It does make me wonder, but I don’t think prediction markets are oracles—rather I think the prices you see on places like Intrade largely reflect whatever passes for common knowledge at the time, and I doubt they’ve any special insight beyond that. I therefore urge skepticism in interpreting their results.
I also believe these places are vulnerable to their own self-reinforcing biases and echo chamber effects—you can see how Intrade’s forums exemplify this.
Though IEM in particular, if you check their price histories for past elections, has a good track-record of predicting final popular vote %s—right now they’ve got roughly 50/50 for Obama/Romney, and Romney’s been on a slight upswing trend it appears.
I thought these would follow the polls fairly closely. I guess the players aren’t limited to the U. S. though.
It seems like people would want to stay close to reality, to avoid a crackup.
Intrade and the other markets are not going to be right all the time:
They are also not so deep ($12 mil for U.S. President ) that they can’t be easily manipulated.
If it were easier and less costly to trade on them, I see a substantial money-making opportunity today.
Of course, there’s always the October Surprise...
Happy Halloween!