Presuming Bets are Bad

Justin Wolfers:

In recent months, there have been millions of dollars bet in options markets, as traders seek a big payday in the event that the economy heads south – and this hasn't raised an eyebrow. But when an Aussie bookie began offering bets on whether the Australian economy is headed for recession, he stirred up a bit of strife.  Federal Treasurer Wayne Swan called the bookie's actions "utterly irresponsible." The contrast between the Treasurer's response to financial trades and bookies' bets provides a nice example of how people respond differently, depending on how a bet is framed.
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  • frelkins

    That the Honorable Swan would loudly distance himself from the actions of a “bookie” makes sense — when you recall Swan himself was once investigated for a campaign contribution he made. With this taint on his record, it is in his interest to separate himself from all the connotations of financial shenanigans associated with the term “bookie” or anything on a sports betting site.

    This just re-inforces the fact that prediction markets will not be taken seriously until the separate themselves from sports betting sites, and stop formatting their websites to look like sports betting sites.

  • James Andrix

    And it is considered responsible to make longshot high payoff bets that close family members will die unexpectedly.

  • nolrai

    And it is considered responsible to make longshot high payoff bets that close family members will die unexpectedly.

    That is a very good point.