I am beginning to suspect that many markets would show large fluctuations if participants were fully rational
Maybe. But I'm willing to bet that that is not the explanation for Intrade fluctuations...
Funny that you assume that stating a testing methodology makes it sound more plausible. My own response was more like, 'well, OK: but my money would be on your disproving your hypothesis.'
It's kind of past the point where this is really relevant, but I was interested to notice that lots of commenters launched into discussions of potential knock-on consequences of real-world speckification but not a single person queried the extended cost of a real-world 50-year torture option (infrastructure, training, torturer-trauma, wear and tear on electrodes etc.). Of course, as with any thought experiment dragging in any externalities at all was/is invalid: the experiment sets the parameters, and any speculation outside of these is irrelevant. But insofar as that was being done I thought it curious that these types of speculations all went one way.
If pressed, I'd hypothesize that this was because some people who saw that the 'specks' option was obviously the right choice were left feeling that there was a further trick of some kind: surely the obvious wrong answer, torture, must be right - or why would the thought experiment have been posed at all?
Personally, I'm a specks guy and I feel deeply suspiciuous of the torturers' reasoning: I suspect it of being dependent on a fallacious calculation of harm. But I think the thought experiment is of very limited value as it does not really mirror any real-world scenario that I can see.