Tyler Cowen at Marginal Revolutions has a little analysis of how some betting markets reacted to last night's presidential debate. My executive summary: no effect. That pretty much lines up with my own reaction to the debate: it was very close, with perhaps a slight edge for Kerry, but no minds were changed.
What's interesting about watching the markets is that the share prices are one step removed from the bettors' opinions. That is, people don't bet based on who they thought did a better job, they bet based on how they estimate everyone else will evaluate the candidates' performances. So with the markets split close to 65/35 in favor of Bush that doesn't mean he's expected to win 65% of the popular vote, it means that the bettors think there's a 65% chance that he'll win the electoral vote by any margin.
What is intriguing as well is in the IEM it has four other groupings.
Rep win w/greater than 52% of the popular vote
Rep win w/less than 52 percent
Dem win w/greater than 52%
Dem win w/less than 52%
The trends of late has the Rep lines expanding with >52 having a higher probablity... meaning the money is going to a larger win for Bush.
The Dem lines are converging with the less than 52% win rising... meaning a Kerry win will is a skinny one.. but even that line is 33% long shot.