Betting Markets
Daniel at Crooked Timber responds to an overexcited piece by John Tierney on online betting markets and the papal election by using some alleged opportunities for arbitrage to show that said markets are irrational. Having dabbled a bit in Tradesports myself and never found any such opportunities, I was surprised at this, and investigated.
I realized pretty quickly that Daniel had overlooked the 4-cent fee imposed by both Intrade and Tradesports on each transaction. As I lay out in comment 11 on the Crooked Timber thread, once you figure in those fees, most of those arbitrage opportunities disappear, and the prices look a lot more rational.