October 19, 2004


Prediction Market
(October 19, 2004, www.StrategyPage.com)

By 8pm EDT on Wednesday, November 3rd, the winner of the US Presidential election will still be unknown or in dispute.

Pro Futures: 551 Con Futures: 351

By 8pm EDT on Wednesday, November 3rd, the winner of the US Presidential
election will still be unknown or in dispute. Will the election be close enough for recounts and lawsuits to affect it? And will those recounts and lawsuits go forward? Choose according to how close you think the result will be, and which party or parties will be prepared to follow the 2000 precedent to its logical conclusion.

The business of futures markets at places such as StategyPage,
Tradesports, and Iowa Electronic Markets has been burgeoning. The idea that
markets have a better (though still imperfect) capability to predict than do
individuals has caught on in a big way. Interestingly, there is divergence
of opinion. StrategyPage is predicting with a fair amount of confidence
that (1) Bush will win; (2) Kerry will lose (an obvious deduction, but there
are 2 separate contracts traded) and; (3) There will be tumult and turmoil
about the result. Tradesports (www.tradesports.com) has Bush at 58.2 as of
this writing. It would seem that the bigger the certainty of a victory, the
smaller the chance of a lengthy resolution of the outcome. Given the 2002
claim that "10,000 lawyers are ready" to clog the courts, the markets just
might be right.

Posted by at October 19, 2004 12:07 PM

It won't be close enoug for the litigation to matter.

Posted by: Robert Schwartz at October 19, 2004 12:42 PM

Robert, I sure hope so, but that is the puzzle in the futures market - if I am reading them correctly.

I suppose the markets could be saying, "We are _very_ sure that the race will be won by GWB, but by a margin small enough to induce litigation.

Posted by: Bruce Cleaver at October 19, 2004 1:24 PM

And it looks like someone is speculating in Bush futures on Tradesports to create an impression of Kerry momentum:



Posted by: PapayaSF at October 19, 2004 1:59 PM

StrategyPage should be taken with more skepticism, since it's not really a market, in that people aren't putting their money on the line.

Posted by: brian at October 19, 2004 2:55 PM

Luskin's speculating Soror might be behind it, but the effort is so ham-handed -- dropping Bush's numbers from the mid-50s to the low teens in a matter of minutes -- there's no way anyone but the most gulliable would be fooled into thinking the market move represents a trend.

My guess would be someone from the MoveOn.org crowd, well below Soros but with enough money to throw away on trying to beat Bush, came up with the idea. But they never released a more gradual decline would come across as far more realistic than a sudden swan dive (and resurfacing shortly after) of GWB's above-50 re-elect bids.

Posted by: John at October 19, 2004 5:40 PM
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