Flip Pidot, co-founder and CEO of the American Civics Exchange, writes to let us know that the exchange has recently added cash prizes to their political prediction markets and is currently running two parallel government shutdown prediction markets, allowing for an interesting experiment:
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At American Civics Exchange, we’ve just begun to implement cash prizes in our political prediction market (a sort of interim maneuver on our way to regulated exchange-traded futures).
For the government shutdown, we’re running two parallel markets – one in which traders buy and sell different shutdown end dates (with play money), yielding an implied odds curve and consensus prediction (below), and another in which traders simply log their best guess as to exact date and time of resolution (with no visibility into others’ guesses), with the closest prediction winning the real-money pot.
Members of the public are being encouraged to take on the Bank of England by betting on the U.K.’s future inflation and unemployment rates.
Free-market think tank the Adam Smith Institute on Wednesday launched two betting markets in an attempt to use the “wisdom of crowds” to beat the Bank of England’s official forecasters. Punters can place bets on what the rate of both U.K. inflation and unemployment will be on June 1, 2015.
Sam Bowman, the research director of the Adam Smith Institute, believes the new markets will “out-predict” official Bank of England predictions. “If these markets catch on, the government should consider outsourcing all of its forecasts to prediction markets instead of expert forecasters,” he said.
InTrade, the Dublin-based prediction market (i.e., betting platform) that we’ve written about regularly over the years (including a Q&A with its founder, John Delaney, who has since died), is under legal scrutiny from U.S. regulators and will therefore stop taking bets from U.S. customers. Here is InTrade’s statement, and here is the CFTC’s press release on the shutdown. What will U.S. regulators do next, outlaw online poker?
For years, I have argued that the best way to track what really matters through election season is to follow the political prediction markets. The one difficulty is that these markets aren’t really available to the general public. Sure, the University of Iowa runs a market, but because it’s for research purposes, the maximum bet is set at only $500. And while I track InTrade closely, they’re based in Ireland, and are frowned upon by American regulators. Likewise, Betfair won’t deal with American customers. But all that may be about to change. Read More »
Next Monday, the Nobel Prize Committee will announce the recipient(s) of the 2011 Nobel Prize in Economic Sciences. If you think you know who’s going to score this year’s prize, head on over to Harvard’s Nobel Pool, “the world’s most accurate prediction market.”
Each entry will cost you $1; all entries and bets must be received by 11:59 PM on Sunday, October 9th. If you’re looking for inspiration, past predictions can be found here. And if you haven’t already, listen to our Freakonomics Radio podcast, “The Folly of Predictions,” to find out where we stand on the whole notion of predictions.
So Freakonomics readers, who are you betting on?
Over at Intrade, there are two “hot” markets involving the odds that Congress will raise the U.S. debt ceiling.
- Congress to approve increase in U.S. debt ceiling before midnight on July 31, 2011: 40% (It was 65% a month ago)
- Congress to approve increase in U.S. debt ceiling before midnight Aug. 31, 2011: 75% (It was 85% a month ago)
And at Irish bookmaker PaddyPower.com, here is the line on a Moody’s downgrade:
Will Moody’s downgrade the U.S.?
Season 1, Episode 4
Fact: Human beings love to predict the future.
Fact: Human beings are not very good at predicting the future.
Fact: Because the incentives to predict are quit imperfect — bad predictions are rarely punished — this situation is unlikely to change.
But wouldn’t it be nice if it did?
That is the gist of our latest hour-long special of Freakonomics Radio, called “The Folly of Prediction.” You can listen or download via the media player embedded inside the post, or read a transcript here. This program and four more hours are being broadcast on public-radio stations across the country this summer, and they’ll all wind up in our podcast stream in short course. See this map of where to find a public radio station near you that plays the show. And you can subscribe to the Freakonomics Radio podcast on iTunes or via RSS. Read More »
OK, so Newt Gingrich’s senior staff have quit. But Newt’s not the news. At least according to the political prediction markets. The real news is that Texas Governor Rick Perry is likely to enter the Republican nomination race. The connection, of course, is that many of the staffers who quit have close ties to Governor Perry.
The figure below tells the story. (Click inside for graph). Since yesterday’s announcement, you can see the markets have re-evaluated Perry’s chances of winning the nomination from around 5%, up to 11%. There’s a tip here for newsgatherers: Focus on the details, and you’ll notice that the Perry’s prediction market rally began just after 11am. But the story broke three hours later, just before 3pm. Read More »