The wisdom of crowds: What the odds tell us about the UK election
We talked about predictive markets in class with betting horses, but what about a more significant bet – the UK election?
UK’s general election happens next month, and with Brexit still in the air uncertainties surrounding several domestic issues, this election has a lot on the line. Will Boris Johnson succeed in making this election all about Brexit? Or will Jeremy Corbyn shift the agenda make to domestic policies such as NHS? We don’t know, but the betting markets might.
In class we talked about the predictive markets involving odds, wealth share weight average, and wisdom of the crowds. The outcomes of the next election might be predicted by the current betting markets at the moment:
Conservative 94%
Labour 8%
Liberal Democrats 2%
Essentially, the Conservatives are overwhelming favorites to win most seats, based on wisdom of the crowd. Lets talk about some deviations from the betting markets in the last election. The betting markets for the 2016 referendum betted a 15% chance of “leave” which is approximately the probability of say getting a six when rolling a dice. So 15% doesn’t necessarily surprise anyone during a dice roll. Why should we be surprised when it comes out as the election results?
Article: https://www.hl.co.uk/news/articles/the-wisdom-of-crowds-what-the-odds-tell-us-about-the-election