Betting market in how long the shutdown will last

by on October 3, 2013 at 9:28 pm in Current Affairs | Permalink

There is one site here, American Civics Exchange, with a real money payout for the top predictor, the mean consensus says 18 days.  I am not sure how liquid this market is.

For the pointer I thank Chris F. Masse.  Chris also sends along this site on prediction markets.

1 Darren October 3, 2013 at 11:24 pm

How valuable is a betting market if the information doesn’t exist. I mean, exactly what information is supposed to inform this kind of bet. Sounds more like garbage in, garbage out in my opinion.

2 Adrian Ratnapala October 4, 2013 at 10:50 am

Government workers will have some about how long their jobs can go undone before anyone notices. They will have somewhat less information about whether such noticing will turn into votes. Perhaps more information can be gained if there were spot-bets about the time-to-failure (if any) of particular services or social institutions that surround them.

3 Martin-2 October 4, 2013 at 5:12 pm

Interesting that people are betting despite not having any information. Do you accuse them of economic irrationality?

4 Martin-2 October 4, 2013 at 5:14 pm

… which would be fine. People play the lottery after all.

5 Rich October 4, 2013 at 12:10 am

Another “wisdom of the crowd” betting market?

6 JWatts October 4, 2013 at 2:55 pm

I would have gone for 3 days, so that crowd is “wiser” than me. Ok, smarter is a better word. ;0

7 Dan Lavatan October 4, 2013 at 12:25 am

This site isn’t useful because it assumes the majority pre-October operations will be resumed rather than the remainder of the government operating on revenues or with a much smaller deficit.

8 prior probability October 4, 2013 at 6:41 am

What shutdown?

9 Z October 4, 2013 at 8:36 am

This is more like a raffle than a prediction market. All we know is it will end. The longest shutdown in the free money era was 21 days. Given the characters involved this time, that would be a good outer limit. That leaves 18 potential winning tickets. My bet, as it were, is the most popular picks will be 7 and 13 as we see with other such lotteries.

10 Mark Thorson October 4, 2013 at 10:13 am

Heck, no! This one will be a record breaker. The winds are blowing just right for a perfect storm. I’d say the sweet spot is realistically 60 to 90 days, but I’m hoping for 6 months. A year is probably too optimistic, but I can dream, can’t I?

11 T. Shaw October 4, 2013 at 12:47 pm

It can’t be a rational market. There are congressmen involved.

12 Mark Thorson October 4, 2013 at 11:07 pm

I’m betting on it! Well, not yet. But I’ll look into it.

13 JWatts October 4, 2013 at 2:56 pm

That’s just irrational exuberance talking.

14 Mark Thorson October 4, 2013 at 11:23 pm

We shall see. I expect it will be a lot longer than anybody (except me) thinks right now. The longest battles are those in which both sides go into it expecting for rational and logical reasons that they must win.

Yes, that’s right. You will win. The American people are on your side. You just have to hang in there. Don’t compromise a minute short of the other side collapsing!

15 Steve R October 4, 2013 at 11:58 am

Sounds more like a hedge market.

16 Ryan October 4, 2013 at 3:12 pm

It is not clear to me how they can calculate a mean consensus based on the underlying bets, given that one of the betting options is open ended (i.e. “More than 2 months”). How do they assign a value to that in a way that it can be averaged with the odds placed on the other options? I tried looking through the site but did not find any explanation of how the “mean consensus” is calculated, but maybe I missed it.

17 Flip Pidot October 4, 2013 at 3:28 pm

Good question, Ryan. This was a judgment call. We plugged 75 days into the “> 2 months” category for mean consensus purposes. Since there’s (hopefully…) a relatively small chance of the shutdown dragging on longer than 2 months, this assumption doesn’t make a huge difference. Currently, if you swap in 90 days, it doesn’t move the needle more than a rounding error. But indeed, if enough of the traders buying the > 2 Month contract believe it will drag on much longer, then we’d be understating the market consensus to some degree.

18 DK October 5, 2013 at 3:02 pm

“As the partial U.S. government shutdown enters its fifth day, House Democrats and Republicans agree to retroactively pay 800,000 furloughed federal government workers.”

Full pay for not working – what’s not to like? Bet on longer shutdown.

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