Comments on: Presidential Decision Markets

By: Implied Prices for Robin Hanson’s Presidential Decision-Aid Markets | Midas Oracle .ORG

Tue, 11 Aug 2009 08:39:45 +0000

[...] And see the comments here. [...]

By: Peter McCluskey

Peter McCluskey — Sat, 19 Jan 2008 01:04:36 +0000

I've created web pages at http://www.bayesianinvestor.com/amm/implied.html and http://www.bayesianinvestor.com/amm/implied4.html (which are currently being updated 4 times a day) which show implied prices for the conditional contracts that I'm subsidizing and for the contracts sponsored by Politimetrics.

By: Peter McCluskey

Peter McCluskey — Fri, 18 Jan 2008 18:04:36 +0000

By: The Future of the Prediction Markets | Midas Oracle .ORG

The Future of the Prediction Markets | Midas Oracle .ORG — Fri, 18 Jan 2008 12:44:04 +0000

[...] Conditional prediction markets (a.k.a. decision-aid markets) will never be taken seriously by the decision makers and the public. Robin Hanson’s tool is very smart, though. Applications should be found within the community of free-market believers, rather. [...]

By: jedc_mercury

jedc_mercury — Thu, 17 Jan 2008 08:51:25 +0000

Hello, Peter.

I see your point that these markets are still in development, and once prices have stabilised they may show less of a difference between the two parties. And I think what you mentioned about setting the initial prices to reflect the PRESIDENT.DEM2008 prices would probably be useful in the future.

That said, I think there's still some interesting data here, and am perhaps most encouraged that people are actually trading on these markets! So many times they are set up with the best of intentions, but in the end are so illiquid as to provide no information at all.

Do you happen to have a script or a way of doing these calculations and showing the results above automatically? I'd be interested in tracking this, but don't necessarily want to take each days data and calculate it manually, and I am not a scripting-saavy guy.

By: Peter McCluskey

Peter McCluskey — Wed, 16 Jan 2008 18:26:09 +0000

It's not obvious that the prices show effects of the election on federal debt and Iraqi troop levels yet.
A simple explanation for what those markets show is that traders have not yet devoted enough money to reflect the relative chances of a Republican versus a Democrat. The market maker started with all prices centered on 50, and it takes a fair amount of money for traders to move the market maker's prices enough to reflect the fact the difference between PRESIDENT.DEM2008 and PRESIDENT.REP2008 + PRESIDENT.FIELD2008. A large fraction of the trades in NONDEM.PRES-GOVT.DEBT and NONDEM.PRES-TROOPS.IRAQ fit a pattern of driving the price down.
Before I start claiming that the prices have become useful to voters, I want to see something like 30% of trades be something other than trades that continue to push the market maker in the same direction. And ideally we should see some correlation with PRESIDENT.DEM2008 price changes before we're confident that the prices have become valuable.
In case it isn't clear to some readers, the market maker is software that knows nothing about elections. I set its initial prices to be near 50 because that was the simplest way to implement it, and to the extent that that was close to a sensible price, it was because the contracts are designed in hopes that they will trade close enough to 50 that asymmetries in the money needed for each side of the market aren't too large.
In hindsight, maybe I should have set the initial market maker prices to reflect the information provided by PRESIDENT.DEM2008.

By: jedc_mercury

jedc_mercury — Tue, 15 Jan 2008 18:51:17 +0000

I may be completely off-base here, but I guess I see the oil price movement on election day as not terribly related to the presidential election if the election results are largely expected, such as a huge blowout for one party. (If the election becomes a strong contest, then absolutely I think the oil prices will respond to estimated election returns.)

Then again, I don't track the volatility on oil markets, so the day-to-day news may have a bigger effect than I estimate, even when largely known events occur.

By: Robin Hanson

Robin Hanson — Tue, 15 Jan 2008 17:44:24 +0000

Yes, it is encouraging to see some results already. But I think the shock response asset values should depend only moderately on how close is the election. And whether those values are above or below 50 should not depend at all.