“If the current betting trends are to be believed, it now seems certain that a recall is in the cards”
-Paddy Power, Irelands Biggest Bookmaker
July 14, 2010 press release
Speaking of dumb bets: Its time to revisit a recent prediction market “winner,” and review the strengths and weaknesses of these markets:
Recall this Bloomberg article:
Apple Inc. is increasingly likely to recall its iPhone 4 after complaints about poor reception and a critical review from Consumer Reports, according to a betting company that tracks odds for such events.
Paddy Power Plc, Ireland’s biggest bookmaker, said the chances that Apple will ultimately recall the phone have increased following what it described a “betting frenzy” after the Consumer Reports review. The consumer organization said on July 12 it wouldn’t recommend the phone because of its tendency to lose signal strength when held in a certain way.
Only, not so much.
We have a long history of criticizing so-called prediction markets. There is no “wisdom of the crowd” unless the prediction markets has a similar demographic profile to whatever group is being forecast (or polled). When their community of voters are similar to an electorate, they act as a deeper polling mechanism. When they try to forecast the decision making processes of dissimilar bodies — Juries, Boards of Directors, or in this instance, corporate management — they stink the joint up.
Apple IPhone 4 Recall Odds Increasing, Irish Bookmaker Says
Bloomberg, July 14 2010