What do prediction markets add that polls don’t? Is there any history of them being more accurate than polling-based models such as 538’s? To the extent they are relevant my intuition is that it would be as to the lesser-known candidates, where the type of person participating in prediction markets has priced in info the average voter doesn’t have. But where average voters do have more complete information, I would rely exclusively or at least more heavily on polls.
For one thing, it’s not clear how to translate polls into probabilities. Let’s assume for sake of argument that when Jack is at 5% in the polls and Jill is at 4%, then Jack is necessarily more likely to win the primaries than Jill. But we still don’t know: how much more likely? What are their probabilities of victory? Translating the polling into expectations (which is necessary for calculating expected value) is difficult. Better to let the prediction markets do that efficiently than to rely on my own guess.
Second, prediction markets take into account lots of other information besides the superficial polling numbers, like: who are voters 2nd and 3rd choices? Which candidate has more momentum? Which candidate is doing best in Iowa/NH? Who has more money? etc.
The reason prediction markets ever tell you something different from the polls is because they are taking into account issues like the above. Their track record is very good as I understand.
What do prediction markets add that polls don’t? Is there any history of them being more accurate than polling-based models such as 538’s? To the extent they are relevant my intuition is that it would be as to the lesser-known candidates, where the type of person participating in prediction markets has priced in info the average voter doesn’t have. But where average voters do have more complete information, I would rely exclusively or at least more heavily on polls.
For one thing, it’s not clear how to translate polls into probabilities. Let’s assume for sake of argument that when Jack is at 5% in the polls and Jill is at 4%, then Jack is necessarily more likely to win the primaries than Jill. But we still don’t know: how much more likely? What are their probabilities of victory? Translating the polling into expectations (which is necessary for calculating expected value) is difficult. Better to let the prediction markets do that efficiently than to rely on my own guess.
Second, prediction markets take into account lots of other information besides the superficial polling numbers, like: who are voters 2nd and 3rd choices? Which candidate has more momentum? Which candidate is doing best in Iowa/NH? Who has more money? etc.
The reason prediction markets ever tell you something different from the polls is because they are taking into account issues like the above. Their track record is very good as I understand.