Prediction markets are free markets

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On the eve of the Iowa caucuses, Huckabee has a 60% chance of winning. Romney has a 38% chance of winning. One or the other has a 98% chance of winning. Looks like Ron Paul will not win Iowa. If he does, it will be a major, major, major upset and also a real bum call for this prediction market.

Prediction markets are free markets, trading real money. They aggregate all sorts of information, private, public, polls, secret methods of predicting, you name it. They strongly tend to outperform the typical participant in contests, as my friend Phil O’Connor has shown. Hence, Paul supporters should not be disappointed if he does not win. The victory is in spreading the free market message and unsettling the establishment, regardless. And there are primaries to come.

3:11 pm on January 2, 2008