Trying to Quantify Liberal Bias at Intrade

Free Republic ^ | September 9, 2008 | Kevmo

[Kevmo]

There are 5 contracts that I intend to examine to get a start on finding some kind of number to quantify Liberal Bias on Intrade.

The first contract is 2008.PRES.CLINTON(H) which seems like it should have zero value. This gives a good glimpse at a baseline bias value.

Taking into account the volume of the contract, bias might be expressed as Price * Volume of such a baseline contract. In this case it's 3.2 * 522834, but that's unnecessarily high because the volume is over the life of the contract. So I would use the volume since the convention ended, which is ~70k or so. This would give me a baseline bias indicator of 3.2*70000 =~224k $Volume of bias.

Most Traded Contracts

2008.PRES.CLINTON(H)

Hillary Clinton to win 2008 US Presidential Election M Trade

Contract Bid Ask Last Vol Chge

3.2 3.3 3.2 522834 +0.2

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The next 2 contracts are the Palin.VP.Withdrawn and Biden.VP.Withdrawn. Both of these are obviously the playground of partisans. What should they be? I’d say 1% (That seems awful high to me but what the heck) for Palin and maybe 5% for Biden. The nice thing about these contracts is they show sort of upper and lower bounds, and they also can be viewed over the life of the contract in volume rather than just the last week or so. So let’s take the current value of Palin, 5%, subtract what it should be (I know, it should be zero) and we get 5%-1% = 4%. The bias here is $4*17836=~$71k of $volume of bias.

PALIN.VP.WITHDRAWN Sarah Palin to be withdrawn as Republican VP nominee/candidate before 2008 presidential election M

Trade

Contract Bid Ask Last Vol Chge 4.6 5.0 5.0 17836 +0.5

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The Biden contract should be higher today because he is a genuine liability and there are so many Hillary supporters who would come back into the fold if Hillary were on the ticket. Since we’re looking at liberal bias, the fact that this is a nonzero quantity means we will be subtracting this value from our earlier Palin Derangement Syndrome $Volume bias figure. It shows that there are some traders on Intrade who are conservative or are at least in it for the money. It’s at 5%, so we’ll take$5 * 220 volume = $3300 in negative $volume of bias.

Joe Biden to be withdrawn as Democratic VP candidate

BIDEN.VP.WITHDRAWN

Joe Biden to be withdrawn as Democratic VP candidate before 2008 presidential election M Trade

Contract Bid Ask Last Vol Chge

4.0 6.0 5.0 220 +0.8

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Subtracting $3.3k of Biden Bias from $71k of PDS $volume bias gives us about $67k $volume bias in liberalness… How do we reconcile that with $224k $Volume of bias in the Hillary contract? Well, one is from a highly partisan-ated contract at relatively low volume / high risk / low liquidity (well, not really but we’ll say it was). The other was from a less partisan-ated contract at high volume / lower risk/ high liquidity. Intraders value liquidity. So if you are looking at some contract that is high volume/high liquidity, the higher value would make sense to use.

That’s what I’d use in looking at the next 2 contracts, the presidential ones.

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McCain is at $46*490812 --> 22577352 of $Volume, ~$22.5M of $volume ~120k --> $5520000 --> $5.5M $volume for McCain ~130k --> $6760000 --> $6.7M $volume for Obama

2008.PRES.McCAIN John McCain to win 2008 US Presidential Election M Trade

Contract Bid Ask Last Vol Chge

46.3 47.7 46.3 490812 +1.2

2008.PRES.OBAMA

Barack Obama to win 2008 US Presidential Election M Trade

Contract Bid Ask Last Vol Chge

51.6 51.9 52.2 357404 -0.8

So, going backwards, adding $0.2M of $volume bias to McCain and subtracting it from Obama,

$5.5M $volume for McCain + $0.2M $volume bias à $5.7M $volume, dividing by current volume $5.7M/120k = => $47.5 for McCain. His current price is ~$42 so that’s $5 worth of bias.

$6.7M $volume for Obama - $0.2M $volume bias à $6.5M $volume, dividing by current volume $6.5M/130k = => $50 for Obama. His current price is ~$52 so that’s $2 worth of bias.

That’s about $7 bias built into the current prices at Intrade. Note that just a few days ago the prices were hovering at $60 & $40 because Obama was comfortably ahead. Once the contract for McCain overcomes that $7 worth of bias, the value might likely jump past that realistic point and go to the $60 that was the resting point earlier.

What does this mean? It means that if you buy a McCain contract you’ve got $7 worth of bias coming your way if you turn out to be correct.

It also probably means that Intraders won't stampede over to reality until they see a consistent 7 point favor in the polls for McCain. Since we've seen a poll or two that has McCain 10 points ahead, there's money on the table, guys.

[Kevmo]

Of course, I’m just an amateur and I’m sure someone will find my analysis to be completely hokey. But it rings true and it’s easy to pop into a spreadsheet to give you a target price for selling as well as for assessing your risk if you think both have an even chance of winning.

[Kevmo]

I don’t think there’s an Intrade ping list, but your weekly post seems to be as close to that as I can think of. Let me know what you think.

[SSS Two]

The Biden contract should be higher today because he is a genuine liability and there are so many Hillary supporters who would come back into the fold if Hillary were on the ticket.

Are you implying that the Biden-withdraw contract should be priced contemplating a switch-out with Mrs. Clinton?

You might want to figure out state laws to determine whether this is even possible. I'm pretty sure the deadline to replace a candidate has passed in Texas. New Jersey doesn't have a deadline at all (at least according to the NJ state courts).

Sen. Biden will be on the Texas ballot. That may not be a big deal for the Dems since they aren't counting on Texas' e.v.'s. But it may be a problem in other states.

Perhaps the ballot problem is mitigated by the fact that votes are for electors. Even if Biden is on the ballot, Dem electors could vote for Mrs. Clinton.

I just want you to be aware that your switch Biden for Clinton scenario is much more complicated that you seem to account for.

[Kevmo]

Are you implying that the Biden-withdraw contract should be priced contemplating a switch-out with Mrs. Clinton?
***That’s not what the contract says. It’s Biden withdrawal.
Obama Campaign in Freefall; Considers Eagleton Option

Penetrating Insights into the Obvious ^ | September 8, 2008 | Michael Asher

http://www.freerepublic.com/focus/f-bloggers/2077853/posts

[Momaw Nadon]

I’m not sure if there is a liberal bias at InTrade. I just don’t know.

Some have suggested in the past that a large percentage of Europeans betting on Intrade may give it a liberal bias. Again, I just don’t know if that is true or not.

I wish I were more well-versed in statistics. I’m not sure what to make of the analysis one way or the other. (For the most part, I just copy and paste the InTrade numbers and post them once a week.)

Do you have an opinion, Political Junkie Too?

[Political Junkie Too]

I'm not an expert, but I do have some observations.

1. InTrade is the same service as Tradesports. They both go back to the same help telephone numbers.

2. InTrade/Tradesports is run out of Ireland. I don't know if this implies a European bias in usage.

3. To the extent that InTrade is self-selecting like on-line polls, rather than random-selected like polling firms, you can assume that InTrade is biased towards the preferences of people who choose to use the service. Are on-line gamblers risk-takers or are they more risk-averse? Is risk-taking / risk-aversion a liberal/conservative trait? Does betting on sports and elections bring out a different kind of risk profile in people than betting on stocks (on-line investment portfolio software)?

4. Someone once suggested that a person like George Soros could throw some money at InTrade bets just to make it look like InTrade traders favor one outcome over another (since the potential loss of funds would mean nothing to a person like Soros). Since pollsters like Rasmussen use InTrade as a source (among others) when predicting which way a state will go in the Electoral College, once can presume that a wealthy person with money to burn would see this as a cheap way to influence public perception.

Hope this helps.

-PJ

[rhinohunter]

Quantify Liberal Bias on Intrade

Ever since Bill Frist banned Americans from internet gambling, there has been a leftward bias on Intrade. Since there must now be a greater percentage of Europeans playing, it stands to reason that pricing would lean more to the left.

[Kevmo]

Looks like someone over at Intrade finally caught on. Today McCain surpassed Obama, and Biden’s withdrawal contract has started to move upwards. Well, free money doesn’t stay on the table for very long.

2008 Presidential Election Winner (Individual)
Contract Bid Ask Last Vol Chge
2008.PRES.OBAMA
Barack Obama to win 2008 US Presidential Election M Trade 48.8 48.9 48.8 377927 -3.6
2008.PRES.McCAIN
John McCain to win 2008 US Presidential Election M Trade 50.2 50.5 50.1 517612 +2.7

Joe Biden to be withdrawn as Democratic VP candidate
Contract Bid Ask Last Vol Chge
BIDEN.VP.WITHDRAWN
Joe Biden to be withdrawn as Democratic VP candidate before 2008 presidential election M Trade 4.0 5.9 5.9 245 +1.9

[Kevmo]

There’s still a little bit of free money on the table at Intrade...

https://bb.intrade.com/intradeForum/posts/list/15/2548.page#29586#29586

ko

Senior

Joined: 03/11/2007 19:01:54
Messages: 332
Online

Dorado wrote:

Pavel wrote:

Actually, andywend, the only reason I even joined intrade at all was that I saw an opportunity to make some easy money once McCain picked Palin. ... But Palin really is a game-changer.

That is indeed exactly why I joined.

Congratulations to both of you. You get to support your candidate and make money at the same time. This kind of opportunity is actually unique in history, as far as I can see (outside of bribery).

Pavel wrote:

...and many of the State markets STILL haven’t adjusted for Palin. Calling this easy money thus far is an insult to easy money (like calling Obama an empty suit...

Cool. There’s still money on the table. I was going to check into that next. Those contracts aren’t as liquid.

[Kevmo]

Here’s another way that there’s still money on the table:

OBABA.PRES is trading at a 2.5-3.0 point discount to DEM.PRES.

[supercat]

Someone once suggested that a person like George Soros could throw some money at InTrade bets just to make it look like InTrade traders favor one outcome over another (since the potential loss of funds would mean nothing to a person like Soros)

The more someone like Soros tries to game the system contrary to actual results, the more people are going to jump into the market to profit by his efforts.

[Kevmo]

Here’s another example of free money on the table.

Author Message
12/09/2008 17:17:55 Subject: Why is McCain at a premium......?
llama

Newbie

Joined: 03/01/2008 20:51:41
Messages: 1
Online
Why is McCain happily trading at above 53.0 on the 2008.PRES.McCAIN market but the Republicans are only trading at 51.3 on the PRESIDENT.REP2008 market......?

How can there be a scenario where McCain is next president without the Republicans winning......?

If anything the premium should be on the PRESIDENT.REP2008 market......?

12/09/2008 17:52:23 Subject: Re:Why is McCain at a premium......?
Pavel

Novice

Joined: 06/09/2008 02:02:27
Messages: 24
Online
Sounds like an arbitrage opportunity to me. As several folks have pointed out, these overlapping contracts don’t always move in sync. You’re right: the GOP contract should be trading higher than the McCain contract. May be some easy money there.

[Kevmo]

2008 Projected Presidential Electoral Votes as of 9/15/2008
InTrade ^ | Monday, September 15, 2008 | Momaw Nadon

Posted on Monday, September 15, 2008 2:48:52 PM by Momaw Nadon
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To: Momaw Nadon
Thanks for the post. Currently, Intrade results are lagging poll results. This means there’s some arbitrage opportunities in whichever states have the lag.

14 posted on Monday, September 15, 2008 3:01:36 PM by Kevmo (Obama Birth Certificate is a Forgery. http://www.freerepublic.com/tag/certifigate/index?tab=articles)
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http://www.freerepublic.com/focus/news/2083017/posts?page=14#14

[Kevmo]

On the weekly Intrade projection map thread... bias showing up.

http://www.freerepublic.com/focus/news/2083017/posts?page=32#32

To: Momaw Nadon
This morning there’s a new graphic on the Intrade login screen: it looks like your electoral map of Intrade results.

McCain has slight edge on the map, but Obama has retaken the lead for the individual pres. contracts. That might mean an arbitrage opportunity somewhere.

29 posted on 09/17/2008 9:39:04 AM PDT by Kevmo (Obama Birth Certificate is a Forgery. http://www.freerepublic.com/tag/certifigate/index?tab=articles)
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To: Kevmo
This morning there’s a new graphic on the Intrade login screen: it looks like your Electoral map of Intrade results.
Impressive!

I like the way they did it.

They even calculated the weighted average in addition to the full Electoral Vote totals.

GMTA!

:-)

30 posted on 09/17/2008 2:03:25 PM PDT by Momaw Nadon (”...with the ultimate goal of ending tyranny in our world.”)
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To: Momaw Nadon
Intrade currently has Obama 291 to McCain 247. I think they’ve swung too far in the other direction, so there’s money on the table. All one has to do is pick a poll they trust and follow those results, betting where there’s a difference between that poll and Intrade. Intrade is full of Obamessiah Worshippers, so they probably have a strong bias reflected in their trading.

And, since the Intrade electoral map was just posted only a day or so ago, that’s the first thing Intraders see, so they’ll move on a state that has the highest likelihood of bumping over to Obama in order to boost the results they see on that page. The emotional content of the trade is VERY high right now, and there’s money to be made off of these liberals.

32 posted on 09/18/2008 9:47:23 PM PDT by Kevmo (Obama Birth Certificate is a Forgery. http://www.freerepublic.com/tag/certifigate/index?tab=articles)
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