Graham Straus

Are prediction markets biased by white men? Republicans? Young people? Dartmouth professor Eric Zitzewitz analyzed 145 years of election prediction market data, spanning multiple exchanges and countries. His findings: • No systematic evidence of political bias across different eras, countries, and offices. • No systematic evidence of pricing bias based on candidates’ race, gender, or age in the recent elections studied. • Traders weren’t always representative of the voting population, yet that didn’t translate into systematic bias in election forecasts. The paper points to a powerful mechanism: people who spot a mispriced outcome have a financial incentive to correct it. Even if some participants trade on personal preferences, informed traders keep prices grounded in reality. Open competition incentivizes research, challenges consensus, and gives the best ideas a chance to surface. People are rewarded for being right, regardless of their background or preferences. The paper does find some pricing biases, including slight overpricing of longshots and underpricing of favorites. Its central finding on election markets remains: no systematic evidence of political or demographic bias. In an increasingly polarized world, these markets give us something valuable: an impartial source of information shaped by people with an incentive to get it right.