Mind: Intrade's Weaknesses

About Intrade which is a website which allows members to trade futures (bet) on the outcomes of events ...

But the [Intrade] crowd was not everywhere wise. For one thing, many of the betting pools on Intrade and Betfair attract relatively few traders, in part because using them legally is cumbersome. (No, I do not know from experience.) The thinness of these markets can cause them to adjust too slowly to new information.

And there is this: If the circle of people who possess information is small enough —- as with the selection of a vice president or pope or, arguably, a decision by the Supreme Court —- the crowds may not have much wisdom to impart. "There is a class of markets that I think are basically pointless," says Justin Wolfers, .... "There is no widely available public information."

For more, see When the Crowd Isn't Wise by David Leonhardt, July 7, 2012 at NYTimes.com.