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Prediction Markets, Twitter and Bigotgate

Author

Listed:
  • Leighton Vaughan Williams

    (Nottingham Trent University)

  • James Reade

    (Department of Economics, University of Reading)

Abstract

We consider the impact of breaking news on market prices by looking at activity on the micro-blogging platform Twitter surrounding the #bigotgate scandal during the 2010 UK General Election, and subsequent movements of betting prices on a prominent betting exchange, Betfair. We find that the response of market prices appears sluggish, as over a thousand tweets are sent before any price movement is registered (despite trading taking place). However, this slow movement appears to be explained by the need for corroborating evidence via more traditional forms of media; once important Tweeters begin to Tweet, once hyperlinks are added to Tweets, and once television and radio news bulletins begin, prices begin to move.

Suggested Citation

  • Leighton Vaughan Williams & James Reade, 2014. "Prediction Markets, Twitter and Bigotgate," Economics Discussion Papers em-dp2014-09, Department of Economics, University of Reading.
  • Handle: RePEc:rdg:emxxdp:em-dp2014-09
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    File URL: http://www.reading.ac.uk/web/FILES/economics/emdp2014114.pdf
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    References listed on IDEAS

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    Cited by:

    1. Alasdair Brown & Dooruj Rambaccussing & James Reade & Giambattista Rossi, 2016. "Using Social Media to Identify Market Inefficiencies: Evidence from Twitter and Betfair," Economics Discussion Papers em-dp2016-01, Department of Economics, University of Reading.
    2. Alasdair Brown & Dooruj Rambaccussing & J. James Reade & Giambattista Rossi, 2016. "Using Social Media to Identify Market Ine!ciencies: Evidence from Twitter and Betfair," Working Papers 2016-002, The George Washington University, Department of Economics, H. O. Stekler Research Program on Forecasting.

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    More about this item

    Keywords

    information and market ffciency; gambling; political elections;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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