Iran, Intrade and the Revolution that wasn’t
29 June 2009
Millions protested the results of Iran’s election. People died. Westerners hoped this 30th anniversay of the Iranian’s revolution would mark the end of a bellicose theocracy. We learned that Twitter can be used for something useful.
But there might have been a clue all along that no change was coming to Iran. Not yet, anyway.
Regular readers of this blog may recall our discussions of Intrade, the prediction market. Last September we found that Intrade signaled the failure of the first TARP bill. And that McCain’s popularity resembled a drop similar in profile to Mt. McKinley when he chose Palin as his running mate.
For those not familiar, a refresher: Intrade lets you bet real money on binary outcomes, such as whether Steve Jobs will depart as Apple CEO before Dec 31, 2009 (currently trading at a 20% chance, down from 75% in January). The idea is that when people put real money on the line the market will give a more accurate prediction than polling.
The graph below shows Intrade results for the outcome that Ahmadinehad will win the Iranian election. Anything above 50% means the market says “yes he will” and below 50% means “nope”. Until the beginning of June, Intrade favoured Ahmadinejad to win, albeit on very little trading volume.
And then – the opposition (presumably Mousavi) started to gain traction, and trading volume picked up. Ahmadinejad’s Intrade-odds dropped from about 60% to a low of 20% on the day of the election.
- Iran. Iran, so far away.
As soon as the election results were announced – boom, the odds of Ahmadinejad winning jumped to 90%. And stayed there through all of the protests. Hardly budged. Despite all of the Western press coverage and the hoping and the changing of avatars to green.
Turns out Iran isn’t having the Colour Revolution its ruling clerics may have feared. Iran is not the Ukraine which could look to nearby Poland or the Czech Republic for examples of how political and economic change can work. Neither is Iran the former USSR which had a few years of Gorbachev loosening the Politburo’s grip before Yeltsin could tear down the wall as it were.
After his stance against the clerics, it is unlikely that Mousavi will be given a chance to be a Gorbachev-like reformer on the inside. For now, Iranians will have to wait for any change they want.
CWN
2 Responses to “Iran, Intrade and the Revolution that wasn’t”
June 29th, 2009 at 5:42 pm
What’s interesting is that intrade also failed to signal the crack down and apparent rigging of the election.
Either the rigging of the election truly was a low probability event, or intrade failed to have the prescience to predict that the incumbent regime would not allow a victory by Mousavi to happen.
June 30th, 2009 at 7:25 am
The market failed to acknowledge the corrupt mullahs in Iran. The market is only good as the information the participants receive. The leading polls showed Moussavi leading on the run up to the election. If this was a US election the market for Ahmadijead would have been a lot lower but the market did anticpate the possibility of fraud by only trading down to 20.