### Conditional Probabilities are Hard to Determine

One tempting thing to do with market-based probabilities of victory is to determine the conditional probability of candidate winning the general election; simply divide the probability of victory of getting the nomination by the probability of winning the general election! But, there are two serious problems with that: (1) most candidates have too much uncertainty in the probability relative to the absolute value, making the statistics poorly defined (addressed in this paper I wrote with David Pennock) (2) candidates do not win nominations independently of their probability of victory in the general election.

Only five candidates approach a 5% likelihood of winning the general election, so I will hold this article to them: Hillary Clinton (D), Marco Rubio, Donald Trump, Ted Cruz, and Jeb Bush (R).

The quick first pass is to go to PredictWise’s Presidential Election – Winner page and divide through the nomination column by the winner column. Here is what you get: Hillary Clinton 61%, Marco Rubio 42%, Donald Trump 38%, Ted Cruz 36%, and Jeb Bush 39%.

A second pass creates some bounds to this point-estimate by using the marginal bid and ask in each market within Betfair. By dividing the ask of the nomination over the bid of the winner market, we get the highest possible conditional probability. And, dividing the bid of the nomination over the ask of the winner market, we get the lowest possible conditional probability. This gives us: Hillary Clinton 59-61%, Marco Rubio 45-50%, Donald Trump 35-49%, Ted Cruz 40-49%, and Jeb Bush 43-51%. Three of the five point-estimates are outside of the ranges! This is because of the aggregating, rounding, and normalizing that takes the raw pricing data make the PredictWise values. This process inflates the probability of victory for the lower tier Republican candidates relative to their probability of winning the general election.

Of course, none of this deals with the updating that would occur should a candidate win the nomination. To win the nomination promises need to be made, skills acquired, and events need to transpire. This could ultimately bend the probability of victory out of this strict conditional relationship.

One thing is clear, even with the wide ranges of probable conditional probabilities; the Democratic front-runner is significantly above 50% likely to win the election conditional on winning the nomination and the Republican candidates are not.

Finally, there is nothing in Trump's conditional probability of victory to indicate a concern that he is likely to compete for the presidency should he lose the nomination.

### State of election markets: 345 Days

My condolences to the family and friends of the victims of the vicious terrorist attack on the Planned Parenthood in Colorado. This was the 5th major terrorist attack at Planned Parenthood since the release of the doctored videos of them in July.

As we drifted from 71 to 64 days until voting starts in Iowa, the Republican primary was relatively uneventful this week. Polling front-runner Donald Trump held steady in the polls and markets, but a series of statements and actions made for a volatile week in the markets for their second place candidate. Market front-runner Marco Rubio was almost completely out of the conversation all week, leaving the smallest crack open for Jeb Bush. Polling second place candidate Ben Carson moved from unlikely to almost negligible in the markets; as the Republican debate shifts to foreign policy, he is even less likely. This gave Chris Christie a small bump to still pretty much negligible in the markets. Meanwhile, Ted Cruz, continues to be the third most viable candidate in the markets despite being fourth in the polls.

On the non-establishment side, Trump had a violate week, but held steady in the markets in second place. Trump mocked a handicapped reporter (although he maintains it was handicapped people in general), continues to insistent that thousands of people in New Jersey celebrated 9/11 (despite that not being true), and otherwise just made stuff up. He held steady because he did not just stay solid in the polls, but actually climbed last week. That being said, he also made the establishment even more jittery about the potential damage he cause to the party if he got the nomination while simultaneously holding them back by threatening to run as a third party candidate if they coalesce against him. Hence, stable price, but a lot of volatility.

Cruz showed a steady rise as his poll numbers continue to climb. Cruz is in the same camp as Trump and Carson, in that he is a non-establishment candidate with a wild card personality. His support is strong, but not wide; he is a Tea Party candidate. The establishment will oppose him just as strongly at Trump or Carson, if forced.

On the establishment side, Rubio had a small, slow decline this week; the market front-runner barely registered in the discussion. There literally is not much to say about him, because there were no stories about him this week. The slight decline shows a concern over his inability to strike while the time is right. Bush holds on to viability as Rubio cannot close him out. Christie will not rise much higher than non-negligible, due to his lack of viability in the general election relative to Rubio or Bush due to his increasingly disastrous term as governor of New Jersey.

Vertical Lines: Nothing this week …

Sources: Betfair, Hypermind, PredictIt, http://www.predictwise.com/politics/2016RepNomination

Debbie Wasserman Schultz probably tried to have a debate on Thanksgiving, but was unable to get a sponsor! Seriously, nothing happened …

Vertical Lines: Nothing this week …

Sources: Betfair, Hypermind, PredictIt, http://www.predictwise.com/politics/2016DemNomination

The next debate is the Republican debate on Tuesday, December 15. The Democrats will meet on Saturday, December 19 (because, you know, everyone wants to watch politics on Saturday nights during holiday breaks).

### State of election markets: 352 Days

I cut the Republican chart down to five candidates this week; four of them have a non-negligible chance of winning the nomination and, because many consider him the front-runner, Ben Carson. On the Democratic side of the election, Hillary Clinton went from dominate to nearly unbeatable as polls showed her insurmountable lead over Bernie Sanders growing. The attacks on Paris dominated political news in the past week; the effect on the markets is weakened by continued uncertainty of their eventual impact on the political scene.

The Republican front-runner (in the markets), Marco Rubio, extended his lead this week by staying relatively quiet. He compared Islam to Nazism, but otherwise appeared moderate relative to Ted Cruz, Donald Trump, and Ben Carson. His ability to weave through the issue, look tough to the GOP base, but not say anything that will be too extreme for the general public, will only reinforce his image as the electable choice for the establishment. Jeb Bush, clinging to 9% likelihood, condemned some of Trump’s more inflammatory remarks, but then noted (along with Cruz) that he would let in only Christian refugees, with a somewhat characteristically floundering commentary.

The Republican front-runner (in the polls), Trump went for the extreme view on Islam in America. He, at times, called for (1) a database of all Muslims (or just immigrant Muslims?) (2) closing down mosques (or just spying on them?) (3) shutting down all refugees (no clarifications). While these comments will certainly be used as ISIS propaganda around the world, it is not clear how they will affect Trump in the GOP or even the general election here in America. While there is a strong liberal and centrist coalition that supports unfettered freedom of religion and helping refugees, judging by quick polls, that position likely represents a minority of the voting population. For instance 53% of Americans told Bloomberg they want no refugees, while a further 11% said we should accept on only Christians. This number mirrors earlier crisis; in 1938 67% of Americans opposed letting in any refugees from Nazi Germany and Austria.

Cruz also took a hardline this week, but was somewhat hampered by his own family’s immigrant status. 71% of Americans wanted no Cuban refugees in 1980, concerned about the mix of Catholicism and Communism. While his father immigrated some time before, it made for an awkward defense of eliminating immigration. Again, there is no reason to assume this will hurt him in the GOP primary, but like Trump’s stance, it will worry the establishment further about his electability in the general election. And make it more likely to will push hard for Rubio, who did so well by saying so little this week.

In general political news, the governor of New Jersey, Chris Christie, took a strong stance against orphans this week. He wants to ensure the government blocks Syrian orphans from being united with family in America. This follows his strong stance against nurses who went to help with the Ebola crisis in Africa. Seriously, he is still running for president and is the only other candidate not a 0%, but he is close!

Vertical Lines: November 10, 2015 debate.

Sources: Betfair, Hypermind, PredictIt, http://www.predictwise.com/politics/2016RepNomination

Barring a major catastrophe, Clinton will be the Democratic nominee for president.

Vertical Lines: November 14, 2015 debate.

Sources: Betfair, Hypermind, PredictIt, http://www.predictwise.com/politics/2016DemNomination

The next debate is the Republican debate on Tuesday, December 15. The Democrats will meet on Saturday, December 19; I will be unable to watch (just like Debbie Wasserman Schultz wants!) …

### Two very different views of the 2016 GOP primary

http://www.msnbc.com/msnbc/two-very-different-views-the-2016-gop-primary

The above link is to a story I wrote for NBC's new website: Data Points

### State of election markets: 359 Days

On a personal note, let me share my sympathy to the people of Paris in the aftermath of this devastating terrorist attack ...

Both parties debated this week and there was not much to show for it in the markets. The Republican debate was a draw for the major candidates; there was no meaningful impact on the Republican voters. The Democratic debate, at 9 PM ET on Saturday night, was designed to have no one watch, and it was the lowest rated debate of the season by far (half the next lowest rated debate). For those who watched, Hillary Clinton came in with a massive lead and nothing happened to shake that.

Marco Rubio, a distant third in the polls and a strong first in the market for the Republican nomination, had a solid debate on October 10. First, he stayed very focused on replying to all questions with snippets of his stump speech, regardless of the nature of the question. Thus, he was both passionate and made no mistakes. Fox News was happy to not challenge the candidates to answer their questions directly, after the blowback from the previous CNBC debate. Second, no attacks from other candidates stuck on him.

Donald Trump, first in the polls and second and the markets, had a reasonable debate. He has become much more polished as the season progresses and the debate showed that. While he had the occasional ad hominem attack and off topic snipe, for the most part he looked a lot more like a regular candidate. That is exactly what he needed to do.

Ted Cruz, fourth in the polls and third in the markets, had a good debate for the GOP voters. He was very forceful in his positions, like the USA returning to the gold standard. Unfortunately for him, success with the voters will bring problems with the establishment. The establishment is worried that (1) he is too extreme for them (2) he is too extreme to win the general election. Thus, his rise in the polls of Republican voters is fueling speculation the establishment will coalesce harder and earlier around someone else (i.e., Rubio) to ensure Cruz does not win the nomination.

Ben Carson, second in the polls and a distant fifth in the markets, had the weakest debate. He continued to impress the media with this confident, but wrong, statements. This time it was about the Chinese involvement in Syria. This may not be a problem with the Republican voters in the short run, but if there was a concern by another candidate or the establishment about him winning, the negative ads would be brutal. That is why the markets assume he has a negligible chance of ultimate victory.

Jeb Bush, remember Jeb Bush, had a fine debate. He is fifth in the polls and fourth in the markets. If they establishment needs a candidate today, Rubio is going to beat out Bush. If they can wait until next year, Bush has a little time to prove that Rubio is not the person they are looking for.

Vertical Lines: Republican debate on Tuesday, October 10

Sources: Betfair, Hypermind, PredictIt, http://www.predictwise.com/politics/2016RepNomination

The Democrats had a debate on Saturday, November 15; no one watched. That was goal of the Debbie Wasserman Schultz, Chair of the Democratic National Committee. The idea is that no visible debates would ensure that Clinton does not get damaged by the debate process. Unfortunately, it also gives Democratic voters very little visibility into the other two candidates in the race, Bernie Sander and Martin O’Malley. It also means that the general election voters cannot get an easy comparison between the slate of Democratic candidates and the slate of Republican candidates.

Vertical Lines: Democratic debate on Saturday, October 14

Sources: Betfair, Hypermind, PredictIt, http://www.predictwise.com/politics/2016DemNomination

The next debate is the Republican debate on Tuesday, December 15. The Democrats will meet on Saturday, December 19, because tons of people will be home to watch a debate on the Saturday night before Christmas. I assume there was some sort of logistic hurdle to organize a Christmas night debate?