There's a big difference between statistical models and prediction markets this US election; and it's a puzzle why this is happening. Some guesses:
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... but even still the crypto PMs roughly agree with the regular PMs. So the explanation must be something that crypto PMs and regular PMs have in common.
If nobody has any unique insights about what's going to happen, then the number of prediction markets of any type whose prices reflect unique insights will be zero.
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Then wouldn't you expect them to just converge on the poll numbers?
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Couldn't weak signals aggregate in markets even though nobody has a strong articulate insight?
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If even a small number of people with a bit of capital believed the 538 model, then the odds would equalize, especially on chain. If one whale thought the real odds were 90% he’d gobble up the arbitrage opportunity. Why hasn’t that happened?
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You don’t just need one whale who believes 538. You need more whales who believe 538 than there are whales who believe whatever other principles.
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I get the hypothesis; few people use those markets, crypto or no, and they tend to be partisans aka dumb investors. Makes sense. But markets can also reflect risks that, AFAICT, 538 et al call out as ignored: suppression, tampering, all the way up to 'Night of the Long Knives'
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538's model doesn't factor in something like voter suppression explicitly but does use a fat tail distribution though which in a sense accounts for risks that you mentioned
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Also this is not what an efficient market looks like: https://predictionexplorer.com/market/0x1EBb89156091EB0d59603C18379C03A5c84D7355 …pic.twitter.com/i4VrWBsQ6N
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By the way, that chart shows Augur's order book for an election market. The highest-vol. market built on Augur is Catnip, which uses an automated market maker built on Balancer. I haven't seen a UI that shows granular price movements. Here's liquidity https://pools.balancer.exchange/#/pool/0x6b74fb4e4b3b177b8e95ba9fa4c3a3121d22fbfb/swaps …
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