President Biden: The NEW one and only politics thread

I don't think the amounts bet would be as important as the number of people betting. Usually, you will get some people betting a lot of money, others betting a little. But ideally if you are trying to use it as a predictor, you' want as large pool of betters as possible, all informing their bets with whatever asymmetric information they have . The more people who are involved, usually the more predictive it is going to be.

 

Perhaps the "Beltway conventional wisdom" follows where voting sentiment is. Or maybe "Beltway conventional wisdom" influences which way voters are leaning.

Regardless, crowd behavior -- and markets that reflect it -- is just something I am very interested in.

A few things I know for certain. Whatever I (or you, or anyone else) is correlating with where something is priced (for example, odds in a betting market) probably misses way more other things than you'd imagine. Beltway conventional wisdom might influence odds, but a lot goes into candidates winning over voters, and information about what is happening -- even when it comes to something like voter sentiment -- is asymmetric. There are always people who know specific things that you or I aren't going to know related to an event. Or people who pay more attention to more news or have some kind of exclusive or private information, or who just have a better feel for the probablities of something happening based on their accumulated knowledge of factors that is superior to other people's.

Betting odds don't predict things with 100 percent certainty, especially when there is a luck or randomness aspect to the thing being bet on -- like with sports. Elections don't have that kind of randomness to the degree that sports do, actually. Like maybe extreme weather might keep people from voting and influence an election. But generally, you are predicting a binary event where there isn't a whole lot of randomness. People settle on one of two candidates (for the most part) and vote for that candidate. With something like that, crowd behavior in a very well populated market (where the market participants are rewarded when they are right or bear the cost if they are wrong) is usually pretty predictive. If "Beltway conventional wisdom" has it all wrong, there will always be plenty of people making their bet in a calculated way, who are poised to profit from getting it right.