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Election predictions are arbitrage-free: response to Taleb

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  • Aubrey Clayton

Abstract

Taleb [Election predictions as martingales: An arbitrage approach. Quant. Finance, 2018, 18, 1–5] claimed a novel approach to evaluating the quality of probabilistic election forecasts via no-arbitrage pricing techniques and argued that popular forecasts of the 2016 U.S. Presidential election had violated arbitrage boundaries. We show that under mild assumptions all such political forecasts are arbitrage-free and that the heuristic that Taleb's argument was based on is false.

Suggested Citation

  • Aubrey Clayton, 2019. "Election predictions are arbitrage-free: response to Taleb," Quantitative Finance, Taylor & Francis Journals, vol. 19(11), pages 1771-1774, November.
    • Handle: RePEc:taf:quantf:v:19:y:2019:i:11:p:1771-1774
    DOI: 10.1080/14697688.2019.1639802
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