Mike Beversluis

Tuesday, November 04, 2008

Prediction Market Prediction

Intrade is currently showing the last prices on the Presidential Election as 91.5 for Obama and 8.8 for McCain. The Iowa election market has similar prices for the Winner Takes All Market, and comes in at near a 8 point spread on the Vote Share Market.

I certainly think Obama will win, probably by 3-4 points, which I feel will be the actual margin because of the economy. But I think that McCains chances are better that future market prices indicate because the internet is a biased estimator of the US population. It tilts Libertarian on the right, and Progressive on the left compared to the general US population. This introduces a market bias, and you can make money from that, which I happened to do in 2004. Excuse me while I put on a top hat and smoke a cigar. I abstained this year, mostly out of lethargy from too much smoking.

Anyway, I did not abstain from voting, which I did early, but not early enough, this morning. I managed to hit the exact buldge in the morning rush before work, so it took about 40 minutes. And my Ipod battery died! But I soldiered on, and got my sticker. Of course, the end of the line followed me in. Perfect.

On a separate note, I've seen a spate of posts out that claim voting is irrational, because the likelihood that your vote will decide a tie is essentially zero. I beg to differ. I think it's mostly rational, for some of these reasons - e.g., you don't really know how close the vote is going to be, and so how close to the tipping point your own vote is can only be determined by everyone getting out and voting. This was certainly true in the 2000 US election, and here in Virginia in 2008, I think it is also true. I vote because I expect that many other people will vote like me, and that we depend on each other to vote as our chance of winning is proportional to our turnout. Seems rational to me.

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