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InTrade got the Economics Nobel Right
Barkley Rosser is unimpressed by the InTrade speculation about the winner of the Nobel Prize in Economics:
The various betting markets on the Sveriges Riksbank Prize for Economics in Memory of Alfred Nobel, such as intrade.com, were just way off. The top bets as of yesterday were in order, Fama, Barro, Tullokck, Helpmann, Grossman, Dixit, and Tirole. None of the actual winners: Hurwicz, Maskin, or Myerson, was even in the betting pool. Oooops!
He's quite wrong, because the "wisdom of crowds" does not extend to choosing who is in the betting pool – that's done by some individual in Ireland. All that the crowds can do is trade on what they're given – and indeed the highest-value contract was "field" – the contract which would expire at 100 if "none of the above" won. Which it did. In that sense, the InTrade market got the Nobel Prize exactly right.
In terms of the commenters on my last InTrade post, dsquared gets the Grand Prize:
"Field" is almost always the best bet for the economics Nobel prize.
And Ken Houghton, I'm afraid, loses out with his far more complicated strategy:
The only economist trading over 20 is Barro. And while I would certainly short the field at 45-48 (last trade/offer), it seems more practical to try a barbell (say, buy Sargent, Krugman, Lazear, and Romer; short Diamond, Dixit, Fama, and Sims).
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