PM Chart of the Day

Chart and quote from Volokh

Consider the figure below. It aggregates a total of 145,388 trades on Major League Baseball games in 2005. Each contract would pay off $10.00 if the specified team won the game.

The x-axis represents different transaction prices, and the y-axis shows, for all trades at that price or up to 10 cents higher, the probability that the team in fact won the game. Note that the points conform fairly closely to a 45-degree line.

This doesn't prove that prediction markets are perfect predictors....