For those who don't follow politics, Mitt Romney offered to bet Rick Perry $10,000 that Perry had misquoted Romney. (video)

Most political commenters see the move as a gaffe. They claim the bet made Romney look out of touch, because it reminded voters that Romney is rich enough to afford $10,000.

As a believer in prediction markets, I am disappointed in the public's reaction. Romney made a bold move by making his beliefs pay rent. Critics point out that $10,000 is "chump change" for Romney, but Romney still but himself at risk. If he had lost the bet, Perry could have made a production about cashing a $10,000 check from a disgraced Romney. Besides, if money were the issue, Perry could have countered with a non-monetary bet.  "Loser has to attend the next debate in a clown suit" or something.

If politicians had to face real consequences every time they made a false statement, they would have a larger incentive to tell the truth. It's a shame Romney's bet probably won't catch on.


This post is not an endorsement of Mitt Romney or his politics. All I am endorsing is political betting.

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26 comments, sorted by Click to highlight new comments since: Today at 5:46 PM

Speaking of Romney, this Romney story from the Post (the homeless shelter one) struck me as an unusually pure example of a rationalist world-view in action.

If he had offered say a $20 bet no one would have batted an eye. The issue was purely the size of the offer since it reminded a lot of viewers at how high Romney's income is compared to theirs. People care to a large extent about identifying with politicians.Since the vast majority of the population doesn't care about prediction markets and hasn't even heard of them, they don't care about that issue. (For what it is worth, when I first heard about this I had to think a minute about why it might be considered a gaffe.)

I felt the same, and came to the same conclusion you did. I can see the clown suit solution becoming a gaffe, as well; many demographics didn't like the way GWB came across as fratboyish, and bets with reputation-harming terms have that association.

Since a presidential candidate who wins will be in a position to influence the results of policy decisions, I don't think their participation in futarchy-style bets would signal well, either. But there's gotta be some politically-correct way for them to put their money where their mouth is...

Having said it, I think he would have done better going on like this:

$10 thousand - hey, why not a million? Our entire campaign funds? As long as I'd be just taking your money, might as well go big! But seriously. You wouldn't - shouldn't - take that bet for a cent, because you'd lose.

But... when was the last time we had a President who couldn't afford to lose a $10K bet?

The question isn't as much whether he's wealthy, it's more whether he's seen as flaunting his wealth.

I actually disagree with this. While flaunting wealth might itself be off-putting, it does at least imply that the person is conscious of how much wealthier they are than others. But the criticism of Romney is just the opposite: that it shows him as "out of touch", i.e. unaware of the vast difference in wealth between him and the average voter. The fact that the bet offer is seen as an unconscious slip is in fact integral to why it is supposedly damaging: it revealed that he doesn't think of $10,000 as a lot of money. (Rather like how Marie Antoinette supposedly failed to realize that cake might be less accessible to her subjects than herself.)

Mind you, I think this criticism is entirely absurd and facepalm-inducing: apparently the ability to (deceptively) signal to the public that one is an "ordinary person" is a more important quality for a president than being the type of person who puts their money where their mouth is.

Why the hell would you want an ordinary person in charge of the country anyway? You swear at ordinary people when they drive badly; you don't want a President like that!

(or, "I think that the signal 'ordinary person here!' is grossly overweighted when it comes to politics")

Bill Clinton has plenty of money now, but I don't think he ever had significant wealth prior to becoming president; his entire career was spent in politics. Hillary made a good living as a lawyer, but not enough that $10k would have been unimportant to them.

Political coverage is a lot like a reality tv show. You put people on camera for hours each day, make up storylines, and then pick little snippets of footage to parade before the world as striking evidence that the person's character fits the storyline.

Yes, a clown-suit appearance or a similar non-monetary but embarrassing bet would have been a much better move. He must have lousy handlers.

The moment I saw this, I thought of LW. The comment didn't bother me at all. He came across to me as "No, I'm serious here. This is something I will stand by, and be willing to take a hit if I'm wrong."

If Romney had made a bet that was large to him, that would have been even better. He'd be showing he really meant it. A $10k bet that sounded off-hand was the worst possible.

Can you imagine Angela Merkel or Margaret Thatcher or even Sarah Palin doing that? Offering to bet a lot of money on the issue in the middle of a debate is hyper-masculine, aggressive, and low class. It is not all that different from asking the guy if he wants to step outside.

Prediction markets where the other side of the bet is a faceless horde are completely different. There is no humiliation inflicted.

That would seem totally in character for Sarah Palin to me (and even more so for Ann Coulter), but then I'm French, so my mental model of Palin may be a bit off.

I don't see it as low class, and I consider "solving" disagreements by betting better than appeals to authority or agreeing to disagree. However it would seem a bit unseemly for someone already in a position of authority (like Thatcher or Merkel), I'm not totally sure why ... maybe because we want to know what they do, not what they think and say, and once they're in power they shouldn't have anything to prove any more. Offering to bet is a way to prove your thinking is correct, which is important for pundits and candidates, but not for those in power.

I don't think it's low class. It's a rhetorical way to challenge someone to put up or shut up.

It would have been smarter to bet $1. That makes it clear it's challenging the point. The dollar is a token of the challenge.

And I think Thatcher would have done it, and she would have done it right with a single pound. As far as hyper aggressive, she had bigger stones than all our current candidates combined. Watch some youtubes of her at Question Time.

challenge someone to put up or shut up.

That is exactly right. Challenging someone to put up or shut up is a confrontation and an escalation. That is how fistfights begin. The challenge is construed as being to their honor.

A well-written analysis of the dynamic is given by a lawyer, William Ian Miller, in Humiliation. Among the other interesting tales he tells is how a medieval Icelandic noble family feud began with a too extravagant gift.

Challenging someone to put up or shut up is a confrontation and an escalation. That is how fistfights begin. The challenge is construed as being to their honor.

Does the fact that it's an escalation mean it's bad? Some bad things (fistfights) are escalations, but that doesn't magically make escalation bad.

Instead of analogies to other bad things, we should analyze what makes things bad.

A norm of responding to challenges to honor by (threats of) violence would mostly result in social status depending on capacity to inflict "acceptable" forms of violence (with a probable side effect of a lot of violence). Since that is not particularly correlated with "social usefulness" (except in case of war with all neighbours), that sounds pretty sucky to society compared to other ways of attributing status.

A norm of responding to disagreements of fact by bets ("put up or shut up"), however, will make people less likely to publicly say provably untrue things, and gives an advantage to those who know what's true and what isn't - seems like a social good!

Very well said.

I'm reminded of a story my grad school advisor told me about professor from Taiwan, I think, who while participating in a technical discussion in the US, was hit by a fit of gleeful delirium as he ranted "I disagree! I disagree! I disagree!"

As my advisor told it, the guy was just giddy with being able publicly disagree and take on an idea - to directly and immediately confront an idea he disagreed with, without some face saving 40 minute kabuki dance to get the point across.

There's a divide on whether directly confronting ideas is "rude" and "insulting", and that divide occurs within societies as well. I think confronting bad ideas is a public good, but in this case, like so many others, I'm aware that I'm in the minority on the issue, even within the supposedly pro free speech, open minded, soap box for everybody US. As a practical, everyday matter, most people think it is insulting, aggressive, or rude for someone to question their ideas, or even express a contradictory viewpoint, and that feeling of grievance grows particularly when they perceive themselves to be in the majority.

You all are overanalyzing it, the issue is simple. Romney's own church position on gambling is clear:

The Church of Jesus Christ of Latter-day Saints is opposed to gambling, including lotteries sponsored by governments. Church leaders have encouraged Church members to join with others in opposing the legalization and government sponsorship of any form of gambling. Gambling is motivated by a desire to get something for nothing. This desire is spiritually destructive. It leads participants away from the Savior's teachings of love and service and toward the selfishness of the adversary. It undermines the virtues of work and thrift and the desire to give honest effort in all we do.

As if Jewish or Muslim candidate invited his opponent to a pork dinner :P

Somehow, I don't think this is the aspect of the affair that does the most damage.

I don't know if the Mormon position on gambling outlaws making bets. Some definitions of gambling require it to involve a 'game' - others require that the bet is made with the primary intent of winning more money.

Why is your name Miley Cyrus?

First name I thought of. I may or may not have been anchored by what was on TV.


James D. Miller once offered to bet Ray Kurzweil:

Rather then just looking at existing markets, however, believers in the possibility of a mid-century Singularity should design Singularity prediction markets. I attempted to do this myself, on a very small scale, when I proposed a bet to Kurzweil. Under the bet I would give him a very small amount of money today and in return at some future agreed-upon date he would give me a 10-meter-diameter solid diamond sphere. The idea behind my bet was that if the Singularity were near, nanotechnology would make it very easy to make large diamonds in the relatively near future. Kurzweil, alas, turned me down. He emailed me making the very reasonable argument that "Everything I write about could come true and for physical reasons that are not currently understood a ten-meter-round diamond might be hard to fabricate." But still, since the mere approach to the Singularity would cause massive price changes, it should be possible to design future markets that provide good estimates of the likelihood of a Singularity occurring.

More here: Singularity Prediction Markets

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One error Romney made is that a wager on his part would have been politically more palatable than a bet. The subject matter in question is Romney's own words; he is presumably quite aware of what he said. Therefore, he's proposing what appears to be a sucker bet, which would create a $10K debt for Perry, which seems unfair. Also, gambling is offensive to some voters; Perry's refusal to go there scored points for him at Romney's expense.

Even a wager (where payment would occur only if Perry could prove his case) would carry the risk of Romney being perceived as something of a crackpot, or someone who reneges on a wager, if Perry could make a convincing case.