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Wednesday, November 08, 2006

Newsflash: The Markets Have Decisively Called the Senate for the Democrats

Ian Ayres

While the major news media suggest that it's up in the air, hinging on both Montana and Virgina. The markets are suggesting that the democrats have won 49 + 2 independents.

Tradesports is saying that probability of Democratic control is 89.8% [The Senate control contracts count 50/50 split as republican control because of Cheney, so this is probability of 51 senators caucusing with democrats]
Probability of Tester winning Montana is 94.7%
Probability of Webb winning Virginia is 96.5 %

You can see the latest prices/probabilities for all three by clicking here.
The markets have spoken.
If you disagree, there's a lot of money to be made.

Comments:

I'm a little skeptical of Tradesports triumphalism. I have heard that at least a few days before the election, they were calling it for the Republicans. (See the Slate Podcast on election prognostications)

Isn't there a big problem of self-fulfilling prophecies in these information markets? I.e., corporate donors deciding to support the side most likely to win, and with those donations helping promote that outcome?
 

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