2024 Atlantic Hurricane Season Prediction Market Bulletin

The official Atlantic hurricane season has entered its final month and there have been 11 hurricanes.

The implied probability of at least one hurricane before the end of the month is 70%. Since 1851 only 8 years saw more than 11 hurricanes, although 4 of those were in the last 20 years.

Why is the price of <11 not zero?

Given 11 hurricanes have already occurred we would expect the price corresponding to fewer than 11 hurricanes to be very low. This is partly caused by participants contining to hold contracts that will not pay out, even though the market maker would pay a small, but non-zero, amount for them. This might be because there are currently no other markets in which participants could deploy these credits. Other nuances of the incentive structure might also be contributing.

Optimizing the incentives for participants in climate prediction markets is one of the research goals of CRUCIAL.

Price updates from CAHM24 will be regularly published at https://www.crucialab.net/market/cahm24/.