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Prediction Markets Suggest GOP Candidates for 2012: Romney, Palin, Pawlenty and Pence

With pretend play money at Inkling Markets and with actual money at Intrade, people are placing bets on the probability of all sorts of future events, including events in politics. Shares for possible outcomes are bought and sold, with the price for a share set in a market based on demand for that share. People will clamor to buy shares for events that they believe are likely to come to pass, because when the event comes to pass those who hold shares will receive the maximum possible share value. Conversely, people will clamor to sell shares for events that they deem unlikely, because when the event fails to transpire people will be left holding shares with no value at all. The price of an event (measured in units from 0-100 on the Intrade market and measured in units of 0-100% on the Inkling market) is therefore a reflection of the collective assessment of the likelihood of an event.

Trades on the Inkling market have reached the following values for the predictions that each of the named Republican politicians will end up being the 2012 GOP presidential nominee:

Mitt Romney: 19.10%
Tim Pawlenty: 18.40%
Mike Pence: 14.60%
Someone not listed on the market: 10.10%
Sarah Palin: 8.90%
John Thune: 7.70%
Haley Barbour: 4.00%
Ron Paul: 3.80%
Jim DeMint: 2.80%
Mitch Daniels: 1.20%
Newt Gingrich: 1.20%
All others: less than 1% each

And the following are the values of trades on the Intrade market answering the question, have reached the following values for the predictions that each of the named Republican politicians will end up being the 2012 GOP presidential nominee:

Mitt Romney: 28
Sarah Palin: 18.8
John Thune: 18.5
Tim Pawlenty: 12.0
Chris Christie: 9.9
Mike Huckabee: 8.4
Newt Gingrich: 7.6
Mitch Daniels: 6.6
Haley Barbour: 6.5
Jeb Bush: 6.1
Mike Pence: 6.1
Ron Paul: 6.0
John Bolton: 6.0
Rudolph Giuliani: 4.0
Paul Ryan: 3.1
Gary Johnson: 3.0
Rick Santorum: 2.9
Jim DeMint: 2.2
Rick Perry: 1.9
David Petraeus: 1.5
Marco Rubio: 1.4
Bobby Jindal: 1.2

The differences between the two sets of predictive values — is Sarah Palin the 2nd or the 5th most likely to win the 2012 GOP nomination? — are one indication that we shouldn’t take the results of these predictive markets as infallible gospel. Some of the suggestions — that the socially awkward, private and brusque John Bolton rivals Ron Paul as a charismatic figure — strain credulity. But the names mentioned consistently at or near the top — Mitt Romney, Mike Pence, Tim Pawlenty, Sarah Palin and John Thune — are names to watch as the congressional election recedes and the presidential election proceeds, if for no other reason than the people on these predictive markets say so. The entire notion of viability for presidential candidates is a social construct, after all.

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