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Prediction markets have an elections problem

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Re: Prediction markets have an elections problem

#11

Post by lkbm »

yodsanklai wrote: post #6
zzzeek wrote: post #2

[flagged]

> I would assume 90% dudes with strong conservative leanings So that would be a good place to make money, and ultimately make these markets better at predicting.

This is something a number of people do on PredictIt, since that one does have a conservative lean. It takes a lot more than the individual limit to fully price correct, though.

I personally haven't maxed out on it (I think the limit is $800), but I've got a few hundred bet that Biden will be the Dem nominee / that Newsome won't be.

Not sure why we don't have more people picking up the free money, but given that I haven't picked up a much as I possibly can, I'm not one to criticize.

Re: Prediction markets have an elections problem

#13

Post by simonw »

Spivak wrote: post #10
nostromo wrote: post #7

Earlier quoted context omitted.

No conspiracy thinking required. Biden has a non-zero chance of dying before the election and Harris is very unpopular. It's not unthinkable that should Biden not be able to run, someone like Obama would step in at the last minute. Would I pay 20:1 odds for that scenario? Hell no. But I might buy at 100:1 or greater.

I'm sorry, what? The line of presidential succession has been long established, it's in the constitution, and Kamala Harris is next in line. And then a lot of people who aren't Obama.

That's a different issue. Presidental succession says who replaces Biden if he dies in office, but the question here is who would stand as the Democratic candidate for the 2024 election if he died.

Harris would be likely, but maybe not a 100% certainty.

Re: Prediction markets have an elections problem

#14

Post by mindslight »

Another thing I don't think the article touched upon - it makes sense to use these markets as a hedge for things you're hoping won't happen, especially as prediction markets become less of a niche thing. For example, it would make sense to put down a bunch of money on Trump winning in 2024. Not because you'd be happy if he won, but rather so that if he does win your earnings can mitigate damage elsewhere in your life. Of course you might not want that contract to be denominated in USD...

Re: Prediction markets have an elections problem

#16

Post by pessimizer »

Spivak wrote: post #10
nostromo wrote: post #7

Earlier quoted context omitted.

No conspiracy thinking required. Biden has a non-zero chance of dying before the election and Harris is very unpopular. It's not unthinkable that should Biden not be able to run, someone like Obama would step in at the last minute. Would I pay 20:1 odds for that scenario? Hell no. But I might buy at 100:1 or greater.

I'm sorry, what? The line of presidential succession has been long established, it's in the constitution, and Kamala Harris is next in line. And then a lot of people who aren't Obama.

Elections have nothing to do with presidential succession. It will be a party decision, Harris is a guaranteed loss, and M. Obama is a possible win.

Re: Prediction markets have an elections problem

#17

Post by function_seven »

Spivak wrote: post #10
nostromo wrote: post #7

Earlier quoted context omitted.

No conspiracy thinking required. Biden has a non-zero chance of dying before the election and Harris is very unpopular. It's not unthinkable that should Biden not be able to run, someone like Obama would step in at the last minute. Would I pay 20:1 odds for that scenario? Hell no. But I might buy at 100:1 or greater.

I'm sorry, what? The line of presidential succession has been long established, it's in the constitution, and Kamala Harris is next in line. And then a lot of people who aren't Obama.

Lines of succession are a separate thing from winners of elections. If Biden were to die before election day, that doesn't mean Harris would be on the ticket as the presidential nominee. I'd wager against that for sure.

So who would be tapped to fill in for the recently-deceased candidate? Could be Harris, or Obama, or a dozen other hopefuls.

Re: Prediction markets have an elections problem

#18

Post by OscarCunningham »

It would be nice to have a site like electionbettingodds.com but with intervals rather than point preditions.

Given the betting odds it's possible to calculate upper and lower bounds on the probabilities. Ideally you would take into account the fees and the opportunity cost of having your money locked in the bet. The bounds would be the range in which it wouldn't be possible to make an expected profit by betting either way.

The advantage would be that instead of an absurd point estimate like "Michelle Obama has a 6.90% of winning the election" you'd get something like "the probability of Michelle Obama winning the election is between 7.0% and 0.01%". Which makes it clear that while the upper bound can't be driven to 0, the lower bound is perfectly sensible.

Re: Prediction markets have an elections problem

#19

Post by cyberax »

Prediction markets are stupid, fundamentally.

If you have some deep subject knowledge to make a prediction, your bet will be drowned by others. Sure, you can make a buck from your prediction, but you won't get instantly rich, and you won't be able to make these kinds of bets consistently.

Re: Prediction markets have an elections problem

#20

Post by rspeele »

recursivecaveat wrote: post #9

Is it actually possible to make money against these small odds predictions? If I look at this page, it has dems win by 215+ at 2 cents. https://www.predictit.org/markets/detail/8077/What-will-be-t... So I buy a "no" contract for 98 cents, and sell it for $1 in most of a year. Maybe someone who has used the platform can chime in, but the terms of service seem to suggest I don't get any interest on my contract money me…

You are absolutely correct. It doesn't make sense to buy that contract unless you already have the money in your PredictIt balance, you want to keep it there as "dry powder", and you really can't think of a better market to park it in (unlikely). Time value of money being what it is... contracts like that have a pretty dead market. There is no reason to hold either the longshot YES that's realistically less than 1% likely OR the tie-up-your-dollar NO.

Of course if you already have a balance on PI, you just won in another market, and say it's Nov 6th and you've got nothing better to do... you might as well buy 99c shares because the $1 payout could be in as little as a couple days and what else are you doing with the money? So the high priced shares DO eventually sell but basically anything that's months away dies out in trading volume before it reaches the 99c mark.

Personally if I still had money sitting in PI I'd probably park my dry powder in NO on "Joe Biden resign in his first term", which has been as high as 10c this month, but even assuming I could get 90c NO shares that is not worth me moving money from my bank back into PI just to skim those pennies.

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