Tuesday, September 18, 2012

Obama with Large Lead in Presidential Prediction Markets

While public opinion polls tend to show President Obama with a fairly narrow 3-6 point lead over Mitt Romney (see here), the incumbent's reelection is virtually certain (barring huge changes in the state of the world between now and election day) according to Intrade, the leading presidential prediction market. As of today, Romney holds only a 32.5 chance of unseating the president (see here, here, and here).

Presidential prediction markets operate essentially like sports betting houses, establishing probabilities (or odds) of election outcomes based on what individuals are willing to pay to purchase prediction shares in candidates. Social science research has found that prediction markets tend to be substantially more accurate than opinion polls, especially months ahead of the actual election (see, e.g., here).

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