Tuesday, February 05, 2008

Super Tuesday Post: A Brokered Convention?

As I write, during the afternoon of the Super Tuesday Democratic primaries, the identity of the Democratic nominee for the Presidency is breathtakingly uncertain: Josh Marshall points out that two of the most influential polling services have come to incompatible conclusions about voters' opinions, and the Intrade futures for the two candidates are currently trading between 49 and 51, with Clinton just above the 50% line and Obama just below.

The closeness of the race has prompted Chris Bowers, in a widely noted blog post, to say that "the most likely scenario" in the Democratic race is a brokered convention decided by superdelegates rather than primary and caucus results. Bowers presents a brokered convention as nearly inevitable barring a whopping Clinton victory in today's elections.

Given the attention the Bowers argument has received, I think it worth noting that Intrade also has a market in the probability of a brokered convention: shares on the Democratic side last traded at $11.10, implying an underlying probability of only 11.1%, with no eye-catching volatility or trends in the price.

Reader, you choose the moral of the story, as it must be one or both of the following:

1. Something in Bowers's account dramatically understates or underweights the ways in which the party can avoid a brokered convention.

2. Bowers is more or less correct, and there are heaps of money available for the taking on Intrade.

On this blog, I try not to make points that are relevant only in a given news cycle. My intent here is to illustrate the tension between the blog narrative and the market and thereby to wonder, in the new age of prediction markets for increasingly contingent and sophisticated contracts, how frequently some of us will be checking market prices to weigh the importance of a wide range of stories.

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