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The Senate has just confirmed Judge Alito by a vote of 58-42. I think the futures market at Tradesports did a fairly good job of assessing the final outcome.

The markets are often referred to as “predictions markets” which I don’t believe is accurate. These markets don’t predict what will happen, but they can set odds at what could happen, knowing what we know now.

Even when the market had little information, the futures market indicated that Judge Alito had roughly 62 votes, with a standard deviation of around seven votes. Although the market was a bit optimistic on Judge Alito’s support, it was a reasonable look at his support. In this case, it was fairly accurate.

Over the last two days, trading in the 60+ votes contract was very strong. As it became clear that Judge Alito would fall short of that number, the contracts plunged. Here’s a chart.

Posted by edelfenbein at January 31, 2006 11:30 AM