Put your money where your candidate is

A lot of Polish people who are interested in internal politics think that major Polish polling companies are politically biased and are "cooking" their results to help their favored politicians. Specifically, they believe that polling companies favor the liberal party called Civic Platform (Platforma Obywatelska), and are actively trying to damage their opponents, a conservative party called Law and Justice (Prawo i Sprawiedliwosc). One of the reasons behind this belief is what happened in 2005, a year in which Poland held both parliamentary and presidential elections. Law and Justice won the parliamentary elections, and their candidate (Lech Kaczynski) won the Presidency. All three major polling agencies predicted otherwise; worse still, the actual results were outside their reported margins of error. This suggests the polling companies do indeed have problems. Those could include any combination of intentional bias (which I don't think is actually the case), dishonest voter response, or flawed sampling. At any rate, when polling agencies drop the ball, prediction markets could step up to the plate. I would really love to see a political prediction market in Poland; for if polling companies are indeed biased, and if the rough magnitude of that bias is common knowledge, then candidate option prices would provide a much better prediction of their electoral performance than polling numbers.

June 20 this year, Poland will hold presidential elections (they were actually scheduled for November but had to be expedited due to President Lech Kaczynski's tragic death). There are several candidates but only two serious ones: Bronislaw Komorowski representing the Civic Platform, and late President's twin brother Jaroslaw Kaczynski representing Law and Justice. The polls currently show Komorowski's support to be at about 48%, whereas Kaczynski's to be at about 37%. The world's largest prediction market, Intrade, has opened betting on Polish presidential elections. Now, on the assumption that the poll numbers are again incorrect, I don't actually expect Intrade to do better. The main traders would be people outside Poland, who will be getting most of their information from Polish poll numbers, so Intrade prices will most likely track polls instead of correcting them. But, (again, if the polls are wrong), Intrade will give those who think polls are wrong a chance to make some money. If you think Polish polls are biased in favor of Komorowski, go on Intrade and buy Kaczynski right now.

In fact, I may do so myself. Regardless of what the polls say, the current price of the Kaczynski option seems way too low (the price is $2.10, which means the market estimates his probability of winning to be 21%).