A new prediction market debuted today linking Jeb Bush to a 2016 presidential run.
Predictit, a New Zealand-based political and financial prediction market, launched today after being granted “no-action relief” from the Commodity Futures Trading Commission.
The website allows users to trade shares, much like on the stock market, for potential political candidates. Traders buy or sell “shares” of candidates based on their assessment of probabilities. In the case of a 2016 presidential bid, Jeb Bush was trading at $0.25. That translates to about a 25 percent likelihood that he’ll earn the GOP nomination. Chris Christie and Mitt Romney were pulling $0.21 each.
On the other side of the aisle the prediction market seems to indicate Hillary Clinton will be the Democratic nominee. She was trading at a whopping $0.74 verses Elizabeth Warren’s $0.17.
Whether this prediction is a reliable indication that Florida could see its former governor and a third White House Bush is unclear. Much like the stock market, traders benefit from buying low and selling high. That volatility could translate to inaccurate predictions. Supporters argue prediction markets are more reliable though because unlike traditional polling, they reach a demographic typically more politically savvy.
“Prediction markets bring insider knowledge into the public domain,” said Victoria University’s Geoff Todd. “They provide a real time reflection of the likelihood of an event occurring. When you make a prediction you are assessing what you think everyone else is going to do, not what you will do. This is a very powerful predictor of people-based events.”
Predictit is an academic project at Victoria University in New Zealand studying the viability of prediction markets. They’re receiving ancillary services from a Washington-based company called Aristotle.
“Prediction markets are part of the future in politics, media, social science, and finance. The ‘game’ of politics has all the ingredients to be fun, social and viral. It will impact the way we interact with current events and the news or entertainment content we consume because a well-designed market affords the engagement that well-informed people crave,” Aristotle CEO John Aristotle Phillips said.
