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URL:  http://boards.fool.com/to-warrl-i-guess-my-further-question-is-why-would-30300981.aspx

Subject:  Re: Intrade Prez odds... Date:  10/4/2012  7:41 PM
Author:  AOLFoolman100 Number:  647064 of 749500

To Warrl:

I guess my further question is why would the Obama administration spend millions on Intrade to affect the percentages...ie. to manipulate the odds between Romney and Obama. I would think spending the money on traditional campaigning would be better spent.

I mean, seriously, what percentage of the population knows about Intrade.com?? I would guess, a very, very small percentage...not enough to really affect the election. Who is viewing the numbers and allowing it to affect their votes? I'd bet a tiny tiny slice of the population.

Do you think it really affects voter turnout or voter sentiment.....hec, I'm all over the internet all day long, love stats, and didn't know about Intrade until about a month ago.


From MadCap:

You would also expect people who are in it to make money to push the price back down if it's overvalued.


Exactly. That's correct. And I agree...with conditions. You're appealing to the efficiency of a large market. When it's efficient, with plenty of participants, yes, the price of the share (odds that Obama/Romney is elected) should accurately reflect all known information. But Warrl's solid, but arguable point is that it's too small - therefore not efficient.

In a market with plenty of liquidity, MC's point is very valid....anyone trying to jump in to manipulate the numbers, thus throwing it off proper market equilibrium, will be met by willing buyers or sellers which throw the numbers (or odds in this case) back to what reflects reality. In other words, if the price is artificially inflated, buyers will be willing to sell, thus driving down price...and vice versa. That's the market. The question is whether the Intrade market is liquid and large enough to reflect reality in the Prez race?
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