Watch, in particular, how the Obama "winner-take-all" price has changed over the last month.
Some firms are setting up prediction markets internally, and we'll hopefully get a chance to talk about why in Advanced Managerial Econ this term.
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It would be interesting to compare the predictive results and real-time spread between IEM.com and http://www.intrade.com/
I agree. There are some restrictions on arbitrage, because Intrade doesn't accept trade from the US. But you'd think if the spreads got too big, someone from outside the US would arbitrage them. I think Obama has been trading lower on Intrade basically all summer, but I don't know if that's still true.
The problem is that Politicians don't like, or appreciate these markets, remember PAM?
Seems to me like a huge mistake to me.
I guess that is why Krugman got the Nobel, because politics = economics. Do you think the Swedes are sending us a message? Maybe Thomas Sowell will win it next year.
The Swedes may have an agenda, but there's no question that Krugman is worthy of this Prize. He made fundamental contributions to our understanding of international trade. Plenty of people disagree with Krugman's "public intellecutal" writings in the NYT, but I think most economists would agree that his scholarly contributions have been enormous. Sowell is well known as a public intellectual, but his impact on scholarship has been small.
It's not obviously the case that the Prize committee is biased against Chicago-School economists. Hayek, Becker, Friedman, etc, have all been honored, and deservedly so.
It's also not the case that the University of Chicago is as doctrinaire as many people believe. Roger Myerson, a current U of Chicago econ professor, shared the Prize last year, in large part for his work extending our understanding of how asymmetric information affects markets. The Tiltsoft/Rafe negotiation that I give as a problem in Fin 6025 is an illustration of the Myerson/Satterthwaite theorem --- the key insight is that asymmetric information can lead to bargaining failures even when it's common knowledge that there are gains from trade. This is a University of Chicago economist who won a Nobel Prize for proving that markets don't always allocate resources efficiently.
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