Comments on: Papal Betting Update

By: RoyalTS » Blog Archive » Pontifex Futures

RoyalTS » Blog Archive » Pontifex Futures — Tue, 19 Apr 2005 16:09:19 +0000

[...] 221;, the betting market on who the next pope is going to be, is no exception. However, as Crooked Timber’s Daniel Davies shows this market is highly inefficient. ThereR [...]

By: jet

jet — Mon, 18 Apr 2005 16:48:54 +0000

digamma,
And here I was about to sink my savings into these arbitrages.

By: Rage on Omnipotent » Blog Archive » Papal Betting Update

Rage on Omnipotent » Blog Archive » Papal Betting Update — Mon, 18 Apr 2005 15:47:03 +0000

[...] her description as a national of Honduras; he’s the only Honduran cardinal Read more in Papal Betting Update. This entry was posted on [...]

By: digamma.net - notes » Betting Markets

digamma.net - notes » Betting Markets — Sun, 17 Apr 2005 19:27:05 +0000

[...] Betting Markets Posted by digamma @ 2:26 pm EDT Daniel at Crooked Timber responds to an overexcited piece by John Tierney on online betting markets and the papa [...]

By: digamma

digamma — Sun, 17 Apr 2005 17:05:37 +0000

I looked it up. There’s generally a buying cost of 4 cents at purchase and another one at expiry. That’s basically the same as Tradesports. Therefore, when I see a nominal asking price of 5.3, 6.1 is its true cost. Likewise a bidding price of 6.0 should be viewed as 5.2 by shrewd investors.

So in your Lustiger example, if you bought Lustiger and sold l’homme generique, your total gain if he won would be 93.9 – 96.8 = -2.9, and if he lost you’d make -6.1 + 5.2 = -0.9, a loss either way. No arbitrage opportunity here.

In your Arinze example, you’re effectively buying Nigeria at 10.4 and selling Arinze at 8.8 . If Arinze or a non-Nigerian wins, you’re out 1.6, so that bet is not without risk.

Your italian portfolio wouldn’t cost 20.5, it’d cost 20.5 + (0.8 * 6) = 25.3, and you’d be selling Italy for 34.2, meaning your Italian outsider
would only be sold for 8.9 – but this is still the most interesting deal you found.

None of this should be construed as a defense of Tierney.

By: digamma

digamma — Sun, 17 Apr 2005 15:58:28 +0000

you can buy Cardinal Rodriguez Maradigia at 8.0 and sell him at 8.5 in his other description as a national of Honduras; he’s the only Honduran cardinal

If it’s anything like Tradesports, transaction costs would probably eat your gains there.

By: Daniel

Daniel — Sun, 17 Apr 2005 00:17:05 +0000

I have always thought that “Paddy Power” would have been a great name for a resistance movement for the London Irish in the 1950s.

By: nick

nick — Sat, 16 Apr 2005 22:30:24 +0000

Also, there’s no named market on Cardinal Martini at Intrade—at least there wasn’t when I last looked, a couple of days back—which absolutely goes with the other inter-market inconsistencies.

(Paddy Power attracts those betting on St Malachy’s ‘glory of the olive prophecy? Perhaps.)

By: nick

nick — Sat, 16 Apr 2005 22:24:36 +0000

This implicit quote on “Italian outsider” seems very high; it’s second favourite after Ratzinger which seems a bit rich; there are 32 cardinals in this field, but most of them are such rank outsiders that fixed-odds bookies aren’t even quoting prices on them.

A possible explanation: I stuck a fiver on Carlo Martini at 25/1, courtesy of the wonderfully-named Paddy Power, and saw his odds shorten to around 5/1 over the past week. He’s considered an outsider, but there appears to be a lot of money headed his way.

By: jamie

jamie — Sat, 16 Apr 2005 15:53:15 +0000

Never mind who’s going to be Pope. there’s a big push on to get JPII nominated to sainthood, among the elect. To get there, he needs two authenticated miracles to his credit.

What we really want to is a spread on what his first miracle is going to involve. Heal the sick? Restore the blind to sight? get the lame tap dancing?

Me, I can’t wait.

By: Tim Worstall

Tim Worstall — Sat, 16 Apr 2005 11:36:16 +0000

And one of the joys of this sort of analysis is that it is in itself making the prediction markets more efficient by pointing out that arbitrage opportunities.

By: abb1

abb1 — Sat, 16 Apr 2005 10:50:21 +0000

Can I bet on Papal with Paypal?

By: John Quiggin

John Quiggin — Fri, 15 Apr 2005 23:46:51 +0000

Tierney’s article even quoted the Nigerian arbitrage without noticing it, IIRC. Such is my implicit faith in the EMH that I lazily assumed:
(i) there are no other Nigerian cardinals
(ii) the spread would wipe out the arb

Fortunately, DD and XL are here to do the hard yards

By: DonBoy

DonBoy — Fri, 15 Apr 2005 22:55:47 +0000

Paddy Power also (at the start) had long odds on a character from the sitcom Father Ted; which odds they had to shorten, because too many people were betting on him. Which means they were concerned about the chance that a sitcom character would become Pope. (BlogWhore.)

By: P ONeill

P ONeill — Fri, 15 Apr 2005 21:25:34 +0000

The Paddy Power market is afflicted by er.. parochial interest. I don’t think that a market that didn’t have a disproportionate number of Irish punters would be quoting any odds (even at 100 to 1) on two bishops i.e. non-cardinals, for Pope: John Magee and Diarmuid Martin.