the upcoming election?





(NOTE: Now even the so-called "unskewed" polls are giving Obama the lead.)

2 comments:

  1. It's so sad.

    Mitt Romney is about as nimble as a pine board. He had a 4 year recession going for him, he had an unending overseas engagement, he had unemployment, he had it all going for him, and he screwed it.

    Mitt, why are you so hard to like? I rightly predicted you would win this thing big, and rightly in that if you could have just been seen as a normal dude you could have won it.

    But no, while Barack and the FLOTUS were going on Entertainment Weekly proving to everyone that they might as well be the people next door, well, you Mitt are just stiff right down to your soul. I think you would have done better if you got a Mohawk haircut, just anything to destiffify you.

    Adios Mitt. Barry can dance, and you can't.

    Sorry Ken, but don't see the whiny faced one knocking off Scott Brown. Also, looking for Durant to win locally. Of course, I could be wrong about all three. Who knows, maybe Mitt will sprout a personality in the next month.

    ReplyDelete
  2. Just another aspect of the lib-ruhl conspiracy.

    ReplyDelete

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