| No Kidding |
9 February 2004
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Market Manipulation Hits PBS Political Market
When Presidential Market 2004 was launched by PBS's "Frontline," Minnesota Public Radio's "Marketplace" and KCET, it was billed as a model for trading political futures contracts not unlike the Iowa Electronic Markets. Although play money (or virtual funds if one requires a more adult term) is used, the experiment has been hit by market manipulations just like real markets are. The prize, a trip to the next inauguration, seems to have brought out the greed that causes such shenanigans.
Not surprisingly, shares in Messrs. Kerry and Bush are commanding top dollar, and Wesley Clark's stock is up as well. However, the Dennis Kucinich and Al Sharpton paper is where the action was in the first day. Congressman Kucinich's value fluctuated radically the first few days of trading. Some players have taken their $2,500 initial stake and pushed it into the $300,000 range with "excellently timed" trades.
Of course, there is no suggestion of illegality, impropriety or any unethical activity here. There don't seem to be any rules requiring the kind of disclosure and such that Wall Street knows. And it's just a game. But as a critique of pure markets, this really is a gem.
There are only a handful of players, violating the perfect market requirement of many buyers and sellers. There is no regulator, and there are no requirements on price fixing. Liquidity is in short supply. The result -- in a short time some fortunes have grown a hundred fold. Others have been wiped out.
If any graduate student in economics is looking for a PhD dissertation topic, this is a case study waiting to make someone a doctor of philosophy.
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