A couple of post-election thoughts

  1. The left has not learned the right lesson.
  2. What the hell is up with Predictit?

Trump was the perfect Madisonian teachable moment. A horrifying figure who I wouldn’t trust to watch my drink while I got up to hang my coat. The lesson should have been clear: scale back the power in the Oval Office. But now that the pendulum has swung the other way, they “are urging him to follow President Trump’s example”. This is why we can’t have nice things.

Meanwhile, in a world where people are putting their own money on the line, people are still holding out hope that Trump will win the election he just lost. The market for predicting the winner of the presidential election has 10’s of thousands of transactions and places the probability that Trump or Biden wins at 103%. As an economist I find it disconcerting that I can still buy contracts of “Biden to win” at 88 cents. The lesson I’m taking away is that (at least when Trump is involved) there’s a wide margin of error on how accurate the prediction market estimate is.

4 thoughts on “A couple of post-election thoughts

    • There’s that then there’s the weird sensation of finding myself wanting to day trade on dillusion. And how could I ever have guessed that prices are moving in the opposite direction of all apparent evidence?!

  1. After a bit of digging, I’ve learned two interesting facts about Predictit:

    1. each contract has a limit of 5000 participants (e.g. “Biden will win the election” is a separate contract from “Trump will win” though both are in the same market).
    2. each participant can’t put more than $850 on the line.

    This means that I was lucky to get into the “Biden will win” contract early. But I can only push the demand curve out so far. There is a bit of price fluctuation, but there’s no possibility of a big player pushing the market towards equilibrium. Apparently there are enough people in that group of 5000 willing to eat losses by holding “Biden to lose” at 10 cents rather than selling.

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