Fry, J. and Brint, A. orcid.org/0000-0002-8863-407X (2017) Bubbles, Blind-Spots and Brexit. Risks, 5 (3). 37.
Abstract
In this paper we develop a well-established financial model to investigate whether bubbles were present in opinion polls and betting markets prior to the UK’s vote on EU membership on 23 June 2016. The importance of our contribution is threefold. Firstly, our continuous-time model allows for irregularly spaced time series—a common feature of polling data. Secondly, we build on qualitative comparisons that are often made between market cycles and voting patterns. Thirdly, our approach is theoretically elegant. Thus, where bubbles are found we suggest a suitable adjustment. We find evidence of bubbles in polling data. This suggests they systematically over-estimate the proportion voting for remain. In contrast, bookmakers’ odds appear to show none of this bubble-like over-confidence. However, implied probabilities from bookmakers’ odds appear remarkably unresponsive to polling data that nonetheless indicates a close-fought vote.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2017 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (http://creativecommons.org/licenses/by/4.0/). |
Keywords: | Brexit; bubbles; econophysics; over-confidence; politics; political modelling |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 20 Nov 2017 09:55 |
Last Modified: | 20 Nov 2017 09:55 |
Published Version: | https://doi.org/10.3390/risks5030037 |
Status: | Published |
Publisher: | MDPI |
Refereed: | Yes |
Identification Number: | 10.3390/risks5030037 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:124208 |