MSM Takes On Possible Intrade Manipulation (Two Very Interesting Articles)

[jsmirman]

Last edited Tue Oct 23, 2012, 08:10 PM - Edit history (1)

I apologize - I totally forgot to analyze the composition of the intrade market - its size and stability or lack thereof, whether it moves differently closer to an election or not, etc.

Most specifically, I had not looked into whether its size left it easily manipulated - these two articles explore that question.

I do think it is entirely possible that Romney fans or Romney-aligned folks or the Romney people, themselves, are responsible for a manipulation this morning - which would be just what a campaign like Romney's would do if they were trying to sell a theme of momentum and their guy just got utterly taken to the woodshed hours ago in the third and final debate...

First:

http://www.theatlantic.com/business/archive/2012/10/should-presidential-campaigns-spend-more-money-manipulating-intrade/264000/

DT: What just happened?

JW: At around 9:57am this morning, I noticed something funny happening on InTrade: Obama's stock was tanking, and this was happening in the absence of any concrete political news. Barnard College's Rajiv Sethi alerted me over Twitter that this was really due to some unusual trades in the Romney stock (which then ultimately affect Obama).

In the chart below, you can see this very clearly: Romney's stock shot up from 41 to 48 in a matter of minutes (suggesting that his chances of winning the election had risen from 41% to 48%).

(chart)

To be clear: We don't know what caused this. It may have been an attempt at manipulating the market. It may also have been a trader with fat fingers making a mistake. But the fact that the uptick took several minutes, rather than occurring instantly, suggests that perhaps it wasn't fat fingers. It still may have been some other form of naive trading. Remember: When you're buying a stock, you want to minimize the extent to which you bid the price up, because that only makes it more expensive for you. These trades did the opposite. It's hard to think of a way of having a more immediate impact on the price.

Second:

http://themonkeycage.org/blog/2012/10/23/is-positive-news-from-intrade-a-good-use-of-campaign-resources/
(The Monkey Cage is Time Magazine's 2012 Best Blog)

I wrote a post last week about the link between the cost of an “Obama wins” futures contract on Intrade and Nate Silver’s 538 blog’s probability of an Obama victory. At the time, the two had converged almost perfectly. Since then, however, a gap has opened up between the two: Silver’s model now gives Obama a 70% chance of winning, but Intrade is down to a 57% chance (and, interestingly enough, Intrade has gone down 3% since Obama “won” last night’s debate.)

Monkey Cage Reader Jason Clarke also noticed this divergence and emailed me with three possibilities that could be explaining it...

Pretty interesting stuff.

[teddy51]

1. So does this leave any doubt about the levels that these guys will go to to make sure

that Romney becomes President? I don't think so!

[jsmirman]

2. Man, it's like common sense gets ignored around here

WHAT IS GOING ON WITH INTRADE!!!????!!??? thread gets 14 replies, this, nothing.

[demwing]

3. 1. I didn't use all caps

So I didn't scream or panic. I just asked a question, apparently the very same question that was posed by the authors of the pieces you cited. Please don't try to make it sound as if questioning obvious shenanigans somehow lacked common sense. It was just the opposite, in fact. Believing those numbers at face value would have been wrong and silly.

2. I thanked you for your post and even offered to promote it. I was very appreciative.

3. K&R. This is me keeping my word.

[jsmirman]

4. I got your message - the fault may, indeed, have been with my dreary title

rather than with the board.

[demwing]

6. lol, it was a bit...

"mainstreamish"

[jsmirman]

7. I'm usually pretty on-point with my titling self-promotion, too

Thanks for the suggestion.

In answer to your other question in your thread, I can't promise you that we are going to win, but I am feeling pretty damn confident that if we work hard these last two weeks and keep up the fight, we are going to kick their asses. And I mean not in a squeaker. But I also believe the game is still up for grabs in the last two weeks.

Here are a few things that make things hard to predict:

1) The technology of campaigns and campaigning from '08 and this election do not resemble what was available in all prior elections

2) The Dem base is wider today than in the past, partially because of an evolution in the Dem party and partially because of what alienating misanthropes the Republicans are (driving away Latinos, women, social liberals, any remaining LGBT supporters)

3) The Democrats no longer resemble a man fumbling for the light in a pitch dark room

and (on the downside)

4) No one knows how much the money the GOP and all their dark money tentacles have started flooding the ad markets has and will impact the election

5) No one knows just how overwhelming the final two-week GOP ad dump is going to be or if it will be effective

6) Voter suppression is a delightful wildcard that the party of the "Right" is playing as hard as ever.

So, anything can happen, but I believe we are in a very good position.

[jsmirman]

5. Kick - two more articles you should read besides the one in Skidmore's thread

(see above)

(skidmore's thread: http://www.democraticunderground.com/10021618266)

[yellowcanine]

8. If true this would be a good thing because those betting on Obama will take the money of the Romney

betters. I can live with that.