Intrade.com is a site where people can go if they want to gamble on future events such as weather and politics. People can also go there to gamble on whether the Health Care Bill is going to pass. Tuesday the odds were 70%, Wednesday March 17th, the odds were 35% and Thursday Morning the odds are 65% so the number is bouncing around.
The reason for paying attention to gambling sites such as Intrade.com is because of a concept called “The Wisdom of the Crowd”. According to this concept, the collective opinion of a group of individuals usually is more accurate than a single expert in questions of estimation and prediction. This concept has been demonstrated over and over again.
One example of the wisdom of the crowd is the NCAA brackets. The average of everybody’s picks on any gambling site almost always beats all of the basketball experts. Those individuals who do better than the group average always do a terrible job of basketball prediction in the following season. It will be the same this year, just watch.
I occasionally follow Intrade during the election season for its predictive abilities, but two caveats when following group opinion on Intrade. First, the prediction becomes more accurate just before the event occurs, that is when all public knowledge is accumulated.
Second, there has to be a large number of bets involved or there really isn’t a crowd.
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