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”.
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”.