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May 15, 2005

Slight Correction.

Talking about the Tory leadership contest:

Meanwhile a clutch of Tory "modernisers" are reported to be lining up behind David Davis, who remains the bookmakers' favourite.

Yes, I know, it’s an old phrase, but bookies do not set odds according to what they think will happen. They set them according to the weight of money coming in. Books are balanced so that whoever wins, the bookies make money. Being a bookmaker is not about prediction, it’s about maths, plain and simple.

May 15, 2005 in Trivia | Permalink

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Comments

Did you read James Surowiecki's Wisdom of the Crowds? It's about decision markets, and he makes the general interesting point (although it's only applicable so far, and under very precise circumstances) that large groups acting as individuals, when you aggregate their decisions, tend to come up with even better predictions than even the most expert expert. Very interesting. Hence, I trust the bookies.

Posted by: Katie | May 15, 2005 1:24:19 PM

I love the reports that say "The smart money is on....". Does that mean that the smarties want everyone else to place that same bet, thus lengthening the odds on the reverse bet, so allowing the smarties to place a reverse bet at the new odds so that they'll make money whatever the outcome? Smart indeed.

Posted by: dearieme | May 16, 2005 12:30:36 PM