Internet market predictions
By David Leonhardt
By now, many political junkies know the recent history of prediction markets. In 2004, the election-morning odds at Intrade, one of the best-known prediction markets, correctly forecast the presidential election in each of the 50 states. (In other words, President Bush won every state where traders gave him than 50 chance of winning — and the same was true of John Kerry.) In 2006, the Intrade odds correctly called each Senate race. These odds are not perfect, of course. This year, for instance, they appeared to be as wrong about the Democratic primary in New Hampshire as the polls and the experts were. But some economists who have studied these markets think they are, on the whole, more accurate than either pundits or polls. In essence, the market attempts to synthesize all the information that’s out there. So what are they saying on the eve of the 2008 election?
