From the Atlantic channeling Rajiv Sethi and Justin Wolfers:
[T]his morning, something very weird happened on Intrade. Mitt Romney began the day trailing the president 60 to 40 (i.e.: his chance of winning was priced at 40%). Suddenly, Romney surged to 49%, and the president’s stock collapsed, despite no game-changing news in the press. The consensus on Twitter seemed to be that somebody tried to manipulate the market….
The total quantity of Romney stock traded between 9:57 and 10:03 was around $17,800. But that’s not the “cost” of this manipulation (if that’s what it was), because the buyer got stock in return. If we value that stock at 41 (rather than the higher price he paid), the net cost of this manipulation/error was about $1,250.
Meanwhile the UK bookies are giving Obama a 5 in 7 chance of winning. This gap between the UK berrint market and Intrade has existed for quite a while. Is some SuperPac spending money consistently to maintain the difference? The marginal benefit of more ads must by now be quite low. Maybe this is all that’s left to spend on.
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October 24, 2012 at 11:37 am
Enrique
There is an intriguing paper titled “Gaming prediction markets,” but upon closer inspection, it looks like “blackboard economics”
http://dash.harvard.edu/bitstream/handle/1/5027877/chen_algorithmica_author.pdf?sequence=1
October 24, 2012 at 4:50 pm
Rajiv Sethi
Jeff, I don’t think this was manipulation, for reasons explained here:
http://rajivsethi.blogspot.com/2012/10/algorithms-arbitrage-and-overreaction.html
October 24, 2012 at 5:05 pm
jeff
that was sandeep.
October 24, 2012 at 8:38 pm
Rajiv Sethi
Oh, sorry Sandeep (and Jeff). Trouble is, the author name disappears once you click on the link for a specific post. Will be more careful.
October 27, 2012 at 10:19 am
Election futures and forecasts « NYU Stern Economics
[…] Intrade.com, esp the Presidential futures. We look at this one all the time, but there have been recent allegations of manipulation. […]
March 27, 2013 at 2:36 pm
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