Intrade, We Hardly Knew Ye

… Beyond the gambling fun, Intrade was believed to be very useful for those interested in forecasting elections. Polls have the disadvantage of being meaningful and accurate only within a few months—or weeks—of an election, since most voters aren’t well aware of the candidates or issues until then. By contrast, people betting on political events are a self-selected group of highly informed political observers, people with enough interest and confidence in their knowledge to actually put down money. In theory, at least, these folks should be able to provide much more reliable predictions much earlier in the race. …

More generally, it turned out that people who bet on Intrade were subject to the same biases and impressionability that people surveyed in polls were. Or worse: as Josh Tucker notes, bettors may have been just relying on polls in placing their bets. [cont.]

Seth Masket (U. of Denver), Pacific Standard