Nice to know that the roles are reversed this time. Though I don’t quite understand why Bush stock crashed so drastically on November 6 – didn’t they say he had basically won by then?
Seems plausible that share value would get more extreme as the time till the election shrinks and the prevailing polls are therefore thought to be better predictors, subject to perhaps one major reversal of opinion. But you’d think traders would gain a better grasp of that dynamic more quickly — ie, that the values would be largely flat at 50 just about until election eve.
Robert: you are correct. Gore paid off in 2000. I don’t see the similarities, myself. If anything that 2000 graph (which had Gore losing the popular vote in late Oct.) shows what a seriously bad predictor the IEM can be. Perhaps that’s Daniel’s point?
Tradesports odds are more even (54/56 ish for the popular vote contract.)
Simstim — a good predictor could still be better close to the event than it was further out — that doesn’t really seem to be true of the IEM for 2000 as shown in this graphic though.
{ 9 comments }
Kenny Easwaran 10.05.04 at 10:40 pm
Nice to know that the roles are reversed this time. Though I don’t quite understand why Bush stock crashed so drastically on November 6 – didn’t they say he had basically won by then?
Robert 10.05.04 at 11:17 pm
It looks like the contracts pay off on the popular vote, not the electoral college. So did the Gore contracts pay off in 2000?
George 10.05.04 at 11:50 pm
Seems plausible that share value would get more extreme as the time till the election shrinks and the prevailing polls are therefore thought to be better predictors, subject to perhaps one major reversal of opinion. But you’d think traders would gain a better grasp of that dynamic more quickly — ie, that the values would be largely flat at 50 just about until election eve.
Alex 10.06.04 at 1:44 pm
Robert: you are correct. Gore paid off in 2000. I don’t see the similarities, myself. If anything that 2000 graph (which had Gore losing the popular vote in late Oct.) shows what a seriously bad predictor the IEM can be. Perhaps that’s Daniel’s point?
Tradesports odds are more even (54/56 ish for the popular vote contract.)
Simstim 10.06.04 at 2:59 pm
But wouldn’t an ideal predictor not change at all, it’d be right from day one?
nnyhav 10.06.04 at 4:01 pm
(I)EMH and the wisdom of crowds of experts who should know better.
nnyhav 10.06.04 at 4:57 pm
via Marginal Rev, the value of a good economist.
Jeremy Osner 10.06.04 at 6:23 pm
Simstim — a good predictor could still be better close to the event than it was further out — that doesn’t really seem to be true of the IEM for 2000 as shown in this graphic though.
nick 10.07.04 at 9:26 am
In other news, the IEM is set to open a market on when Rodney Dangerfield will die.
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