A Single Trader Lost Millions Betting On Mitt Romney On Intrade Late In The 2012 Election
Fox NewsA single trader lost between $4 million and $7 million placing a flurry of bets on Republican presidential candidate Mitt Romney on Intrade in the final two weeks of last year's election, according to a new research paper studying election betting patterns.
Trader A, as the research paper dubs the trader, was responsible for about one-third of the money bet on Romney over the last two weeks - and about one-quarter over the entire cycle on Intrade.
The authors of the paper - economists Rajiv Sethi, of Barnard College and Columbia University, and David Rothschild, of Microsoft Research - speculate that Trader A's intent was to manipulate Romney's position.
Or, in the final few weeks of the election as Romney fell in polls, they determine that Trader A could have been attempting to manipulate beliefs about his standing to boost fundraising, morale, and turnout.
The economists determine three possibilities for the slew of bets:
Sethi and Rothschild draw no definitive conclusions, but they lean toward option No. 3.
Another surprising finding from the study: Trader A aside, political betting seems to be much more static than other trading markets.
The economists found that 86% of traders never changed once who they were betting on. That accounted for 52% of the volume of bench. Only 6% of bettors were determined to be "unbiased" by taking positions on both candidates as the race developed.
One of the biggest single-night shifts came on the night of the first presidential debate, which was viewed as a gigantic loss for President Barack Obama. Here's a look at how his Intrade price cratered that night:Trading Strategies and Market Microstructure