How to forecast the labor market
Market forecast to operate in the currency of the land on which they are based,for example the U.S. dollar. For US the elections, the markets trade a Trump assets that pay $ 1 after the election if Trump wins, and $ 0 otherwise. Biden-the entity pays $1 if Biden wins and $0 if not.
Prediction markets always price these events are between $0 and $1. This means that the price of an asset can be interpreted as the probability that an event will happen. So, if Trump exchange assets of $ 0.4, Trump has a 40% chance of winning. This does not mean “Trump is going to lose the election” -this means he is a loser and it’s probably going to lose, but it certainly will not be. And the market measure is likely. However, regardless of the market price, the investor will still get only $1 or $0 after the election results were announced.
If most traders think that an asset is overpriced, because the cost exceeds the candidate’s chances, then it will sell and the market price will fall. Conversely, if most traders think an advantage to have a low price, they buy it, and cost rose. Thus, market prices are an estimate of the election results based on consensus forecasting, which tend to be much better than one experts ‘ estimates.
Prediction of the market price, because we know that the underlying research to look at the thousands of matching with the market forecast on the possibilities, all of them 0.4 $ and the estimated price of the underlying asset gruplandirdi event, for example, choose a particular candidate, these 40% of cases actually occurred. Similarly, for the price of $ 0.5, hidden in the events that occurred in 50% of cases. The prices are well calibrated as probability estimates.
Trump of luck
Trump, who is based in New Zealand, there is an estimated 41% chance to win the election, and Biden is a strong favorite at 59%. On 11 August, the day, Harris was announced as vice president, Biden, the chances are increased by two points, while Trump dropped by two points.
The market clearly think Harris is a good choice and was boosted Biden’s chances of winning the election. The day was also the day with the highest trading volume in several months, making it one of the highlights of the campaign.
Before this, the price chart shows Trump is likely to fall significantly in June. As early as May, the market is still seen as the Trump favorite, Biden did not impress during the Democratic primary race. But, with the double crisis of the COVID-19 pandemic and the Black Lives Matter protests (which include the Trump of the answers) become the major problem of US politics, Trump is gradually losing ground and Biden have seized on him as the favorite.
What events led to this glass? May 28 day, Trump National Guard to confront protesters are threatening to bring about black life, widely criticized for using “started to pour in when the a price then Increase to a lot of shots in just a few days for the church, Biden lost five points while getting five Trump on his opponents that he was able to walk for the 10 point difference in favor of changing this map” quote, starting on 1 June.
COVID news also has a significant impact. On June 24-25, Trump lost by another four points, increasing the gap to Biden by eight. During the two days, Anthony Fauci, director of the U.S. National Institute for Allergy and Infectious Diseases, testified that it showed that the united States was not coping well with the crisis. At the end of July, Trump regained a few points while drawing some attention to its anti-China rhetoric and the sale of Chinese social media platform TikTok.
But, the race is not over. In the 2016 election, the price did in the two months immediately before the election. Trump trailed Hillary Clinton in the prediction market in all the campaign and was only seen as the favorite on Election Day-that indicated that the underdog was able to recover. So, even if Trump is in bad shape, it could still win some seats.