# Election predictions are arbitrage-free: response to Taleb

## TL;DR

This paper demonstrates that under mild assumptions, probabilistic election forecasts are inherently arbitrage-free, countering Taleb's claim that popular forecasts violated arbitrage boundaries.

## Contribution

The paper refutes Taleb's heuristic argument by proving that all political forecasts under mild assumptions are arbitrage-free, clarifying the application of no-arbitrage pricing in election predictions.

## Key findings

- All probabilistic election forecasts are arbitrage-free under mild assumptions.
- Taleb's heuristic argument regarding arbitrage boundaries is false.
- Popular election forecasts do not violate arbitrage principles.

## Abstract

Taleb (2018) claimed a novel approach to evaluating the quality of probabilistic election forecasts via no-arbitrage pricing techniques and argued that popular forecasts of the 2016 U.S. Presidential election had violated arbitrage boundaries. We show that under mild assumptions all such political forecasts are arbitrage-free and that the heuristic that Taleb's argument was based on is false.