Markets in anything, part 71
Will gravitational waves be detected by 2010?
No way.
Um maybe…Yikes! probably?
Not sure who would have asked them to quote a price but you have to wonder if the information asymmetry really favoured the bookie in this case (from The Economist)
Back in August 2004, Ladbrokes, a British bookmaker, offered odds of 500 to one against gravitational waves being detected by 2010. After taking a flurry of bets, it slashed the odds to 100 to one and then two to one in just a few weeks before closing the book. The bookies must be hoping that gravitational-wave scientists find no reason to end the reticence of the past four decades.
Is it just me or is it not pretty intuitive that Ladbrokes is perhaps not the best placed organisation in the world to manage and price this kind of outcome risk? I’m sure if it had been priced on an exchange, we would have seen a more continuous and informative market. I’ m not sure if Ladbrokes still considers Betfair and the other exchanges as evil but perhaps if one of them created a market in this, Ladbrokes could hedge some or all of their book!
