# How do you forecast an election?

Nassim Nicholas Taleb

DRAFT - CANNOT BE CITED YET. I need to make the notations uniform across the two parts.

A Dynamic View of Forecasting
1.0 0.6
0.5
0.8 0.5
0.4
0.6 0.4
0.3
, 0.4
, 0.3 ,
0.2 0.2
0.1 0.2 0.1

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0.8 1.0 1.0

0.6 0.8 0.8

0.6 0.6
0.4 , 0.4
, 0.4
,
0.2 0.2 0.2

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1.0 1.0
0.8
0.8 0.8
0.6
0.6 0.6
0.4 , 0.4
, 0.4
,
0.2 0.2 0.2

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1.0 0.5

0.6 0.8 0.4

0.6 0.3
0.4
, 0.4
, 0.2
0.2
0.2 0.1

20 40 60 80 100 20 40 60 80 100 20 40 60 80 100

◼ Figure 1: A collection of forecasters for the same variable {0,1} over 100 periods. The blue has little
uncertainty in his forecast. The most efficient forecaster is half way, closer to the green line

1. the estimation error can be integrated into the variance of W. Yes we have known for >200 years since Laplace’s argument that uncertainty and ignorance makes odds remain close to 1/2. the closer the probability in two-contest need to be at ..2 binary forecasting 538. This note is organized as follows. we can transform later): dW = dt μ + dZ σ (1) By Ito' s Lemma: . or some other variable.0 ELECTION Rigorous DAY 0. They responded to this criticism with .5 ◼ The higher the uncertainty in the system the more slowly forecast need to update until the final result. more ignorance of probability.9 updating 0.7 0. a Wiener process WLOG..nb ◼ Figure 2: The defect of 538. Very very basics of stochastic calculus.6 20 40 60 80 100 Some mathematical derivations Let us start the model from the very basics. Assume W is a continuous state variable determining the final result. Note the following: ◼ The higher the uncertainty. I discuss the option approach than show how it corresponds to de Finetti’s approach to minimize the Brier Score as a “proper” score. We have the election estimate F a function of a state variable W. W has for simple dynamics (arithmetic B M. W can be an estimate.8 538 0.