Last week was good for Newt Gingrich in prediction markets (Originally posted on Yahoo!'s "The Signal" Blog)
DavidMRothschild on November 14, 2011 @ 5:55PM
Mitt Romney remained the clear frontrunner for the nomination with a 68.9 percent likelihood of winning, but Gingrich is the latest anyone-but-Romney candidate at 14 percent likelihood. The former speaker of the house benefited as Herman Cain's sexual harassment problems grew worse and Rick Perry had a memory failure at Wednesday night's Michigan debate.
It is not just me, political pundits, following the recent polls, are finally agreeing that Republican voters are taking a serious look at Gingrich. Yet, his 14.0 percent likelihood of gaining the nomination says less about Gingrich and more about Romney. Gingrich is the most recent person to take the largest share of the likelihood that Romney does not get the nomination, currently at 31.1 percent. Despite his time as speaker of the house, current Republican voters have not vetted him as intensely as they they have previous Romney rivals and, at 14.0 percent, it is still unlikely that he will be propelled to victory after they do.
DavidMRothschild on November 13, 2011 @ 1:29PM
In professional football the Green Bay Packers are undefeated half way through the 2011 season--and forecasters in the prediction markets give them a 27.8 percent likelihood of winning the Super Bowl. The new Twilight movie, The Twilight Saga: Breaking Dawn Part 1, opens next weekend--with the markets predicting a huge opening weekend box office receipt of about $152.9 million, with a running total of $318.5 million over the first four weekends the movie is out. There is about a 25-30 percent likelihood that the global energy and contracting firm Halliburton will see its stock price top $40 per share in a month's time. (It's currently trading at 37.21.) And in the global political arena, the markets give Ali Abdullah Saleh, the president of Yemen, a 25 percent likelihood of losing power before the end of the year.
All four of these above predictions are derived from different markets. The sports prediction from Betfair, the box office prediction from the Hollywood Stock Exchange, the stock prediction from the options market, and the political prediction from Intrade. All of these markets have different trading protocols, which can produce distinctive quirks in their prediction models. Among other things, different transaction costs shift incentives (and Hollywood Stock Exchange does not use real money) and different accounting procedures require different methods of calculating probabilities from pricing.
DavidMRothschild on November 09, 2011 @ 4:02PM
In the Senate elections, the campaign math is not favoring the Democrats. Simply put, Democrats have many more vulnerable seats up for grabs next November than Republicans do. Democrats control 23 of the 33 seats up for election next year—and at least six senators who caucus with the Democrats are going to retire, while two more Democratic incumbents have yet to confirm whether they will run for re-election. The number of Republican senators who are not up for re-election this cycle, meanwhile, is just two.
In the House elections, the 2010 Census looms over the 2012 elections—in a way that again favors the Republicans. In the first election after every census the government reapportions the seats between the states to reflect population shifts. In general, seats were lost in the Northeast and Midwest, where Democrats have traditionally performed well; and the Southeast and Southwest—traditional strongholds for the GOP--gained seats. Republicans control most of the state legislatures in the 10 states picking up additional House seats-- including 4 seats in the heavily Republican state of Texas--the new congressional districts will likely be drawn up with boundaries favoring the Republicans. That is the simplest kind of political math.