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Wanna Bet There Will Be War? A Time-Series Analysis Of Prediction Markets During The Libya Conflict 2011

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  • Sebastian Matthias Woerle

Abstract

This paper tests the explanatory power of an online Prediction market on the ousting of Muammar Gaddafi as Libya’s leader during the uprising in 2011. Based on the theory of efficient markets and collective intelligence, it employs a GARCH time-series analysis and an event study of Intrade data to test the impact of events on market performance and trading volume. The market distinguishes sensibly between relevant and irrelevant news for the outcome of the conflict and prices them in at a surprising speed. Some support for short-term anticipative trading and price performance is found. The analyzed market is found to be semi-strong efficient and works as an evaluative tool in international conflict.

Suggested Citation

  • Sebastian Matthias Woerle, 2013. "Wanna Bet There Will Be War? A Time-Series Analysis Of Prediction Markets During The Libya Conflict 2011," Journal of Prediction Markets, University of Buckingham Press, vol. 7(3), pages 1-28.
    • Handle: RePEc:buc:jpredm:v:7:y:2013:i:3:p:1-28
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    Keywords

    time-series; conflict; prediction market(s); forecasting; international relations; event study;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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