Warner not running, Edwards gains

This is surprising:

Former Virginia Gov. Mark R. Warner (D) announced this morning that he will not seek the presidency in 2008, saying he wants to spend more time with his family.

He was trading at 15% yesterday on Tradesports:

Clearly, the major beneficiary of this development is John Edwards, who is now the main "electable" Democrat from the South in the race. The market agrees - Edwards futures shares have ticked up the most of the other potential Democratic nominees:

Update 10/12 4:51 PM: On TNR's The Plank, Michael Crowley argues that Evan Bayh also benefits from Warner's decision. But let's take a closer look at how the Democratic futures contract values have changed today.

Warner: -14.8
Edwards: +6.4
Clinton: +2.1
Bayh: +1.3
Obama: +.9
Gore: +.5
Feingold: +.5
Schweitzer: +.4
Vilsack: +.3
Dodd: +.3
Richardson: +.2

The prevailing sentiment, it seems, is still that Edwards benefits. Interestingly, Hillary shares went up by the second greatest amount, suggesting that the removal of a credible "electable" alternative helps her chances. I think that's right.

Comments

[Seth]

Okay lets put money down on Edwards/Obama. It's the feel good ticket of the year.

[Petey]

TradeSports is an indication of the current conventional wisdom, not a prognosticator.

The Warner withdrawal really does help Bayh, though that may not be apparent until well after this November. Centrist anti-Hillary money needs to flow somewhere.

And I think the Warner withdrawal hurts Hillary rather than helps her. Warner never had a clear path to knocking off Hillary. Edwards has always been the real threat. The Warner withdrawal increases the chances Edwards will get a clear shot at HRC, and thus hurts her chances.

The more crowded the field, the better for HRC.

-----

And finally, your methodology is dead wrong here.

The Bayh contract increased by a far greater percentage of its value than the HRC contract.

It's the percentage gain that counts, rather than the dollar gain. Would you rather have a $5 stock that goes up $1 or a $100 stock that goes up $2?

[Brendan Nyhan]

There are two questions:

1) To which candidates does the predicted probability previously allocated to Warner go? That's the question I was interested in, and I used the appropriate methodology to answer it (absolute changes in futures market prices).

2) Which candidate got the biggest boost relative to their previously predicted probability? By that metric (relative change in futures market prices), Bayh did bump up a lot, but it's only because he was so low to begin with.

[Petey]

"There are two questions"

Point taken.