Follow-up: Intrade confirms artificial inflation of McCain trading

I don’t know if Erik‘s seen this, but I found this report on Talking Points Memo interesting. Apparently Intrade’s internal investigation confirms that someone is artificially inflating the value of McCain (that is, the probability that he’ll win in November) by dumping huge amounts of money into the market in an irrational fashion. The CQ article says that it’s a single “institutional” member of Intrade and that they’ve been in contact with the investor, but that there’s no evidence that the rules of the exchange were violated.

I guess what this proves is that:

  1. Intrade is small enough to be manipulated, if you have a little spare change, and therefore its predictions aren’t trustworthy. Double-check any important prodictions with the Iowa Electronic Market and Betfair.
  2. There are McCain supporters out there who are willing to spend, and lose, large amounts of money to influence an outlying marker of the campaign’s success.

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