Intrade shutdown hurts academics (and gamblers)
A television host points to a graph on a screen at the New York Stock Exchange on July 6, 2012 in New York City.
The online trading site Intrade has shut down. For those of you unfamiliar with Intrade, it’s one of those sites that lets you bet on future events -- like the election or who will be the next pope.
On Sunday, the Dublin-based website stopped trading, citing “circumstances” that may include financial irregularities.
If you call up Intrade today, you get this message: “Thank you for calling Intrade. We’re not able to take your call right now, but please leave us a detailed message after the tone including your name and account user name, and we’ll get back to you as soon as possible.”
But you can bet that “as soon as possible” is going to be a while. (You just can’t make that bet on Intrade.) The company isn’t staffing its phones. It’s not paying out account holders.
And it’s not going to be delivering the data that professors and pundits love so much. “I think it’s a big loss,” says Dartmouth economics professor Eric Zitzewitz. “Intrade was the most used prediction market for wagers, on topics of academic interest.”
You could bet on the elections, the war in Iraq, and the future of the euro. And all that market data was available on Intrade to discuss and dissect.
Justin Wolfers at the University of Michigan says Intrade was also important for pundits. It helped keep them honest. “Previously you could just wear your leather elbow patches, smoke a pipe and appear on PBS or CBS or any TV show saying any old thing,” says Wolfers. But, he says, just because Intrade is gone doesn’t mean we’re back to a world of fact-free jabber.
Intrade was the leading face of an important idea: “that broad crowds have a lot of information and that markets are an effective way of aggregating that information,” says Wolfers, “and they often turn out to be much better than experts.”
With other sites doing similar things, Wolfers says, it’s an idea that’s not going away.