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> Prediction markets have also had some high-profile misfires, however — such as giving the odds of a Brexit ‘stay’ vote as 85% on the day of the referendum I'

> Prediction markets have also had some high-profile misfires, however — such as giving the odds of a Brexit ‘stay’ vote as 85% on the day of the referendum I'm continuously annoyed by this. The prediction was 85%, not 100%. I'm guessing if you looked at all the 85% predictions, about 15% of the time the other outcome happened. That's what 85% means, after all. You can't just round all predictions to the nearest integer and call it a "misfire" when the unlikely events happen. 1 in 7 events happen all the time! The misfire would be if 85% events always happened.

wyldfire 10y ago
I agree with your logic but perhaps they consider the magnitude of the actual Brexit referendum vote to refute the prediction 'stay' likelihood of 85%. I don't know how close the election was (IIRC it was fairly close), I'm just stating that many people might consider a landslide in the other direction to mean that the prediction was flawed. OTOH maybe people misinterpreted the 'stay' likelihood itself as the ratio of the predicted popular stay vote and that would explain it too.
- HSO 10y ago
  It was very close, something like 51:49. The predictions circulating before the vote may have influenced the result. Apparently more Remainers would have bothered to vote if the predictions had not been so clearly in favor of Remain. It's a tragedy, really, that something so important would be decided on so flippantly. This, by the way, is another weakness (or limitation) of prediction markets. They should probably not be applied to matters where the prediction interacts with the "predictee" lest you enter a "Keynesian beauty contest".
  - hueving 10y ago
    Or more of the exiters would have voted if they weren't discouraged by being told it was a big loss. That sword cuts both ways.
    - deleted 10y ago
      [deleted]
    - verbify 10y ago
      Biased sample here, but I spoke to multiple people with 'bregret' - they told me they only voted for brexit because they thought it wouldn't happen and wanted to stick it to the man. The stupidity of these people boggles my mind, but there you have it. And nobody predicted a big loss - it was going to be close either way.
  - xamuel 10y ago
    >a tragedy that something so important would be decided on so flippantly If so, it was an even bigger tragedy when the UK joined the EU in the first place, there was NO vote for that.
vegabook 10y ago
The nuance though is the direction in which the market moved. On the day, the market went from 20% for Brexit in the morning to 10% by the evening for Brexit. And this trend had been in place for about 10 days (ie Brexit losing ground). So you'd think that as an event draws closer, the prediction odds would tend towards the outcome, not diverge from it.
- evandijk70 10y ago
  If this were always true, it could very easily be turned into a profitable betting strategy.
YeGoblynQueenne 10y ago
>> I'm guessing if you looked at all the 85% predictions, about 15% of the time the other outcome happened. That's what 85% means, after all. That's what 85% probability means. In this context the 85/15% is not a probability - it's a prediction representing the educated guess of a bunch of people about the actual probability. Which is to say, the probability of people being right or wrong about an event's probability is not the same as the probability of that event.

wyldfire 10y ago

I agree with your logic but perhaps they consider the magnitude of the actual Brexit referendum vote to refute the prediction 'stay' likelihood of 85%. I don't know how close the election was (IIRC it was fairly close), I'm just stating that many people might consider a landslide in the other direction to mean that the prediction was flawed. OTOH maybe people misinterpreted the 'stay' likelihood itself as the ratio of the predicted popular stay vote and that would explain it too.

HSO 10y ago
It was very close, something like 51:49. The predictions circulating before the vote may have influenced the result. Apparently more Remainers would have bothered to vote if the predictions had not been so clearly in favor of Remain. It's a tragedy, really, that something so important would be decided on so flippantly. This, by the way, is another weakness (or limitation) of prediction markets. They should probably not be applied to matters where the prediction interacts with the "predictee" lest you enter a "Keynesian beauty contest".
- hueving 10y ago
  Or more of the exiters would have voted if they weren't discouraged by being told it was a big loss. That sword cuts both ways.
  - deleted 10y ago
    [deleted]
  - verbify 10y ago
    Biased sample here, but I spoke to multiple people with 'bregret' - they told me they only voted for brexit because they thought it wouldn't happen and wanted to stick it to the man. The stupidity of these people boggles my mind, but there you have it. And nobody predicted a big loss - it was going to be close either way.
- xamuel 10y ago
  >a tragedy that something so important would be decided on so flippantly If so, it was an even bigger tragedy when the UK joined the EU in the first place, there was NO vote for that.

vegabook 10y ago

The nuance though is the direction in which the market moved. On the day, the market went from 20% for Brexit in the morning to 10% by the evening for Brexit. And this trend had been in place for about 10 days (ie Brexit losing ground). So you'd think that as an event draws closer, the prediction odds would tend towards the outcome, not diverge from it.

evandijk70 10y ago
If this were always true, it could very easily be turned into a profitable betting strategy.

YeGoblynQueenne 10y ago

>> I'm guessing if you looked at all the 85% predictions, about 15% of the time the other outcome happened. That's what 85% means, after all. That's what 85% probability means. In this context the 85/15% is not a probability - it's a prediction representing the educated guess of a bunch of people about the actual probability. Which is to say, the probability of people being right or wrong about an event's probability is not the same as the probability of that event.