PredictWise Blog

Prediction Markets and the UK Election

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In the final stages of the UK election on May 7, 2015 the polls showed Labour in the lead for seats. It is reasonable to say it was a statistical dead heat. Despite the polling, prediction markets had the Conservative party over 65% to get more seats than Labour every day from March 10, 2015 onward.

To be clear, Labour never had a majority of the seats in the polling (neither party did) and, with several parties and the prospect of a coalition, determining who would take power was non-trivial. So, FiveThirtyEight, YouGov, and others created complicated models and determined possible coalitions. I cannot determine from their sites a direct probability of government for each party, but prediction markets certainly provided that for me. Prediction markets gave the Conservatives 55% to hold the government (coming from both Betfair and HyperMind markets) on the eve of the election, despite polling showing them not even getting a plurality of the vote.

I do not have the time to build models for every: political, entertainment, sports, and economic outcome, and prediction markets consistently do as well or better than the best modelers (even mine). To be clear, I am a huge fan of the modeling that FiveThirtyEight, YouGov, and others do to translate polling into predictions. I do it myself for USA elections, Oscars, and few other events. But, prediction markets crowd source many models, from many people, who are willing to bet real money on their information.

Prediction market-based forecasts are scalable because in exchange for expected winnings users do a lot of work aggregating information. Prediction market-based forecasts are timely because in exchange for expected winnings users do a lot of work in getting information into the market quickly. Prediction market-based forecasts are flexible because in exchange for expected winnings users do a lot of work in answering all types of questions and on all types of outcomes. Prediction market-based forecasts are accurate because in exchange for expected winnings users do a lot of work in ensuring that they incorporate all of the most accurate information available, and then some more …

NCAA Men's Basketball - March 30

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Kentucky is 55% to win the tournament, same as they were before the Elite Eight. They did not look dominate so advancing a round was not as helpful as it should!

NCAA Men's Basketball - March 28

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1) Kentucky is 55% to win the tournament, up just 11 percentage points from the start of the tournment.

2) The other three games are all pretty tight. Michigan State is a 58% favorite, Duke is a 57% favorite, and Arizona is a 52 favorite.

NCAA Men's Basketball - March 26

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1) Of the three top seeds left, Duke is the most at risk.

2) Wichita State (7) v. Notre Dame (3) is the tighest pick with the market-based forecasets at 54% for Wichita State and the FiveThirtyEight's model at 53% for Notre Dame.

3) Two (7) seeds are favored over (3) seeds!

NCAA Men's Basketball - March 22

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Day 3 was another day of top-seeds or expected favorites winning ... will the exception of the top seeded Villanova. This is a huge blow to the FiveThirtyEight predictions which had a big weight on Nova: a 16% likelihood of winning the tourney going into the round of 32 (12% going into the round of 64). Prediction market-based forecasts were half of that.

In the game-by-game predictions for Sunday, March 22, the market-based PredictWise forecasts are again similar to FiveThirtyEight today ... But, keep on eye on Maryland v. West Virginia where  PredictWise's live predictions are ont he other side of the outcome.