The crowd bets
April 27, 2010Jon Brooks Comments OffEver check out Intrade? It’s an online futures market, currently made up of 102,000 members, where you can bet on the outcome of a particular occurrence, giving or taking the odds that the market itself has set. People who subscribe to the “wisdom of crowds” theory often check the site to see what the “market” believes will be the outcome of something in the news.
For example, is Sarah Palin going to be the Republican nominee in 2012? Here are the odds over time that the members of Intrade have set by virtue of their betting. The chart shows the market makes Palin’s odds at about 25%.
Will the U.S. economy enter another recession in 2010? The market speaks:
As you can see, the market has deemed the chances of recession this year to be about 11%, a considerable decrease from the beginning of 2009, when the odds were pegged at about 45%.
What about the odds of a severe stock market crash? The market puts the chances of the Dow closing at under 6500 by the end of the year at just 10%.
Other events you can bet on:
- Will the U.S. establish a cap and trade emissions system by the end of this year?
- Will AIG repay all its TARP funds by the end of the year?
- Will California experience a “credit event” (bankruptcy, default, debt restructing, etc.) by the end of the year?
And what are the odds that you’ll lose your shirt betting on stuff like this?
Higher than 50%, I’d say…
