Prediction Markets in Everything: Superbowl Edition

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Wondering who's gonna win this year's Superbowl? Just ask eBay.

The company Mpire is plotting the price of team paraphenalia for the Seattle Seahawks and the Pittsburgh Steelers, in an attempt to see if the price might be a decent predictor of Superbowl victory. The intuition, I suspect, is that people will be buying the merchandise of the team they expect to win, in the hopes that it will increase in value once the win occurs. Aggregating the data into a single price is intended to look something like the confidence that the crowd has in a win by one team or the other.

From a story on the experiment:

The confounding success of the famous Super Bowl economic indicator, where the winning team's conference seems to correlate with the coming year's economy, is spilling over into other areas of voodoo economics. This time it's reversed as eBayers are predicting the outcome of America's time-honored obsession based upon the going price of each team's merchandise.

Right now, Seattle is around $150, while Pittsburgh hovers near $100. Since Pittsburgh is generally viewed as the favorite, I have to wonder if there aren't a lot of people spending rather small amounts of money on Seahawks trinkets just on the off chance that an upset happens. After all, depending on the consumer's belief in the increase of the value, the expected value of the Seahawk do-dad could be above that of the Steeler gee-gaw, no matter what team the consumer believes will win. (Hey, wait -- does that mean we should read this prediction in reverse? Since the crowd seems to favor Pittsburgh, we should expect Seattle-stuff to sell for more? Not sure. My guess at relevent parameters: 1) closeness of the line, since a wide spread might induce people to forget the long-shot bet and snap up the favored-team's stuff before everyone else does, and 2) the price of the item purchased, since a signed t-shirt might go for cheap now, but could increase several times over in value, whereas expensive items require a much greater level of certainty. Anyway...)

2 Comments

The reason Seattle's merchandise purchasing is running higher is due to the fact that the Seahawks have less a history of winning. That is, fewer Seattlites(?) own merchandise already. Steeler fans have been accumulating merchandise for years. This is not an accurate indicator of the crowd's predicted outcome, imo.

The confounding success of the famous Super Bowl economic indicator, that in behalf of the economic crisis the people can afford to buy their products that the market strategic planning that would gain a lot of production, In the way the economy is going, more and more people are turning towards a payday loan for help to make ends meet. Despite the bad economy, however, Super Bowl ads are having no problem filling their advertising spots. Super Bowl commercials are up for sale at $3 million for 30 seconds. Anheuser Busch this year spent $27 million for four and a half minutes of advertising. Last year’s Super Bowl commercial winner, FedEx, will not be advertising this year because of the economy. Could FedEx use a payday loan? Another big name that is dropping out of the lineup this year: General Motors. You can find out more about the Super Bowl commercial sell-outs in this article at your payday loan source.

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This page contains a single entry by published on January 31, 2006 3:55 PM.

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