The latest news on Taegan Goddard's Political Wire
via Doug Milhous
"A ...* academic paper digging into presidential betting in the final
weeks of the 2012 election finds that a single trader lost between $4 million and $7 million placing a flurry of Intrade bets on Mitt Romney -- perhaps to make the Republican nominee's chance of victory appear brighter," the Wall Street Journal reports.
aha just as I suspected.
"The anonymous trader placed 1.2 million pro-Romney contracts, some of which were actually in the form of bets against a Barack Obama victory. The most plausible reason for the betting, the authors conclude, is that 'this trader could have been attempting to manipulate beliefs about the odds of victory in an attempt to boost fundraising, campaign morale, and turnout.'"
Mark Kleiman asked "Wha' Happened"
and I commented
- putting my tinfoil hat on, I have an Intrade odds guess. way back when the Intrade Obama odds were 60% the implied probability of an Obama victory was significantly higher at Betfair and Ladbrooks. There was an arbitrage opportunity (says Richard Thaler who should know). I had a guess that someone was manipulating the Intrade odds. It wouldn’t take much money (and the expected cost of manipulating odds is second order ). Intrade gets much more attention than other markets. All operatives agree that polls which would be good for a candidate if true helps** the candidate. Why wouldn’t some of Romney’s super rich maxed out supporters bet on Romney at Intrade (but not on sites which aren’t reported all over) ?The spike might be some market manipulator giving up.Paranoid ? Sure. But just because I’m paranoid doesn’t mean that some market manipulator has decided to cut his losses.
* mandatory "fair" use ellipses.
**I tries to conjugate and not add incorrect s's, but sometimes I just can't helps myself.