Tuesday, 9 February 2010

Hector Sants as a prediction market?

The interpretation of Hector Sants' resignation announcement seems to be that it's a protest against the Tories' plans to gut the FSA if they are elected.

But the Tories haven't been elected. So it's a little odd to make a protest gesture like this.

Thus, despite Robert Peston's speculation that this might be bad for the Tories, it actually suggests the converse: that Sants is very confident they will win. And he's putting his money - as it were - where his mouth is.

Although this isn't exactly a prediction market, it has some of the same incentive characteristics as one. And looking at a real prediction market (Betfair) the Tories have decimal odds of about 1.5 to win an overall majority (indicating about a probability of about 66%). Not sure I'd leave my job on those odds, but his contract does expire in the summer so it's decent of him to allow some time to find a successor.

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