“If the current betting trends are to be believed, it now seems certain that a recall is in the cards”

-Paddy Power, Irelands Biggest Bookmaker
July 14, 2010 press release

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Speaking of dumb bets: Its time to revisit a recent prediction market “winner,” and review the strengths and weaknesses of these markets:

Recall this Bloomberg article:

Apple IPhone 4 Recall Odds Increasing, Irish Bookmaker Says

Apple Inc. is increasingly likely to recall its iPhone 4 after complaints about poor reception and a critical review from Consumer Reports, according to a betting company that tracks odds for such events.

Paddy Power Plc, Ireland’s biggest bookmaker, said the chances that Apple will ultimately recall the phone have increased following what it described a “betting frenzy” after the Consumer Reports review. The consumer organization said on July 12 it wouldn’t recommend the phone because of its tendency to lose signal strength when held in a certain way.

Only, not so much.

We have a long history of criticizing so-called prediction markets. There is no “wisdom of the crowd” unless the prediction markets has a similar demographic profile to whatever group is being forecast (or polled). When their community of voters are similar to an electorate, they act as a deeper polling mechanism. When they try to forecast the decision making processes of dissimilar bodies — Juries, Boards of Directors, or in this instance, corporate management — they stink the joint up.

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Source:
Apple IPhone 4 Recall Odds Increasing, Irish Bookmaker Says
Arik Hesseldahl
Bloomberg, July 14 2010
http://noir.bloomberg.com/apps/news?pid=20601087&sid=a0GOFk3C_q3k&

Category: Mathematics, Really, really bad calls, UnScience

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “Whatever Happened to that Apple iPhone Recall?”

  1. Hans Robert says:

    Honestly I would rather ask someone in tech or tech retail about the market movements and corporate decisions for or against Apple rather than any analyst or let alone a bookmaker…

  2. destor23 says:

    Is the problem that people are ultimately saying not what they think will happen but what they think should happen? And when I read a poll that says 20% of Americans believe Obama is a Muslim, is that really what the poll is saying or is it saying that 20% of Americans hate the guy so much they’ll say whatever they think will damage him?

  3. TheUnrepentantGunner says:

    My disagreement with you on this remains the same.

    The longshot bet is supposed to pay off sometimes. The unlikey occurrence occurs more often than you think.

    IF a non-recall was only priced at 10 cents (with a $1 payout if no recall occurs), then 10% of the time that could be expected to happen.

    Just like some of the “upsets” in the primaries of 2008.

    IF a recall was truly pre-ordained, the price would have fallen on that contract to a cent or less.

    As an aside, Paddy Power is notoriously poor at setting odds. Their general scheme is to do outrageous things (ie: pay off sports pennant bets way before the season is over if someone has a slim lead taking the chance that they get egg on their face) and other stunts in exchange for generally terrible prices. Umm, not that I would know anything about that…

  4. endorendil says:

    They might wish they had done that recall though – the phone has been a relative dud and a persistent blemish on Apple’s reputation. A recall would have at least salvaged their reputation for customer service.

  5. ezduzit says:

    @endorendil

    i must be living on mars and they just turned off the oxygen, after reading your comment.

  6. d4winds says:

    I looked at them during the presidential election & found them useless. Much better forecasts were available as simple aggregates of polls, a sort of “wisdom of crowds of pollsters.”

  7. Alex says:

    Guys… shhhhhh!

    I make all sorts of money (theoretically as I guess its illegal or something) off of suckers trying to bet their “feelings” on these markets.

    If you keep making sense, the marks might go away.