10 December 2009
WSEX clearly abandoning Heisman market
Posted by QuikSand under: Prediction Markets .
Time to call a spade a spade here.
The WSEX pseudomarkets generically rely on “good-enough” information to drive share prices, and then they inflate the collective prices (and the implied transaction differential between the BUY and SELL prices) to ensure a house edge to overcome any shortfalls in the information they are using to set the prices. It’s not a bad model, don’t get me wrong. It’s not a true market, where prices are set by a robust series of open exchanges among willing buyers and sellers, it’s you against the house, and if they do a good enough job setting prices, they retain a healthy edge.
This year’s Heisman race seems to be very intriguing — the first “serious” threat being posed by a true defensive player in years, the highest profile quarterbacks stumbling in their final games and otherwise losing their blooms, two running backs who are diverse both in accomplishments and geography — it all adds up to a great place to drop a buy/sell market.
And WSEX is walking away from it. Clearly.
It is presumably for the same reasons we are pointing out here. This is tough to call, the information is tough to come by, and there’s a real chance that they might just have it all wrong. The posted prices in the “paused” market are clearly unreasonable, but to the extent they have tried to reset the prices, what should they do? Based on publicly available information, you might conservatively set manually set prices of around 40 for each of McCoy and Ingram, and maybe 25 each for Gerhardt and Suh, and 10 for Tebow. Than you have a horribly stilted market where it costs $130 to cover the five options… unattractive for buyers. But drop all those down by a fourth, and you run a real risk of someone just crushing this market with a bit of insider information.
So, they take a pass, likely in the name of “technical difficulties” and deprive us the chance to play at all. Boo, hiss.
2 Comments so far...
albionmoonlight Says:
10 December 2009 at 10:57 am.
Oh, for a real market on things like this.
Jesse Livermore Says:
10 December 2009 at 3:55 pm.
Standard play for a book there is to open the markets with low limits, and move the lines aggressively in response to action. That should pound the lines into shape pretty quickly and limit the impact of anyone with inside info.