tag:blogger.com,1999:blog-4039434.post620566744994573515..comments2024-02-26T06:46:53.171-05:00Comments on Rajiv Sethi: Price Coherence on IntradeRajivhttp://www.blogger.com/profile/13667685126282705505noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4039434.post-58443380411015415772011-12-03T08:57:33.692-05:002011-12-03T08:57:33.692-05:00dwb, accounts can easily be funded by bank wire or...dwb, accounts can easily be funded by bank wire or check and most traders on the exchange are in fact from the US. Withdrawal of funds is also easy via bank wire or check. Funds can also be transferred easily between accounts. <br /><br />If you look at the intrade <a href="https://www.intrade.com/forum/" rel="nofollow">forum</a> you'll find over 1400 messages in the thread on the republican nominee alone. Some of these are from highly informed individuals who are intimately familiar not only with the political landscape and polling data but also with details about the apportionment of delegates at each primary. They respond to information rapidly, tracking blogs and twitter feeds as well as traditional media. And the forum reflects just a small subset of traders. <br /><br />Regarding liquidity, there's plenty of it. Open interest in Gingrich alone is 170,000 contracts. Spreads sometimes widen when news arrives but close quickly. It's not unusual to see spreads of a penny on a widely traded contract. Overall volume is an order of magnitude greater than on the Iowa Electronic Markets, which have a strong record of forecasting electoral outcomes (better than poll averages for instance).<br /><br />All this does not imply that the market is efficient. As I have argued in a previous <a href="http://rajivsethi.blogspot.com/2010/01/on-prediction-markets-and-self.html" rel="nofollow">post</a>, Intrade's high visibility itself creates incentives for manipulation. Shifting prices by a few points can help a campaign and is a lot cheaper than running ads in big media markets. But this kind of thing is what brings the informed traders in. <br /><br />All in all, it's an interesting market that ought to be taken seriously.Rajivhttps://www.blogger.com/profile/13667685126282705505noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-6018571084189132802011-12-02T23:34:28.920-05:002011-12-02T23:34:28.920-05:00i would not read too much into it. Accounts cannot...i would not read too much into it. Accounts cannot be funded from the U.S. (most banks block it). So there is not a lot of liquidity - the bid asks are pretty wide and there is not a very deep market to arb any perceved inconsistencies. Its also hard to get your money out if you are right. Overseas players able to access it do not know much about US politics (I lived in England for a while, many dont get the U.S. governmental system).dwbhttps://www.blogger.com/profile/02799793864068767226noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-81321773940769534092011-12-01T21:17:27.276-05:002011-12-01T21:17:27.276-05:00Exactly... one can think of the Buckley rule as &q...Exactly... one can think of the Buckley rule as "targeting" electability. Interesting way to look at it.Rajivhttps://www.blogger.com/profile/13667685126282705505noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-21373119787335764992011-12-01T17:54:06.064-05:002011-12-01T17:54:06.064-05:00Neat. Just like when a central bank is targeting i...Neat. Just like when a central bank is targeting inflation, there should be no correlation between the policy instrument and future inflation.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.com