Paper out of Microsoft Research detects blatant manipulation of InTrade prediction market in 2012: "price manipulation by a single trader ... accounted for one-third of all bets placed on Romney during our observational window, and lost almost four million dollars in the process ... attempting to manipulate beliefs about the odds of victory in an attempt to boost fundraising, campaign morale, and turnout."
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- HT, Noah Smith on Twitter and a Buzzfeed article http://www.buzzfeed.com/jacobfischler/trader-lost-millions-apparently-trying-to-manipulate-intradeSep 24, 2013
- Note there was some discussion of this at the time, eg
but InTrade mostly denied that manipulation was occurring. Seems pretty clear now that it was.
It's a hit on the credibility of prediction markets and suggests prediction markets need to do a much better job of ensuring adequate liquidity and detecting attempts to manipulate the market.Sep 24, 2013
- I thought it was widely considered to be obvious at the time?Sep 24, 2013
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