Intrade’s Record In Picking Presidents: Is There Market Manipulation?

An “influential forecast” is one in which knowledge of the prediction changes the uncertainty in the thing being predicted. Consider a (respected) political opinion poll which announces Candidate B has an 85% chance of winning an election. Some people supporting Candidate A might hear this and figure the margin is so large that they needn’t bother voting. The result of the vote will edge in the direction of Candidate B.

This isn’t far-fetched. Exit polls for presidential races used to be reported from states in the east while voting continued in the west, but it was felt these polls influenced behavior and so are now withheld from general public knowledge (journalists, better equipped to deal with reality, still know their dark secrets).

Polls are not only error-prone measures of opinion, but they can always be viewed in a predictive sense, as a guess of what the vote percentages will be.

Also of interest are those forecasts produced by prediction markets, such as Intrade, Betfair, and the Iowa Electronics Market (IEM). The price on the presidential race on Intrade is often quoted in the press and taken to be indicative of the status of the race.

Some people are betting the predictive markets like Intrade are not just accurate but influential. That is, some folks have pumped money into the system hoping to drive the price up for a candidate and therefore make that candidate appear viable to the press, which will then dutifully report what it sees. According to this Daily Caller article, market manipulation has happened several times in the past on Intrade, particularly in presidential races.

If Intrade races were fiddled, then their forecast accuracy will have suffered. What of nominee races? In a University of Nottingham dissertation Ian Saxon1 found that Intrade predictions for the 2004 and 2008 Democrate nominee contests were good. He compared Intrade against an average of polls (he also tracked the individual polls, which were not much different than the average). Recall that polls are not forecasting the winner, but the vote percentage.

Intrade predicted a solid Kerry victory, with probabilities (prices normalized to 100) near 100% early on in January 2004 (pic). In the Clinton et al.-Obama matchup, Intrade’s prediction also showed an Obama victory, but perhaps not a quickly as in 2004 considering the price did not near the top until the close of the race.

Intrade predicts Obama victory

Intrade performed their own study of the 2004 Presidential, Bush-Kerry race, and produced this picture:

Intrade predicts a Bush victory, but barely

The events 1-7 are given by Intrade as:

  1. April 03: Coalition troops overtake Baghdad. Major fighting expected to be over
  2. December 03: Saddam Hussein captured in Tikrit
  3. April/May 04: Abu Ghraib prison scandal photos released
  4. June 04: Coalition troops hand over power to Iraqi interim government
  5. July 04: Democratic National Convention
  6. Early September 04: Republican National Convention; Swift Boat Veterans’ ads
  7. September/October 04: John Kerry “wins” Presidential debates

But the Daily Caller claims these undulations might have due to manipulation:

In 2004, recalls Eric Zitzewitz, an associate professor of economics at Dartmouth College who has co-written several papers on prediction markets, “somebody, in the middle of the night, drove the price of the [George W.] Bush re-elect contract — which was probably trading about 60 at the time — down to 15.”

Similar fluctuations were present in the McCain-Obama election in McCain’s favor. According to the Daily Caller, “The now-late founder of Intrade, John Delaney, concluded that the fluctuations were not the result of someone trying to rig the system.” Here’s the picture:

2008 Presidential Race

If manipulation is present, it’s pretty subtle, particularly near the end of the race.

Here’s the latest (as of yesterday) Intrade Chart for Romeny (red)-Obama (blue). Any manipulations? Or is this a good prediction?

Intrade predicts an Obama victory

As of this writing, Intrade has Obama at 57.9%.

Whether or not there is manipulation, Intrade weeks and months before the election is certainly not an infallible guide to who will win.


1Intrade Prediction Market Accuracy and Efficiency: An Analysis of the 2004 and 2008 Democratic Presidential Nomination Contests: pdf).


  1. Bogus. Not even close. Intrade has been fed to the sharks.

  2. MattS

    Another issue you run into with pre-election polls or exit poles is that people might lie to the pollster for any number of reasons.

  3. Milton Hathaway

    The Intrade Obama vs Romney chart actually seems somewhat reasonable when you realize that it isn’t a self-selected poll of candidate choice, but rather a self-selected poll of who people expect to win. I know a number of people who are firm Romney supports but expect Obama to win. I have bets with some of them (gentleman’s bets, of course, of course).

    Compare the first chart, “Obama vs Romney, 2012”, with the third chart, “Expect to Win Election” in today’s ABC New/Washington Post daily tracking poll:

    Counter-intuitive, no?

  4. Ken

    “Someone has said that the first soothsayer, the first prophet, was the first rascal who encountered a fool.” Voltaire.

    “I wonder that a soothsayer doesn’t laugh whenever he sees another soothsayer.” Marcus Tullius Cicero.

    It comes down to the world series–if the Nat’l league team wins the Repbulican wins the Presidency; vice versa for the AL team (see:

    QUESTION: are those events in some complex & not fully understood way actually influencing events to achieve the observed outcome (i.e. a bona fide, if bizarre, cause-effect relationship), or are they merely tapping into some universal unknown(s) to only “predict” what’s going to happen?

    Of course, they could just be random coincidences manifesting in a manner that appears like something other than random coincidence is afoot, but, hardly anybody really believes that (after all, experience–seeing IS believing).

    Detroit, as everybody knows, is has been for decades (50 years-ish) an uninterrupted bastion of left-wing Democratic governance and all that goes with it (e.g. uber-powerful unions, etc.). Its a recipe that’s worked so well (just check out the place, see how well its prospertd!) they just can’t give it up…so, the thinking goes, the Detroit Tigers are endeavoring to throw the World Series (but still keep up appearances so their true ulterior motive can be debated) to ensure a second Obama Presidency.

  5. Ken


    Is there any data available to assess how much “new” research is just a rehashing of old research, including both peer-reviewed and less rigorous reporting?

    My anecdotal observations suggest this is a trend, but that’s hardly definitive. PROMPT for this: Some “definitive” analysis of the reason for the losses in the Bermuda triangle pointing to releases of methane gas that create a mix at the surface that won’t support a ship and/or an explosive gas that can detonate when triggered by an aircraft ( ).

    That’s been studied & reported a decade or more ago. Tests have been done in labs; there’s at least one incidence of a floating oil platform sunk by this–all reported in the media long long ago. Yet, here we go again.

    Malcolm Gladwell polished this to an art form by reporting interesting studies as independent books (e.g. “The Tipping Point”).

    The discussed problem of too much mundane research seems to have a corralary of copycat research not being called out for what it is. Any way of assessing that?

  6. JH

    Looking at the graph for the 2008 presidential race, the chance of winning for McCain took a downturn around the beginning of September, 2008. Was it the result of his vice presidential choice? Perhaps there is some value in Intrade’s prediction. Sorry, Mr. Briggs, I didn’t mean to bring up this old wound (I am lying), I (Luis, 49ers, Uncle Mike, DAV, and Rich) know that you loved Sarah Palin terribly and probably still do. I cannot pass up an opportunity to tease you. ^_^

  7. MattS


    IMO in the 2008 presidential race neither VP pick was helpful to their respective campaigns.

    McCain was running on experience and picked a first term govenor as VP.

    Obama was running as an anti-establishment reformer. He picked an old school extablishment Senetor as his VP.

    The VP choices were a net wash.

  8. Doug M


    I was following the numbers daily in 2008, The Republican convention and the selection of Palin conincides with McCain closing the gap with Obama. The gap opens up again when the markets crashed, and McCain suggested postponing the first debate.

  9. JH

    Matt S & Doug M, I agree with you!

    Doug M,

    The stock market has made a good comeback since the 2008 crash. If the stock market is a good economic indicator of how well the US economy is doing, I would say that whoever gets elected will certainly get the credit.

  10. Ken

    RE: Multiple comments regarding particular interest topics correlating with a given candidate’s popularity.

    For the most part people, especially democrats, are partial to candidates they personally relate to–who share traits they also have. If you’ve paid attention you’ve probably seen them even pick doctors for serious problems that way: not necessarily the one with the best succcess record, rather the one with the best bedside manner.

    Consider the “poor” — a clear constituent of Obama’s. Obama has sidestepped that group throughout the campaign, and for good reason. See: to find that according to the Census Bureau, the poverty rate has gone from

    12.5 percent in 2007 to
    13.2 percent in 2008 to
    14.3 percent in 2009 to
    15.1 percent in 2010 to
    15.0 percent in 2011.

    The last time it was higher than 15.1 percent was in 1965, when the nation’s anti-poverty programs were just taking effect.

    HOW TAXING THE RICH WORKED OUT LAST TIME THIS WAS TRIED: The lower class workers ended up getting laid off & fired in droves as the rich just spent less on luxury items built & maintained by the poorer among us:

    THAT’s a failed policy tactic our President is endorsing again…

    IT IS NOT THE ‘ISSUES VS. A CANDIDATE’s STANCE ON THOSE ISSUES’ THAT DRIVE VOTERS TO A CANDIDATE, it’s how they relate to that person’s overall values. Everything else is just an excuse to selectively rationalize their views.

    See: for a much more detailed explanation

  11. rank sophist

    Nate Silver of 538 wrote about Intrade’s possible data manipulation recently, I believe. He concluded that it was iffy, but he didn’t really say one or the other. 538 is the prediction to watch, in any case–it’s been insanely accurate for quite awhile, and it isn’t vulnerable to abuse like Intrade and company. (I know some conservatives don’t trust it just because the New York Times bought it, but this is unfounded bias. 538 has been dead-on for both Republican and Democrat wins for years.)

  12. Briggs


    Silver’s word heard today is 2/3 chance for The One. His models are very good, but I wonder how many account for the disparity in lying: that is, more people say they will vote or vote for The One and lie than do others for Romney.

    And then see this analysis.

  13. rank sophist


    I can’t imagine that lying would make that big of an impact. I mean, is it really likely that a lot of people lied about their choice during polling? I can’t think of a particular reason that a Romney supporter–or someone voting for the Green candidate, or a non-voter–would lie about supporting Obama. If they don’t support him, then what do they get out of boosting him in the polls? Now, you might suggest that a conservative black or hispanic voter, for instance, would feel community pressure to vote for Obama. But, considering that polls are taken by phone and usually privately, I can’t see these cases being particularly common.

    As for that analysis, it was pretty interesting. Two things about it concern me, though. First, it underestimates the influence of fear at the polls. It’s largely fear of Obama’s second term, in my view, that motivates so many conservatives to vote for Romney. Under more normal circumstances, it’s hard to imagine an evangelical or a Catholic getting excited to vote for a Mormon who has waffled on issues like abortion and so forth for almost two decades. Personally, despite its strong PR these days, I still believe that the Mormon church is a heretical, almost non-Christian cult. I’m sure that many traditional Christians familiar with Mormon teachings agree with me. (There’s a reason Newt Gingrich, an absolute mess of a man, beat Romney in one of those Southern states.) But this has not kept people suspicious of Mormonism and Romney’s past positions from voting for him.

    However, the same kind of fear grips the Democrats. They equate Romney with Bush, and they are absolutely terrified of the Tea Party. Even the hyper-liberals who hate Obama for his drone policy are more likely to vote for Obama just to keep the Republicans and their Tea Party allies (Ryan, of course, being a key member of the latter group) from gaining power. This is why, when that article’s writer says that there has not been a major change since 2010, I have to disagree. Democrats have gotten more and more afraid of the Tea Party since it was founded. They, like the Republicans, are probably more worried about blocking the opposition than they are about electing their candidate. Enthusiasm for Obama is pretty low. In some ways, it’s like a reverse of Bush-Kerry: nobody likes either guy that much, but they’ll do what it takes to keep the other side out.

    The second thing that bothered me about the analysis was his near-exclusive use of Gallup and Rasmussen. In recent weeks, Gallup has been showing a pretty large discrepancy with the other polls (Silver said that Gallup has a history of giving bad data when this happens), and Rasmussen has had Romney in the lead for months. I’m not saying that they aren’t good polls, obviously; but the writer of that analysis seems to be finding what he wants to find, as is so common in statistics. A Democrat could just as easily look for Obama-leaning polls, explain why they are the “best”, and then ignore stuff like Rasmussen to “prove” his case. So, the author might be right that Romney will win, but I think he’s too confident by half.

  14. AndrewKennett

    One of the interesting things about this analysis and effect of polls on The Poll in general is the idea that in USA if you poll high more people will vote for you (that is many people like to vote for the side they expect to win regardless of who they want to win) in Australia it works the opposite way, everybody wants to be the underdog reasoning that many people will vote to prevent a landslide (we call that keeping the bastards honest). I would of thought this would of worked in the USA as well especially since voting is non-compulsory — if many people think everybody else will vote for a candidate then they may not bother to turn up and vote as their vote isn’t needed. So the type of gaming the polls discussed here would be counter productive.

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