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But if this is a known effect, why were the betting markets also wrong?
by evanpw 10y ago
But if this is a known effect, why were the betting markets also wrong?
- fdsaaf 10y agoI think betting markets are prone to wishful thinking; there's no guarantee that errors of reasoning toward one side or the other will cancel out, since it's perfectly reasonable to imagine that errors in one direction are more common.
- maxerickson 10y agoThere's no guarantee, but the bookie is watching his, uh, book and adjusting the odds to make sure the payouts come from losing bets rather than his pocket.
- Lxr 10y agoNot on Betfair, it's an exchange. They make money either way.
- selectron 10y agoThe betting markets had somewhere around a 35% of Brexit. So it wasn't that unlikely according to the betting markets.
- evanpw 10y agoI saw 15% before election data started coming out. That's pretty wrong.
- selectron 10y agoIt looks like the average was around 35%: http://predictwise.com/politics/uk-politics http://predictwise.com/politics/uk-politics Interestingly the odds went down pretty sharply as the election came closer, but it is not really fair to pick the lowest odds when evaluating how good the predictions were. But even 15% odds are not really all that unlikely, about a 1 in 6 chance. It isn't as though pundits were predicting leave.
- Callmenorm 10y agoOr maybe people are using the betting markets to hedge. Is that a dumb thing to do?
- evanpw 10y agoI think that hedging would have the opposite effect. The pound is tanking (30-year low right now), so if your salary is paid in pounds, it would have made sense to bet on Leave. I'm not sure who wins economically from leaving. British companies that compete with continental ones?