tag:blogger.com,1999:blog-4039434.post5749258404074218997..comments2024-02-26T06:46:53.171-05:00Comments on Rajiv Sethi: Prediction Market Manipulation: A Case StudyRajivhttp://www.blogger.com/profile/13667685126282705505noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-4039434.post-14834308646754003752012-11-11T13:34:05.647-05:002012-11-11T13:34:05.647-05:00Rajiv: I had noticed that stability as well and wa...Rajiv: I had noticed that stability as well and was also surprised by it -- everything else had seemed to suggest that Obama's "percentage" would have risen a bit. But while this surprised me, the stability on the afternoon and evening of Election Day SHOCKED me.<br /><br />This additional info that you just gave is also interesting and does seem to be a likely explanation for the lack of movement on Monday. And again, the relatively tiny cost is almost unbelievable -- truly tiny on the scale of campaign expenditures.Markhttps://www.blogger.com/profile/06530122694379915730noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-42504821569392550102012-11-08T10:07:09.389-05:002012-11-08T10:07:09.389-05:00Thanks Mark. There was also a large sell order (ab...Thanks Mark. There was also a large sell order (about 10,000 contracts) a shade above 67 the day before the election which was putting a ceiling on the Obama price. This was snapped up in a single order. Cost to the seller (and profit to buyer if held to expiration): $33,000. Rajivhttps://www.blogger.com/profile/13667685126282705505noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-5087439857756636162012-11-08T09:10:30.971-05:002012-11-08T09:10:30.971-05:00Great work!!
I followed Intrade closely on electio...Great work!!<br />I followed Intrade closely on election day and noticed the very surprising stability that you talk about. I had assumed that at least by mid-afternoon, there would have been either erratic volatility or (more likely) very strong movement in one direction, according to whisperings about exit polls and turnout. I was ASTONISHED at the stability (and talked about it). Your theory didn't occur to me at all, but, especially with the benefit of seeing the data you gathered, I think you're right.<br />GREAT WORK!!Markhttps://www.blogger.com/profile/06530122694379915730noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-67755382074671949002012-11-08T08:11:07.700-05:002012-11-08T08:11:07.700-05:00There's a post by Robert Wiblin that claims ma...There's a post by Robert Wiblin that claims manipulation on Intrade for an extended period is behind violations of the law of one price:<br /><br /><a href="http://www.overcomingbias.com/2012/11/was-intrade-being-manipulated-over-the-last-month.html" rel="nofollow">http://www.overcomingbias.com/2012/11/was-intrade-being-manipulated-over-the-last-month.html</a><br /><br />There was definitely some of this the day before the election, but I've been watching these markets for a long time (started blogging about them ten years ago) and I didn't see any signs of it before that. I just think it's a case of limits to arbitrage, given transactions costs, segmented markets and the difficulty of quickly transferring funds. By the way the piece you linked to is mistaken about the stakes on Intrade, the more visible election markets had tens of millions of dollars change hands over the past few months.Rajivhttps://www.blogger.com/profile/13667685126282705505noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-7527781174989546872012-11-08T00:45:55.839-05:002012-11-08T00:45:55.839-05:00It's interesting how the Law of One Price far ...It's interesting how the Law of One Price far from holds in these markets. I'd like to find out more about why. I have a brief post on this at:<br /><br />http://richardhserlin.blogspot.com/2012/11/no-law-of-one-price-in-presidential.html<br />Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-51680329987041734252012-11-07T16:21:41.567-05:002012-11-07T16:21:41.567-05:00It's possible Brittany, but the floor gave way...It's possible Brittany, but the floor gave way a few minutes before the PA call at 9pm, and I think it was pretty obvious from the exits released hours earlier that the polls had been basically right. <br /><br />I just can't see this big loss of $240K as being due to someone foolish enough to leave such large orders up there for hours as information was rapidly coming in. <br /><br />nogre, I thought the expression made sense when I wrote it... think I'll just leave it as is.<br /><br />But thanks, both of you, for the comments.Rajivhttps://www.blogger.com/profile/13667685126282705505noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-17509441534607564152012-11-07T16:14:39.595-05:002012-11-07T16:14:39.595-05:00I noticed the drop around 9pm too, but I have an a...I noticed the drop around 9pm too, but I have an alternative explanation. 9pm was about when Pennsylvania was called for Obama. After this happened, everyone realized that the state polls were basically correct and that Romney would lose Ohio, WI, etc.<br /><br />Romney's only hope entering the election was that the polls were systematically over-counting Democrats (which would've given him a chance in even PA and WI). As soon as the markets ruled this out, the price swung to Obama. The fact that the 28/72 floor dropped at 9pm could be consistent with information release rather than manipulation.Brittanyhttps://www.blogger.com/profile/01484377604407641695noreply@blogger.comtag:blogger.com,1999:blog-4039434.post-37787669899383034652012-11-07T11:43:17.258-05:002012-11-07T11:43:17.258-05:00"core pubic information" in first paragr..."core pubic information" in first paragraphnogrehttps://www.blogger.com/profile/05290690073819948310noreply@blogger.com