Here’s an election day update of my post on conditional futures. What do the markets say about stock returns, nuclear weapons use and terrorist attacks in the U.S., contingent upon the winner of the temporary dictator election?
Unfortunately not much of anything. The market cited below doesn’t use real money and trading is very thin. Consider the answers below meaningless, just for fun (as is this post’s title).
The Economists’ Voice published Experimental Political Betting Markets and the 2004 Election a few weeks ago, which describes a real money contingent betting experiment. Unfortunately the claims aren’t very interesting — they aim to capture the potential effect of events on the election outcome (e.g., one expects that the capture of bin Laden would give Bush a tremendous boost). I’m interested in how people expect the election outcome to effect future events.
Noise follows:
bid ask last
/ / /
46 57 47 http://www.ideosphere.com/fx-bin/Claim?claim=Bush04
Bush may not win.
41 47 43 http://www.ideosphere.com/fx-bin/Claim?claim=Stocks
25 28 50 http://www.ideosphere.com/fx-bin/Claim?claim=GBStok
50/.47 = 106 < 43
Bush win means much higher stock returns? However, bid and ask are much lower than last, so this must be the anomalous result of a very thin market. Taking the average of bid and ask:
26.5/.47 = 56 < 43
Bush win still means higher stock returns.
40 49 41 http://www.ideosphere.com/fx-bin/Claim?claim=GBNuke
40 51 44 http://www.ideosphere.com/fx-bin/Claim?claim=JKNuke
41/.47 = 87 < 44/.53 = 83
Bush win means slightly higher chance of US getting nuked?
70 72 71 http://www.ideosphere.com/fx-bin/Claim?claim=Terr10
30 69 30 http://www.ideosphere.com/fx-bin/Claim?claim=GBTerr
30/.47 = 64 > 71
Bush win means very slightly lower chance of terrorist attack in US?
Taking the average of bid and ask:
49.5/.47 = 105 > 71
Bush win means greater chance of terrorist attack in US?
Addendum 2004-12-07: I just noticed that David Schneider-Jones posted a deeper analysis of the Nuke-related contracts above on November 1.
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