Ranking Assumption for 2020 Presidential election

Data collected from Predictit on September 8, 2020

On this date, 19 states had market probabilities on the Predictit website less than 90 percent and greater than 10 percent for the Democrats winning the state. The 19 states, ranked by market probabilities for the Democratic candidate, are:

state prob votes sumvotes
Maine not 0282 3212
Nevada80 6218
New Hampshire71 4222
Minnesota 70 10232
Michigan69 16248
Nebraska 0267 1249
Wisconsin65 10259
Arizona 63 11270pivot
Pennsylvania63 20290pivot
Florida53 29
North Carolina49 15
Ohio36 18
Maine 0236 1
Georgia 35 16
Iowa31 6
Texas29 38
Arkansas15 6
Missouri 12 10
Montana12 3
60 = Predictit market-based probability that the Democrats win the presidential election.

"sumvotes" is the sum of the electoral votes of all the states ranked above the state plus the state's vote. 270 votes are needed to win. You can see that Arizona or Pennsylvania is the pivot state (they have equal probabilities). If Biden takes Arizona or Pennsylvania and all the states ranked above it, he gets 270 or 290 votes. Of the states ranked below Arizona and Pennslyvania, he could also win by not taking Arizona and Pennsylvania but taking Florida. This would, of course, violate the ranking assumption.

There is evidence that traders are more or less using the ranking assumption. According to the ranking assumption, the probability that the Democrats get a majority in the electoral college is the probability that they win the pivot state, Arizona or Pennslyvania, which is 63. On the Predictit website, the market-based probability that the Democrats win the presidential election (in the electoral college) is 60, close to 63.

Data collected from Predictit on September 22, 2020

On this date, 19 states had market probabilities on the Predictit website less than 90 percent and greater than 10 percent for the Democrats winning the state. The 19 states, ranked by market probabilities for the Democratic candidate, are:

state prob votes sumvotes
New Mexico89 5200
Colorado 89 9209
Maine not 0286 3212
Nevada76 6218
Minnesota 75 10228
Michigan72 16244
New Hampshire71 4248
Wisconsin66 10258
Nebraska 0265 1259
Arizona 65 11270pivot
Pennsylvania64 20
Florida48 29
North Carolina47 15
Maine 0247 1
Iowa36 6
Ohio34 18
Georgia 34 16
Texas26 38
Arkansas16 6
59 = Predictit market-based probability that the Democrats win the presidential election.

"sumvotes" is the sum of the electoral votes of all the states ranked above the state plus the state's vote. 270 votes are needed to win. You can see that Arizona is the pivot state. If Biden takes Arizona and all the states ranked above it, he gets 270 votes. Of the states ranked below Arizona, he could also win by not taking Arizona, but taking Pennsylvania, Florida, or North Carolina. This would, of course, violate the ranking assumption.

There is evidence that traders are more or less using the ranking assumption. According to the ranking assumption, the probability that the Democrats get a majority in the electoral college is the probability that they win the pivot state, Arizona, which is 65. On the Predictit website, the market-based probability that the Democrats win the presidential election (in the electoral college) is 59, close to 65.

Data collected from Predictit on October 6, 2020

On this date, 21 states had market probabilities on the Predictit website less than 90 percent and greater than 10 percent for the Democrats winning the state. The 21 states, ranked by market probabilities for the Democratic candidate, are:

state prob votes sumvotes
Minnesota 79 10222
New Hampshire79 4226
Nevada78 6232
Nebraska 0278 1233
Michigan77 16249
Wisconsin72 10259
Pennsylvania71 20279pivot
Arizona 68 11
Maine 0256 1
Florida55 29
North Carolina53 15
Ohio44 18
Georgia 43 16
Iowa41 6
Texas31 38
Arkansas 21 6
South Carolina20 9
Missouri14 10
Montana 13 3
Kansas11 6
Indiana 11 11
66 = Predictit market-based probability that the Democrats win the presidential election.

"sumvotes" is the sum of the electoral votes of all the states ranked above the state plus the state's vote. 270 votes are needed to win. You can see that Pennsylvania is the pivot state. If Biden takes Pennsylvania and all the states ranked above it, he gets 279 votes. Of the states ranked below Pennsylvania, he could also win by not taking Pennsylvania, but taking Arizona, Florida, or North Carolina, where he is favored. This would, of course, violate the ranking assumption.

According to the ranking assumption, the probability that the Democrats get a majority in the electoral college is the probability that they win the pivot state, Pennsylvania, which is 71. On the Predictit website, the market-based probability that the Democrats win the presidential election (in the electoral college) is 66, slightly below 71. So the market participants are not quite using the ranking assumption.
Ranking Assumption for 2020 Senate elections

Data collected from Predictit on September 8, 2020

The current make up of the Senate is 53 Republicans and 47 Democrats, counting the 2 independents as Democrats. Only 14 states are in play in having market probabilities on the Predictit website less than 90 percent and greater than 10 percent. The 14 states ranked by the market probabilities from Predictit for the Democratic candidate are:

state prob now
Colorado88R
Arizona87R
Minnesota84D
Michigan77D
Maine72Rpivot for 50 Democratic seats
North Carolina67Rpivot for 51 Democratic seats
Iowa45R
Montana41R
Georgia, reg.30R
Arkansas26R
South Carolina23R
Georgia, spec.20R
Texas13R
Alabama11R
56 = Predictit market-based probability of the Democrats controlling the Senate.

If the Democrats win North Carolina and all the states above it, they will have 51 seats, counting the 2 independents as Democrats. If they win Maine and all the states above it but lose North Carolina, they will have 50 seats. They will still control the Senate if they win the White House. According to the ranking assumption, the Predictit market probablility that they control the Senate is thus 72 percent (the probablity they win Maine) if they win the White House and 67 percent (the probablility they win North Carolina) if they don't. If we use the Predictit market-based probabilty of 60 percent that the Democrats win the presidential electon, then the ranking assumption probability that the Democrats control the Senate is 0.60x72 + 0.40x67, which is 70 percent. This is noticeably higher than the Predictit market-based probability of the Democrats controlling the Senate of 56 percent. In this case, unlike in the Presidential case, it does not look like the market is using the ranking assumption.

Data collected from Predictit on September 22, 2020

The current make up of the Senate is 53 Republicans and 47 Democrats, counting the 2 independents as Democrats. Only 16 states are in play in having market probabilities on the Predictit website less than 90 percent and greater than 10 percent. The 16 states ranked by the market probabilities from Predictit for the Democratic candidate are:

state prob now
Minnesota87D
Colorado84R
Arizona83R
Michigan73D
Maine73Rpivot for 50 Democratic seats
North Carolina65Rpivot for 51 Democratic seats
Iowa49R
Montana42R
Georgia, reg.35R
South Carolina30R
Georgia, spec.27R
Arkansas26R
Kansas22R
Texas16R
Alabama12R
Kentucky11R
57 = Predictit market-based probability of the Democrats controlling the Senate.

If the Democrats win North Carolina and all the states above it, they will have 51 seats, counting the 2 independents as Democrats. If they win Maine and all the states above it but lose North Carolina, they will have 50 seats. They will still control the Senate if they win the White House. According to the ranking assumption, the Predictit market probablility that they control the Senate is thus 73 percent (the probablity they win Maine) if they win the White House and 65 percent (the probablility they win North Carolina) if they don't. If we use the Predictit market-based probabilty of 59 percent that the Democrats win the presidential electon, then the ranking assumption probability that the Democrats control the Senate is 0.59x73 + 0.41x65, which is 70 percent. This is noticeably higher than the Predictit market-based probability of the Democrats controlling the Senate of 57 percent. In this case, unlike in the Presidential case, it does not look like the market is using the ranking assumption.

Data collected from Predictit on October 6, 2020

The current make up of the Senate is 53 Republicans and 47 Democrats, counting the 2 independents as Democrats. Only 16 states are in play in having market probabilities on the Predictit website less than 90 percent and greater than 10 percent. The 16 states ranked by the market probabilities from Predictit for the Democratic candidate are:

state prob now
Colorado87R
Arizona83R
Maine77Rpivot for 50 Democratic seats
Michigan71D
North Carolina58Rpivot for 51 Democratic seats
Iowa54R
Montana42R
Georgia, reg.38R
Georgia, spec.34R
Arkansas34R
South Carolina32R
Kansas31R
Mississippi19R
Texas18R
Alabama13R
Kentucky11R
66 = Predictit market-based probability of the Democrats controlling the Senate.

If the Democrats win North Carolina and all the states above it, they will have 51 seats, counting the 2 independents as Democrats. If they win Maine and all the states above it but lose North Carolina, they will have 50 seats. They will still control the Senate if they win the White House. According to the ranking assumption, the Predictit market probablility that they control the Senate is thus 77 percent (the probablity they win Maine) if they win the White House and 58 percent (the probablility they win North Carolina) if they don't. If we use the Predictit market-based probabilty of 66 percent that the Democrats win the presidential electon, then the ranking assumption probability that the Democrats control the Senate is 0.66x77 + 0.34x58, which is 70.5 percent. This is somewhat higher than the Predictit market-based probability of the Democrats controlling the Senate of 66 percent. So the market is not quite using the ranking asssumption.