I’m not a fan of investment advice on LessWrong. If these markets are significant (they aren’t—there’s just not that much money changing hands, and the fees and terms make it unattractive to pro bettors), there’s something to explain, before advising to exploit.
I think you’re well off the mark when you claim that “rationalists … have faith”.
This is extremely false; I know of multiple professional political bettors, and plenty more who make 5+ figures betting on election years. Also, PredictIt has $113m matched on the “Who will be the next president?” market alone, which is a lot of money by any reasonable standard…
The explanation for the mispricing is really simple: Trump supporters tend to think that the polls are rigged and he’ll win, and Biden supporters tend to think the polls are off/Trump will rig the election/voter suppression will cost them the election/ etc etc so 90% of the square money is on Trump and there’s not enough sharp money to balance it out. Elections are just too infrequent for biased bettors to lose money quickly enough that prices are efficient, and it doesn’t help that Trump unexpectedly won the 2016 election, transferring a lot of money to biased bettors.
If it’s that obvious, though, why does it persist? Elections might not be frequent enough to bankrupt the sources of dumb money, but why have the pros not eaten it up by now? Even if there aren’t that many of them, and despite their skills they’re not very rich yet, why haven’t the people who do have enough capital to bring the markets back to their senses got involved?
That’s a good question; I assume it’s because they don’t have enough domain expertise to make a confident judgement about the market, and they have more valuable things to do with their time than acquire that expertise.
it doesn’t help that Trump unexpectedly won the 2016 election, transferring a lot of money to biased bettors.
I mean they got the answer right so it seems a little arrogant to call them biased. Maybe they just had a good heuristic to do with preference falsification?
Prices have been biased towards the GOP ever since 2016, and I’m pretty sure it’s because most of the Trump bettors in 2016 were GOP partisans rather than sophisticated analysts. “Maybe they just had a good heuristic to do with preference falsification?” what does this mean?
I do know a number of professional bettors (poker and sports/horse, not political), who are only lightly betting on the political sites—the terms and vig are very unattractive to them.
I stand corrected if there’s $113M on that specific bet, though—that’s enough (presuming it’s fairly active, not all placed months ago and just forced to resolve rather than hedging/adjusting) to indicate pretty broad belief. That does change it from “small-stakes very likely exploitable” to “reasonable stakes, but one should answer WHY there’s a discrepancy before committing very much”.
Have you actually tried checking with anyone resembling a ‘pro bettor’? I predict the majority of them would say the bet is in fact attractive and you should put money on Biden. I see one person in the thread who is known for regularly making money betting on things other than stocks (Zvi). He said ‘yes the odds are insane at this point’.
Terms are actually better right now outside of Predictit but Americans cannot legally use those. I have not look into all the options for getting millions into the markets (I do not have that kind of money). But you can certainly bet hundreds of thousands of USD easily if you are not American. This seems more than sufficient to be attractive to pro bettors. The things you list in parenthesis do not explain the current situation.
I’m not a fan of investment advice on LessWrong. If these markets are significant (they aren’t—there’s just not that much money changing hands, and the fees and terms make it unattractive to pro bettors), there’s something to explain, before advising to exploit.
I think you’re well off the mark when you claim that “rationalists … have faith”.
This is extremely false; I know of multiple professional political bettors, and plenty more who make 5+ figures betting on election years. Also, PredictIt has $113m matched on the “Who will be the next president?” market alone, which is a lot of money by any reasonable standard…
The explanation for the mispricing is really simple: Trump supporters tend to think that the polls are rigged and he’ll win, and Biden supporters tend to think the polls are off/Trump will rig the election/voter suppression will cost them the election/ etc etc so 90% of the square money is on Trump and there’s not enough sharp money to balance it out. Elections are just too infrequent for biased bettors to lose money quickly enough that prices are efficient, and it doesn’t help that Trump unexpectedly won the 2016 election, transferring a lot of money to biased bettors.
If it’s that obvious, though, why does it persist? Elections might not be frequent enough to bankrupt the sources of dumb money, but why have the pros not eaten it up by now? Even if there aren’t that many of them, and despite their skills they’re not very rich yet, why haven’t the people who do have enough capital to bring the markets back to their senses got involved?
That’s a good question; I assume it’s because they don’t have enough domain expertise to make a confident judgement about the market, and they have more valuable things to do with their time than acquire that expertise.
I mean they got the answer right so it seems a little arrogant to call them biased. Maybe they just had a good heuristic to do with preference falsification?
Prices have been biased towards the GOP ever since 2016, and I’m pretty sure it’s because most of the Trump bettors in 2016 were GOP partisans rather than sophisticated analysts. “Maybe they just had a good heuristic to do with preference falsification?” what does this mean?
Thanks for the data!
I do know a number of professional bettors (poker and sports/horse, not political), who are only lightly betting on the political sites—the terms and vig are very unattractive to them.
I stand corrected if there’s $113M on that specific bet, though—that’s enough (presuming it’s fairly active, not all placed months ago and just forced to resolve rather than hedging/adjusting) to indicate pretty broad belief. That does change it from “small-stakes very likely exploitable” to “reasonable stakes, but one should answer WHY there’s a discrepancy before committing very much”.
Have you actually tried checking with anyone resembling a ‘pro bettor’? I predict the majority of them would say the bet is in fact attractive and you should put money on Biden. I see one person in the thread who is known for regularly making money betting on things other than stocks (Zvi). He said ‘yes the odds are insane at this point’.
Terms are actually better right now outside of Predictit but Americans cannot legally use those. I have not look into all the options for getting millions into the markets (I do not have that kind of money). But you can certainly bet hundreds of thousands of USD easily if you are not American. This seems more than sufficient to be attractive to pro bettors. The things you list in parenthesis do not explain the current situation.