According to Tradesports Betting, President Bush Will Pick John Roberts:
Although Tradesports.com gave John Roberts less than a 1% likelihood of getting the nomination as of about two hours ago, right now it is giving Roberts a 99.5% chance of getting the nomination. Looks like Tradesports was right after all -- at least after the announcement was made.
Related Posts (on one page):
- Trading in Roberts Futures at Tradesports.--
- According to Tradesports Betting, President Bush Will Pick John Roberts:
- More on the Accuracy of Electronic Markets:
- The Accuracy of Small-Volume Electronic Markets.--
- Tradesports and Supreme Court Nominations:
- According to Tradesports betting, Bush will choose Edith Clement [or Edith Jones].--
Jim Lindgren
(From Lindgren's next post) "The market anticipated by about an hour the NBC announcement at about 7:47 that AP was reporting Roberts as the nominee." But his own chart shows Roberts trading a hair above 10 around 7:40, and he never traded as high as either Edith at her high until around the time of the AP report.
I don't think the spike to 30 and back to 10 has any particular significance, either--probably just bid-ask bounce. How wide was the bid-ask spread at that point? (Anyone save the quotes?)
As Orin noted, this is a circumstance where one might think markets are relatively weak (save for leaks). They certainly are weak if the White House used misdirection, as it appears may have happened. And this is a thinly traded market.
Tradesports is certainly not clairvoyant. But attacking the market is something of a strawman. It provides a measure of the contemporaneous state of perceptions, and that's all it purports to provide. The criticism makes sense only as applied to those who overclaim the significance of the results.
See, e.g., Lindgren, James.
One reason that Tradesports may have seen an uptick on Roberts about two before the annoucement may have been this post at The Corner at 5:24 pm:
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I SAY DERB'S WRONG, WRONG, WRONG [K. J. Lopez]
Prediction: Bush will nominate a white male tonight. Just because they said he couldn't.
John Roberts. Bill Pryor! John Bolton!! Karl Rove.
I'm serious about one of those guys, by the way (and, no, I'm not being a right-wing lunatic this time, so this one's an easy guess).
Posted at 05:24 PM
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Twenty minutes after that, Lopez explained that she didn't mean Pryor, leaving clear that she meant that she was predicting Roberts would get the nod. I assume that other similar posts appeared around the blogosphere at around the same time, and someone read those posts and placed some bets that raised Roberts from 1% to 10%.
So AFAICT, TradeSports merely followed the same rumor mill that many in the blogosphere did. Let's put aside the question of whether TS did a "good" or "poor" job -- my question is, where's the added value? What could we learn from TradeSports that we couldn't have picked up from a bit of blogsurfing? And with a blogger, you have some chance of gauging how reliable the opinion might be, but with the market, there's no way to know what information is driving the movement of the prices.
It was correct an hour before the news reports? OK, but was there any way to tell at the time that the upward move of Roberts was any more reliable than the surge in Clement earlier in the day? I don't see how that move, at the time it happened, could have been discerned from any other incorrect move in the market. If we are only able to know ex post that it was right at 6:47, but we didn't know at 6:47 that it was right, then so what?
This is exactly the point. A well functioning market should provide the best estimate of who the nominee will be at the time of the trade. It does not indicate that this is the final move. If a move were known to be final (and a prediction locked in), then the trading should be approaching 100. I never said that Clement or anyone else would be the nominee. I was reporting what a trading market said was the best guess at the time. Very few people this morning thought that Roberts would be the nominee. I shared the view of most experts that Bush would choose a woman or a minority. And I would expect that at 7:40pm (about 6 minutes before the first seemingly definitive press story) Tradesports was one of the few sources suggesting that Roberts was slightly more likely to be the nominee than anyone else. It is a way of aggregating the opinions of those who are willing to risk money on their expectations.
[I posted this earlier, but it came through under some goofy anonymous name, so I am reposting it.]
Jim Lindgren