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‘Erratic’ used again in McCain connection

October 20, 2008

This time, though, it's not Barack Obama using that word to describe his opponent.

Rather, moves of the online trading exchange Intrade have been called erratic of late.

The reason? Intrade tracking recently defied political polls and predicted that John McCain will win the presidency next month. (Although, if I'm reading the site's data correctly, it looks like that's changed.)

The McCain preference raised questions as to whether there had been market manipulation; that somehow McCain was being favored by artificial means.

The New York Times says that Intrade's chief John Delaney conceded there had been erratic behavior, including spikes in the direction of McCain and away from Obama "by up to 10 points."

Delaney also told the paper that "trading that caused the unusual price movements and discrepancies was principally due to a single 'institutional' member on Intrade."

That someone is trying to game the system to give McCain some momentum seems to be the most rational explanation.

"Increasing a candidate’s perceived standing would be something of value to offset the irrational decision to waste money buying a share in Mr. McCain for more than the absolute minimum price," notes writer Noam Cohen.

The Opinionator blog also takes a look at McCain's Intrade "value" in Cheating the Spread.

How does Intrade work? The company's Web site says:

You can use our platform to learn new trading skills, and be part of the leading community that predicts the future. … Buy the events that you think will happen, just like buying a stock. The price then equals the probability that the event will happen. Or Sell the events you don't think will happen.

In addition to politics, Intrade offers several other trading categories, such as:

  • Financial, where you can predict a new high for the Dow,
  • Legal, where you can speculate on Samuel Alito becoming the next Chief Justice, and  
  • Weather, now taking picks on 2008's average global temperature.

It's all bit much for me. I'm limiting my selections to Texas lottery numbers!

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Comments
  • Taxrascal
    18 years ago Reply

    It’s interesting that although Intrade is fairly complicated, it can really simplify your life in a few ways. When I don’t have time to read polls or the news, I can get a very quick summary of how well each candidate is doing by looking at the odds. And if I worried about my taxes under Obama, or my tax credits under McCain, I could hedge with political futures and sleep well at night.

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