Market failure
Just recieved the latest report from iPredict. I continue to be astounded that Internal Affairs have given them permission to run this betting agency. Anyway, iPredict isn't perfect - example 1:
89% certainty the election will be on 26 November as planned. Has it escaped people's attention that the two support parties to the government are in melt-down? That the Nats have everything to gain and nothing to lose if they go early? The only thing standing in the way is the budget. And that will be read on the 19th and the legislation rammed through shortly thereafter as per - so that could be quite soon. The PM doesn't really have to do that much conjuring to make up a reason either - it's all in open sight: "coalition instability." The spectre of a Don Brash and Roger Douglas party to the right - with Rodney mandateless as a quasi-independent clinging to the baubles of office - and to the left the Maori Party who just booted out Hone and who face electoral oblivion. What a cocktail. Is this stable?
How stable is it when Te Ururoa Flavell has just posed questions in parliament this afternoon to the Minerals Minister (but answered by Finlayson) saying a NZ official is at a mining conference and is trying to delete the indigenous rights provisions in the text? How stable is it when he asks whether it is consistent with "Cabinet support" and intimates the Nats are in breach of their support agreement? What do you think he's hinting at? Maybe the Maori Party have woken up and realised unless they start opposing things and break with National they will be wiped out. That scenario is not 89% certainty I would have thought.
Why iPredict isn't perfect example 2:
Is there not enough information on the Maori electorates and their constituents for the Wellington politicos to understand what is happening? There is no way Sharples or Flavell are now in safe seats as iPredict's shonky "market" would indicate. While Sharples has no named contender for Tamaki Makaurau, Matt McCarten's union muscle and organisation will blitz Auckland and puts the personable Shane Jones as front-runner in a potential three-way contest with a Mana candidate. In Waiariki, Te Ururoa is in deep trouble and Annette Sykes has launched early salvos, mopping up the disillusioned Maori Party organisers and supporters. Labour's Louis Te Kani does not feature in this race - he lacks any profile. Only Tariana's seat could be arguably safe - and even then, because so much of the seat is in Waikato and King Country (away from her Whanganui base), that may be considered marginal too.
posted by Tim Selwyn @ 3:34 pm
4 comments
4 Comments:
"I continue to be astounded that Internal Affairs have given them permission to run this betting agency." - Why?
There are two possibilities if the information you mention is as widely available as you suggest:
1) either that information has already been priced in by the market and the probabilities reported reflect it (plus any other information that exists... perhaps you're an outsider and don't have that information yourself)
2) or you are an insider and have information that others do not. As such you should be putting your money where your mouth is, so to speak, and contributing to the updating of the probabilities reported. If you haven't done this, then we readers ought put little weight on the strength of your convictions. Or perhaps you're just incredibly risk averse (that wasn't meant to be an economics-style "oh you big chicken" jibe, btw).
James, astounded it is legal because it is gambling and if you read all the legislation it is a criminal offence. It is inherently prone to insider trading.
2) I am saying the market - the Wellington politicos - are not well informed on Maori electorates. As for your suggestion:
"As such you should be putting your money where your mouth is, so to speak, and contributing to the updating of the probabilities reported. If you haven't done this, then we readers ought put little weight on the strength of your convictions"
It doesn't make sense. Firstly you assume I haven't put money on it - although that is correct. Secondly the strength of my views can be measured in what I'm saying, not participating in a system I have criticised.
Aaah deary me! Oim jiss so prhour ta hev Jorn as hour proim minsta. Gone forwad...heese thoneleigh turntiff.....fect: TINA!!!! Speshleigh his pufforminince on Hahhh Tork!
Jorn: luv ya longtime.
And you demonstrate. yet again, that you just don't understand any economics.
This isn't a "market failure" this is the market working exactly how it's meant to.
There is a price. If you think it's wrong, you can buy and then sell and make a profit. The market provides and incentive to use the difference in information to move the price to a more accurate place.
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