We’re researching a larger piece about prediction markets and it occurs to us that they provide a form of collective intelligence. Such markets — where thousands of people place bets on the outcome of the future — have remarkable accuracy. The Iowa Electronic Markets have predicted the outcome of the past presidential elections since 1988 with only 1.33% variance from aggregate results.
As of midnight last night, McCain’s odds of “winning it all” fell to 23.5% on the IEM exchange. The red line in the graph above shows the declining GOP fortune, tied to the economic tailspin. Bets are on the final mile of this election will get virulent.