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I must have been an idiot last night.

Good news....looks like the debate last night had a sizable effect on Intrade. Obama's chances of winning the re-election had been pushing 75-80% for a couple of weeks now.

Well, this morning, it plummeted down to 66% after his poor performance. Awesome.


http://www.intrade.com/v4/markets/contract/?contractId=74347...
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Good news....looks like the debate last night had a sizable effect on Intrade. Obama's chances of winning the re-election had been pushing 75-80% for a couple of weeks now.

Well, this morning, it plummeted down to 66% after his poor performance. Awesome.


I just took a look at the InTrade market to see how big it is and here I found:

Total size of the Obama-gets-elected market (shares outstanding times current price): $5.7 million.

Total size of the Romney-gets-elected market: $3.4 million.

That's a total of $9.1 million.

In comparison, the Obama campaign reportedly had $130 million cash on hand at the end of August, while the Romney campaign had $191 million. http://elections.nytimes.com/2012/campaign-finance

Conclusion 1: it would be trivially easy and cheap for either campaign to manipulate these markets.

Conclusion 2: in context, they don't mean much.
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In comparison, the Obama campaign reportedly had $130 million cash on hand at the end of August, while the Romney campaign had $191 million. http://elections.nytimes.com/2012/campaign-finance

Conclusion 1: it would be trivially easy and cheap for either campaign to manipulate these markets.

Conclusion 2: in context, they don't mean much.



I agree. I've been struggling to find out whether Intrade is "predictive" and whether it can be manipulated. However, I've read (and been told by posters here) that Intrade is very accurate. Granted, if it's manipulated, then that goes out the window.

However, what is noteworthy and real is that the odds did decrease, indicating a drop in confidence in Obama's chances after the debate. I couldn't imagine that manipulation was withdrawn or greatly attentuated the day after the 1st debate.
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However, what is noteworthy and real is that the odds did decrease, indicating a drop in confidence in Obama's chances after the debate. I couldn't imagine that manipulation was withdrawn or greatly attentuated the day after the 1st debate.

"Gee, after a pounding like that, if we don't let Obama slump in this market people will start thinking it's manipulated. Let's let the slump happen and short it up a little bit at a time for the next couple weeks."
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I agree. I've been struggling to find out whether Intrade is "predictive" and whether it can be manipulated. However, I've read (and been told by posters here) that Intrade is very accurate. Granted, if it's manipulated, then that goes out the window.

However, what is noteworthy and real is that the odds did decrease, indicating a drop in confidence in Obama's chances after the debate. I couldn't imagine that manipulation was withdrawn or greatly attentuated the day after the 1st debate.


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


It wouldn't take $4 million. The entire Romney-wins market is less than $4 million. Today's volume - think it might have been a busy day after last night's debate? - is under $160K, under 50K shares. Optimistically assuming that a short order requires 100% coverage of the $10 max price, it would require someone put up a mere $31,600 to enter a short order for 1/10 of the daily volume.

Going long on Obama would be even cheaper, because you only have to put up the purchase price of the shares. Going long 1/10 of today's volume would cost $27,500.

And why? Because a legend has formed that InTrade is usefully predictive. So manipulating InTrade to give an impression of your choosing is approximately as good as manipulating most polls - and probably cheaper.
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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.


If it's a small market, then the price should be easy to push down as well as push up.
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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.

Not exactly.

My point is that, relative to the size of the entities with incentive to manipulate it, it's too small - therefore *cannot be trusted* to be efficient.
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Not exactly.

My point is that, relative to the size of the entities with incentive to manipulate it, it's too small - therefore *cannot be trusted* to be efficient.



Yes, correct. that was implied in my post.
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If it's a small market, then the price should be easy to push down as well as push up.


Yes correct. But 2 points. Number 1), is it in fact a "small market"....which we have yet to define and to what specific consequenses. 2) Small markets are not necessarily not efficient...often so, but not necessarily so. Small markets CAN be accurate. The problem is that none of us here has the empirical data to make any real pronoucements of such facts.
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However, I've read (and been told by posters here) that Intrade is very accurate.

Intrade has only been around since 1999. So at most it has predicted 3 Presidential elections. That's like calling a rookie a hall of famer because he goes 3 for 3 in his first game.

Yes it has an accurate history, but it has a brief history. Not enough time for black swans to occur. Just remember, the intrade of the day said Dewey beat Truman.

JLC
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Intrade has only been around since 1999. So at most it has predicted 3 Presidential elections. That's like calling a rookie a hall of famer because he goes 3 for 3 in his first game.

Yes it has an accurate history, but it has a brief history. Not enough time for black swans to occur. Just remember, the intrade of the day said Dewey beat Truman.

JLC



I don't think people are just talking about prez elections.....you can bet on all sorts of things there.....from sunspots numbers next year to when Iran may be attacked to box office grosses of movies. Supposedly it's accurate in all of this. I have no evidence myself that they are accurate, but that's what I hear.
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I don't think people are just talking about prez elections.....you can bet on all sorts of things there.....from sunspots numbers next year to when Iran may be attacked to box office grosses of movies. Supposedly it's accurate in all of this. I have no evidence myself that they are accurate, but that's what I hear.

In principle it ought to be accurate (albeit not perfectly accurate, and not necessarily with great precision), but one must always weigh that principle against potentially-distorting facets of reality.

There's an InTrade contract for a magnitude 9.0 earthquake to occur *anywhere in the world* before the end of this year (US eastern standard time). Would there be any advantage to distorting that market? I don't see any. Certainly what people think of the likelihood of that event does not, through any discernible causative mechanism, affect the likelihood of that event. So it's plausible that this market would be accurate... although with only about 1,460 shares outstanding I wouldn't expect great precision. (Right now Intrade predicts a 3% chance of this event, by the way.)

With markets in election outcomes, the problem arises that an "air of inevitability" can affect the outcome, and the market can affect such an "air". In other words, betting on the event can make the event more likely. A feedback loop. (If a campaign were to engage in manipulation, appropriately altering an "air of inevitability" might also garner an increase in donations that more than pays for the manipulation - enabling further manipulation. Another feedback loop. However this does not work for manipulators independent of the campaign.)

And unfortunately the Intrade market on the presidential campaigns is puny compared to either campaign, so it would be easy for either campaign - or a few wealthy partisans on either side - to manipulate. Purely hypothetically, a Buffett-equivalent could delegate someone to spend $30K a day going long Obama, and he'd be about 10% of daily volume all by himself. That's plenty to manipulate a market. Doing this daily for 4.5 months (assuming no trading on weekends) would cost less than $3 million including the flunky's salary - petty cash for quite a few of this country's and planet's richest socialists. Including many who can't legally contribute to a US Presidential campaign. At present a similar manipulation in favor of Romney would be even cheaper.

Please note that I have NOT alleged that the market is being manipulated to affect the election outcome. Let alone accused anyone in particular of such manipulation.

I am only pointing out that it would be foolish to assume no such manipulation is going on. And if you don't make that assumption, you cannot draw any conclusion from the InTrade market.
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An interesting thing about the Intrade market, and something that has made me a lot of money over the years as far as gambling is concerned is that I take the word of everyone I know and only that group - those who made money over the years gambling on events they have no actual control over.


Having gains about eq
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