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Was Intrade being manipulated over the last month?

overcomingbias.com

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Re: Was Intrade being manipulated over the last month?

#21

Post by modarts »

hooande wrote: post #3

The author brings up some good points about the potential for arbitrage between prediction markets. But in my experience, intrade has a strong conservative bias. This is more likely a case of people betting on their (incorrect) political convictions as opposed to intentional manipulation. I remember observing a similar thing around the betting on the supreme court healthcare decision. The odds were 3-4 points more ag…

Markets are by in large not NEARLY as rational as conservative economists make them out to be. Your point about the political biases informing the positions that traders were taking further supports that.

Re: Was Intrade being manipulated over the last month?

#22

Post by [deleted] »

modarts wrote: post #21
hooande wrote: post #3

The author brings up some good points about the potential for arbitrage between prediction markets. But in my experience, intrade has a strong conservative bias. This is more likely a case of people betting on their (incorrect) political convictions as opposed to intentional manipulation. I remember observing a similar thing around the betting on the supreme court healthcare decision. The odds were 3-4 points more ag…

Markets are by in large not NEARLY as rational as conservative economists make them out to be. Your point about the political biases informing the positions that traders were taking further supports that.

[deleted]

Re: Was Intrade being manipulated over the last month?

#23

Post by 001sky »

modarts wrote: post #21
hooande wrote: post #3

The author brings up some good points about the potential for arbitrage between prediction markets. But in my experience, intrade has a strong conservative bias. This is more likely a case of people betting on their (incorrect) political convictions as opposed to intentional manipulation. I remember observing a similar thing around the betting on the supreme court healthcare decision. The odds were 3-4 points more ag…

Markets are by in large not NEARLY as rational as conservative economists make them out to be. Your point about the political biases informing the positions that traders were taking further supports that.

Your use of the word 'conservative' is ill-advised, both technically and rhetorically. Free-market Economics is rooted in [l]iberal traditions in the first instance, not conservative (see: repeal of the corn laws)[1]; and in the second: Modern [L]iberals (ie, interventionists) require near-perfect rationality as an operating behavioural assumption, ex-ante. Not to be pedantic, but this is an important point. [L]iberal economists are part of the Orthodoxy. Non-orthodox behavioural assumptions[1] are (arguably) quite problematic to an Orthodox interventionist. This is glossed over because it threatens the 'myth of expertise' that is required to politically implement a such an ideology. This is not a partisian point, but one of history and terminology.

______________

[1] http://en.wikipedia.org/wiki/Corn_Laws.

[2] In particular, bounded rationality and opportunism.

edits: clarity

Re: Was Intrade being manipulated over the last month?

#24

Post by pja »

zecho wrote: post #15
javert wrote: post #12

Earlier quoted context omitted.

aren't markets supposed to be efficient To a certain extent. Largely because of people doing arbitrage. So, if all arbitrageurs called it quits because they thought markets are automatically efficient, well, they wouldn't be. Did you make much money?

There's an economics joke as old as the hills: An economist and a non-economist are walking down the street when the non-economist notices something on the ground and says, "hey there's a $10 bill!" The economist replies, "Impossible. If there was a $10 bill on the ground, someone would have picked it up already."

On my summer holiday this year I was walking along Hadrian's Wall & looked down to see a £5 note being blown along the path by the wind. Picked it up & was instantly reminded of this joke :)

Re: Was Intrade being manipulated over the last month?

#25

Post by lmm »

001sky wrote: post #23
modarts wrote: post #21

Earlier quoted context omitted.

Markets are by in large not NEARLY as rational as conservative economists make them out to be. Your point about the political biases informing the positions that traders were taking further supports that.

Your use of the word 'conservative' is ill-advised, both technically and rhetorically. Free-market Economics is rooted in [l]iberal traditions in the first instance, not conservative (see: repeal of the corn laws)[1]; and in the second: Modern [L]iberals (ie, interventionists) require near-perfect rationality as an operating behavioural assumption, ex-ante. Not to be pedantic, but this is an important point. [L]ibera…

For rhetorical/conversational purposes current usage is more important than historical derivation, and the current political reality is that the "market liberal" position is espoused almost exclusively by those in the "conservative" (i.e. social conservative) camp - blame the two-party US system.

Surely the liberal interventionist position requires an assumption of irrational behaviour from market participants - that's the only way e.g. regulation to prevent bubbles would make sense.

Re: Was Intrade being manipulated over the last month?

#26

Post by andrewcooke »

pg wrote: post #4

I've been wondering about this for week. Is there a statistical smoking gun anywhere?

there's http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/10/23... which was mentioned at http://fivethirtyeight.blogs.nytimes.com/2012/10/24/oct-23-t...

chart in first link shows large romney buyer. not sure if that's what you're looking for with "statistical smoking gun" though. a little more analysis at second link.

Re: Was Intrade being manipulated over the last month?

#27

Post by andrewcooke »

cypherpunks01 wrote: post #14

A commenter over there mentioned that a similar phenomenon was noticed during the 2008 presidential election, and quoted John Delaney (Intrade founder, now deceased): Mr. Delaney conceded there had been erratic behavior - including spikes in the direction of Mr. McCain and away from Barack Obama "by up to 10 points." And he said "trading that caused the unusual price movements and discrepancies was principally due to…

could this be hedging against a romney win? for example, if you're an investor in green tech, then intrader shares in romney would be a way to protect yourself.

but i imagine the numbers are too small?

Re: Was Intrade being manipulated over the last month?

#28

Post by gjm11 »

001sky wrote: post #23
modarts wrote: post #21

Earlier quoted context omitted.

Markets are by in large not NEARLY as rational as conservative economists make them out to be. Your point about the political biases informing the positions that traders were taking further supports that.

Your use of the word 'conservative' is ill-advised, both technically and rhetorically. Free-market Economics is rooted in [l]iberal traditions in the first instance, not conservative (see: repeal of the corn laws)[1]; and in the second: Modern [L]iberals (ie, interventionists) require near-perfect rationality as an operating behavioural assumption, ex-ante. Not to be pedantic, but this is an important point. [L]ibera…

You appear to be arguing that because (1) the historical foundations of free-market economics come from a group different from the one now called "conservative", and (2) the people now called "liberal" also make overoptimistic assumptions about people's rationality, it's wrong to say that (3) the people boosting markets like Intrade as reliable information sources tend to be the ones now called "conservative".

But there is no contradiction of any sort between (1,2) and (3).

Which is maybe just as well, because in fact (3) is true.

(It seems to me that (1) is an interesting but irrelevant historical point, and (2) is merely irrelevant smoke-blowing, whose best explanation is that you're more partisan than you let on here. But I could be wrong.)

Re: Was Intrade being manipulated over the last month?

#29

Post by sire404 »

pg wrote: post #4

I've been wondering about this for week. Is there a statistical smoking gun anywhere?

No it's most likely just overconfidence in the market by a few individuals.

Intrade actually checked for manipulation themselves:

"We checked this out for potential manipulation - it certainly fit the pattern at first glance. However, during the period you reference above 40 individuals bought Romney shares and no individual bought more than 15% of the shares traded during that period. A look at those 40 accounts shows nothing suspicious. So we don't believe this was manipulation but more a run on Romney when the market was unusually thin."

http://www.theatlantic.com/business/archive/2012/10/should-p...

However, even without this spike the Intrade market was misaligned for more than 24 hours. A few of our arbitrage customers made huge amounts of money (outside our software) trading 5-10% arbs between Intrade and Matchbook. This is extremely uncommon.

Disclaimer: I'm one of the developers behind sports arbitrage software RebelBetting (http://www.rebelbetting.com)

Re: Was Intrade being manipulated over the last month?

#30

Post by maxerickson »

Dn_Ab wrote: post #7

My friend and I also did some 'arbitrage', we almost didn't do it because we were sure we had something wrong, I mean, aren't markets supposed to be efficient? We even made a program that calculated optimal amounts and alerted us when the odds were aligned to a particular criteria taking into account exctraction fees, exchange rates, commission and stuff. Our only explanation was that betfair (our other side) was mos…

I think a greater number of U.S. participants on Intrade is one of the better explanations.

I wouldn't be surprised if personal biases play a bigger factor than the media.

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