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Overcoming Bias Commenter's avatar

You're assuming a candidate wants to win. But what would happen if a successful candidate decides he wanted to cash in rather than win his election? For a candidate to lose his election is very easy - the odd racist or pro-pedophile comment "accidentally" slipped into a speech.

That's a very good point. Consider the history of sports betting. Now imagine if it were okay for a professional sports player to bet against himself. It's easy to throw a game, or just not score enough points to beat the spread.

Second, markets are subject to their own irrationalities; just consider the various stock market bubbles that sometimes occur. For that matter, why was there EVER a market for Beanie Babies as high-priced collectibles? When the "greater fool theory" becomes the primary justification for buying something, and there really are plenty of greater fools around, then individually rational behavior can become collectively ridiculous.

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Overcoming Bias Commenter's avatar

You're assuming a candidate wants to win. But what would happen if a successful candidate decides he wanted to cash in rather than win his election? For a candidate to lose his election is very easy - the odd racist or pro-pedophile comment "accidentally" slipped into a speech.

If the betting markets allow bets on percentage of the vote, not only on result, then even losing candidates may be more tempted to destroy their campaign for cash.

This could hugely undermine the effectiveness of betting markets, even with disclosure and insider trading sorted. A candidate bet against himself may be a hedge, a preparation for the self-imollation of his campaign, an attempt at publicity, or maybe a superstitious gesture. Each carries very different meanings, and interpreting them depends on knowing the inner mentality of the candidate, something that is practically impossible. This would dilute the reliability of the betting market, especially if the bet is large.

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