Edward Conard

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Edward Conard

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Is the Stability of the Presidential Prediction Market Evidence That It Is Failing?

According to Andrew Gelman and David Rothschild,“right now, it appears that prediction markets have arrived at a paradoxical place: Their reliability, the very source of their prestige, is causing them to fail… The prediction market prices for the presidential election have been incredibly stable for nearly a month, despite waves of news on business scandals, fundraising money, poll swings, and possible indictments. … What we are seeing now with the Clinton-Trump race is similar to what we saw with Brexit. … People are using the current prediction odds as an anchor and updating too slowly. … When polls showed solid and consistent majorities for ‘Leave,’ pollsters looked to the markets, which were firmly supporting ‘Remain,’ and doubted their own polls. … A mature prediction market should show measured, but real, swings in prices in response to news.”

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