Buy Now Or Forever Hold Your Peace

The In­trade pre­dic­tion mar­ket is giv­ing Hillary a 53% chance and Obama a 47% chance of win­ning the Demo­cratic pres­i­den­tial nom­i­na­tion. Hillary is down 7.5 per­centage points in just the last day. (Note: Between when I wrote the above, and when I posted this, Hillary went up to 54.)

From what I’ve read on In­trade, you can fund your ac­count with up to $250 us­ing a credit card, and it should land in your ac­count im­me­di­ately. (More than this takes time.) Also, re­mem­ber that you can sell con­tracts at any time af­ter­ward—you don’t have to wait months to col­lect your pay­out.

If you think that Hillary is go­ing to do bet­ter than the polls on Su­per Tues­day, and you’re go­ing to sneer af­ter­ward and say that In­trade was “just track­ing the polls”, buy Hillary now.

If you think that Obama is go­ing to do bet­ter than the polls on Su­per Tues­day, and you’re go­ing to gloat about how pre­dic­tion mar­kets didn’t call this sur­prise in ad­vance, buy Obama now.

If you don’t do ei­ther, then clearly you do not re­ally be­lieve that you know any­thing the pre­dic­tion mar­kets don’t. (Or you don’t un­der­stand ex­pected util­ity, or your util­ities over fi­nal out­comes drop off im­prob­a­bly fast in the vicinity of your cur­rent wealth minus fifty bucks—you don’t have to bet the full $250.) It is free money, go­ing now for any­one who gen­uinely thinks they know bet­ter than the pre­dic­tion mar­kets what will hap­pen next.

Pre­dic­tion mar­kets do not have su­per­nat­u­ral in­sight. If they give the can­di­dates fifty-fifty odds, it means that the mar­ket col­lec­tively doesn’t know what will hap­pen next. Even if you’re well-cal­ibrated, you get sur­prised on 90% prob­a­bil­ities one time out of ten.

The point is not that pre­dic­tion mar­kets are a good pre­dic­tor but that they are the best pre­dic­tor. If you think you can do bet­ter, why ain’cha rich? Any per­son, group, or method that does bet­ter can pump money out of the pre­dic­tion mar­kets.

If pre­dic­tion mar­kets re­act to polls, they’re get­ting new in­for­ma­tion, that they didn’t pre­dict in ad­vance, which hap­pens. Be­ing the best pre­dic­tor doesn’t make you om­ni­scient.

Every­one’s go­ing to find it real easy to make a bet­ter pre­dic­tion af­ter­ward, but if you think you can call it in ad­vance, there’s FREE MONEY GOING NOW.

Buy now, or for­ever hold your peace.