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:

"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:

"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:

"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.

Data collected from Predictit on October 20, 2020

On this date, 20 states had market probabilities on the Predictit website less than 90 percent and greater than 10 percent for the Democrats winning the state. The 20 states, ranked by market probabilities for the Democratic candidate, are:

"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 Michigan is the pivot state. If Biden takes Michigan and all the states ranked above it, he gets 279 votes. Of the states ranked below Michigan, he could also win by not taking Michigan, but taking Arizona, 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, Michigan, which is 67. On the Predictit website, the market-based probability that the Democrats win the presidential election (in the electoral college) is 64, close to 67. So the market participants are roughly using the ranking assumption.