By Bryan Caplan
I have bet Daniel Filan $100 at even odds that Gary Johnson will receive less than or equal to 5% of the 2016 U.S. Presidential popular vote. I hope to lose, since I (a) consider Johnson far less bad than either Clinton or Trump, and (b) think a high Johnson share reduces the risk that the GOP goes even further down the path of anti-foreign bias. But since the odds are even, I obviously expect to win.
Filan has prepaid me, so if I lose I will pay him a gross of $200.
Update: In the comments, Matthew Moore writes:
What private / different information are you using here,
Bryan? Pretty much every model and market I can find is substantially
over the 5% mark, e.g.:
538’s three models have Johnson at 7.3, 8.7 and 5.7
Ladbrokes are offering 150/1 for Johnson to *win*.
Pivit.io predictions net out at 95% chance of >5%
Why are you so relatively pessimistic? What information is missing from these markets?
I discount the polls because several insiders have confessed to me that Libertarian Party candidates do much better in polls than actual elections.
I discount the betting markets because extremist bettors seem to noticeably tilt the odds for extreme long-shots. This is stable due to moderate transaction costs and thin markets: If Johnson’s expected vote share is 3%, a market prediction of 6% is not a major money-making opportunity.
Update #2: Bill Friedman has made the same bet with me.