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Forecasting Elections: Do Prediction Markets Tells Us Anything More than the Polls?

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  • Davis, Brent

Abstract

Election forecasting is an expanding domain within political science, moving from the outer edges (as a novelty pursued by a few ‘quants’) toward the mainstream of the discipline. Amongst the most high profile of election forecasting techniques are prediction markets and vote-intention polls. While the weight of scholarly opinion appears to favour prediction markets over polls for election forecasting, there remain challengers and critics. This article joins with the challengers and the critics, looking at whether this ‘horse race’ competition between election forecasting approaches is valid. Using data from the 2013 Australian federal election, we conclude such comparisons-of-forecasts are misplaced in the Australian context, as prediction markets and vote-intention polls appear to be independent of each other given information from one appears to have no impact on the other.

Suggested Citation

  • Davis, Brent, 2015. "Forecasting Elections: Do Prediction Markets Tells Us Anything More than the Polls?," MPRA Paper 65505, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:65505
    as

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    File URL: https://mpra.ub.uni-muenchen.de/65505/1/MPRA_paper_65505.pdf
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    References listed on IDEAS

    as
    1. Wolfers, Justin & Zitzewitz, Eric, 2006. "Prediction Markets in Theory and Practice," Research Papers 1927, Stanford University, Graduate School of Business.
    2. Forsythe, Robert & Rietz, Thomas A. & Ross, Thomas W., 1999. "Wishes, expectations and actions: a survey on price formation in election stock markets," Journal of Economic Behavior & Organization, Elsevier, vol. 39(1), pages 83-110, May.
    3. Georgios Tziralis & Ilias Tatsiopoulos, 2007. "Prediction Markets: An Extended Literature Review," Journal of Prediction Markets, University of Buckingham Press, vol. 1(1), pages 75-91, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    voting behaviour/ choice; election forecasting;

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General

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