Allen Gillespie comments on this post from Feb 7th:

Having covered the gaming sector and written posthumously on the death of DARPA's Policy Analysis Market - I could not let this post pass without a more detailed consideration, for a few reasons: First, market structure matters in the predictive accuracy of a market. I also think the death of these projects has resulted in a mentality of more data, is better, so we are going to suck it all in regardless of personal liberties even if we cannot accurately analyze it. I personally think a better study of cross correlation analysis would lead to better and more timely insights without the violations to personal privacy we now experience - that is what I proposed to DARPA but they didn't seem interested.. After this latest Corona Virus - our biology will now be collected as well and full tracking will probably be mandatory. Gotta love Big Brother you know. In addition, certain projects have been pushed into private enterprises then the data repurchased data to get around restrictive laws.

1. Spot markets reflect a market's current discounting of future cashflow for stocks, however, a futures market would reflect the spot market at that future point in time. As a result, they both have predicative abilities but they are focused on different periods of time. This is why many do not understand how to use yield curve data, for example, because it reflects varies leads and lags. Spot data, because it is a discounting mechanism, also reflects futures events - anyone have an idea of the best sector in the 2016 election year or the 2008 election year - what about 200? I will give you a hint, what is good for government is bad for business and what is good for West Virginia may not fly in California both identified, and the low in defense spending dates back a few years. This year, China, biology, guns, HSA, student loan, and work and staying at home related names seem to be the themes - just be aware of the weather cycles. Informational warfare is a different game - as there are lots of potential cross-currents and beneficiaries this year - its the Strike You Know - how do you clear a street of protesters? Who says rates should be zero and we should not have sent manufacturing overseas? Who went on strike? What was the policy on Iran's nuclear program and what was the Stuxnet virus? What is the lab safety record in China? Does containing an outbreak lead to more money and nationalization of the healthcare systems? Many competing vested interests here.

2. Political markets are unique given that markets are designed to balance money to the real odds, but in political markets - every man can independently influence the final outcome through actions outside the market. In short, political markets are more likely to be imbalanced by the Palindrome's reflexive function - as a bettor is not only a bettor but potentially a participant with a single vote - different rule set than the markets. Therefore, the number of bets on a side may be more predictive than the money on a side provided each market participate can vote. This was the problem with the PAM and why after 9/11 certain rules were created - if one has inside knowledge - well then certain activities become self-financing. The insurance claims on the World Trade Center are an interesting financial case.

Victor Niederhoffer writes:

What evidence is there that future markets predict actual future events better than spot prices. This will be relevant now that polls give dems almost an even chance while betting markets are highly in favor of Rep. One expects a deluge of articles from newspapers showing that polls in recent years are just as good as betting markets.

Stefan Jovanovich writes:

The betting markets that are serious because they accept sized wagers–those of the bookies in Britain–are options. That is why you can get a quote on a bet that is clearly going to expire out-of-the-money.

If you use linear polling, the spot and futures prices converge nicely the nearer you get to an election.

"Linear polling" is what I call regular sampling over time of an unchanged initial sample–what the LA Times and the private Trump polls did in 2016. The USC Dornsife poll is my current favorite, and they are–not a surprise!–predicting Trump's re-election.

Peter Ringel writes: 

Whatever threatens the old information monopoly will be attacked.


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