InTrade got the Economics Nobel Right


Rosser is unimpressed by the InTrade speculation about the winner of the

Nobel Prize in Economics:

The various betting markets on the Sveriges Riksbank Prize for Economics

in Memory of Alfred Nobel, such as, were just way off. The top

bets as of yesterday were in order, Fama, Barro, Tullokck, Helpmann, Grossman,

Dixit, and Tirole. None of the actual winners: Hurwicz, Maskin, or Myerson,

was even in the betting pool. Oooops!

He’s quite wrong, because the "wisdom of crowds" does not extend

to choosing who is in the betting pool – that’s done by some individual

in Ireland. All that the crowds can do is trade on what they’re given –

and indeed the highest-value contract was "field" – the contract

which would expire at 100 if "none of the above" won. Which it did.

In that sense, the InTrade market got the Nobel Prize exactly right.

In terms of the commenters on my last InTrade

post, dsquared gets the Grand Prize:

"Field" is almost always the best bet for the economics Nobel prize.

And Ken Houghton, I’m afraid, loses out with his far more complicated strategy:

The only economist trading over 20 is Barro. And while I would certainly

short the field at 45-48 (last trade/offer), it seems more practical to try

a barbell (say, buy Sargent, Krugman, Lazear, and Romer; short Diamond, Dixit,

Fama, and Sims).

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