InTrade Blows It Again: ACA Upheld by SCOTUS
Posted By Barry Ritholtz On June 28, 2012 @ 10:34 am In Markets,Really, really bad calls | Comments Disabled
“Individual Mandate to be ruled unconstitutional by the US Supreme Court”
[1]
Source: Intrade [2]
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As I have said over the years (repeatedly) this is the sort of thing that Intrade gets wrong.
Futures markets are really a focus group unto themselves: When the group is something less representative of the target market, they get it wrong with alarming frequency. Indeed, the further the traders are as a group to the target decision makers/voters, the worse their track record.
Here are the calls that I tracked over the years that were awfully wrong – IMO, it is absolutely due to the fact that the traders as a group have no correlation to the decision-makers:
GOP Retention of Senate (2006) [3]
Michael Jackson Trial Results [4]
Morgan Stanley CEO Purcell resignation [5]
Howard Dean’s Iowa Primary [6]
pre-Election 2004 [7]
Election day trading frenzy [8]
Today’s SCOTUS decision is a classic example of why Prediction markets have minimal value.
The Wisdom of Crowds is wildly overstated . . .
Previously:
Why Prediction Markets Fail [9] (January 11th, 2008)
Misunderstanding Prediction Market Failures [9] (February 14th, 2007)
The Prediction Markets Chalk Another One Up! [10] (June 13th, 2005)
Article printed from The Big Picture: http://www.ritholtz.com/blog
URL to article: http://www.ritholtz.com/blog/2012/06/healthcare-upheld-by-scotus-intrade-blows-it-again/
URLs in this post:
[1] Image: http://www.ritholtz.com/blog/wp-content/uploads/2012/06/health-care.png
[2] Intrade: http://www.intrade.com/v4/markets/contract/?contractId=745354
[3] GOP Retention of Senate (2006): http://www.ritholtz.com/blog/2006/10/odds-of-gop-retaining-congressional-control/
[4] Michael Jackson Trial Results: http://www.ritholtz.com/blog/2005/06/the-prediction-markets-chalk-another-one-up/
[5] Morgan Stanley CEO Purcell resignation: http://www.ritholtz.com/blog/2005/06/purcell-prediction-markets/
[6] Howard Dean’s Iowa Primary: http://www.ritholtz.com/blog/2004/01/iowa-and-prediction-markets/
[7] pre-Election 2004: http://www.ritholtz.com/blog/2004/10/presidential-futures-markets-spurious-predictive-powers/
[8] Election day trading frenzy: http://www.slate.com/articles/business/moneybox/2004/11/bettors_for_bush.html
[9] Why Prediction Markets Fail: http://www.ritholtz.com/blog/2008/01/why-prediction-markets-fail/
[10] The Prediction Markets Chalk Another One Up!: http://www.ritholtz.com/blog/2005/06/the-prediction-markets-chalk-another-one-up/
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