Dan - so did you get that easy 10% ROI on Ron Paul? If no, why leave all that free money on the table?

Of course, this opportunity presents itself every day in the form of sports betting. Sometimes the markets are "wrong" (e.g. yesterday's Super Bowl), but in the long term, it is pretty hard to beat the sports markets. FWIW, the sportsbook I use currently shows the same odds as intrade (http://www.wsex.com/market/DEMOCRATNOMINEE-2008.html) which makes sense as otherwise someone would arbitrage the difference away.

I admit that I am still not quite sure what a "Bayesian" is as opposed to and "Old style" statistician (though I am very familiar with Bayes theorem, prior probabilities, likelihood ratios, etc).

That being said, the example at the beginning of the post is a great example of "after the fact" reasoning. If researcher number #2 had required 1,000 trials, then you could say that our interpretation of his results are the same as, say, "researcher #3" who set out to have 1,000 trials no matter how many cures were observed....

Yes, you can sell contracts as well. In fact, whenever you are buying, you are doing so from someone who is selling.

However, seeing that Obama and Hillary are really the only candidates left, shorting one is (more or less) equivalent to going long on the other.