 "Before Oscar night, playing the odds with a bettor's mind-set")
The Academy Awards ceremony will emphasise the suspense of the unknown on Sunday night. But Hollywood insiders are well aware that many nominees have little chance of winning - and know who those nominees are.
Not only will the award for best picture most likely go to Birdman or Boyhood, but the best director award also seems destined for one of those two films. Eddie Redmayne (The Theory of Everything) will probably win best actor, though Michael Keaton (Birdman) has a shot. The other acting categories - best actress, best supporting actress and best supporting actor - appear to offer even less suspense, with Julianne Moore (Still Alice), Patricia Arquette (Boyhood) and J K Simmons (Whiplash) each a runaway favourite.
There is nothing new, of course, about Hollywood going into Oscar night with a very good idea of what will happen. That's been the case for years. The new development is that any of the rest of us who want to know the likely outcomes can do so, with nothing fancier than an internet connection.
Several betting markets, including European bookmakers, the Wynn Las Vegas casino and a prediction market known as the Hollywood Stock Exchange, publicly list Oscar odds. And their record over the past decade is remarkably good.
Big underdogs rarely win. Johnny Avello, executive director of the Race and Sports Book at Wynn, said that only two Oscar long shots have won in a major category in the past decade. Ang Lee took best director in 2013, despite having 9-to-1 odds, which suggests roughly a 10 percent chance of victory. In 2006, Crash won best picture with 4-to-1 (or roughly 20 per cent) odds.
On the other end of the spectrum, nominees who have more than a 90 per cent chance of winning - as Moore, Arquette and Simmons do, according to PredictWise, which aggregates betting market odds - have ended up winning more than 90 per cent of the time.
Other strong favourites this year, according to the prediction markets, include: How to Train Your Dragon 2 for animated feature; The Grand Budapest Hotel for costume design and makeup and hairstyling; Citizenfour for documentary feature; Ida for foreign-language film; Glory, from Selma, for original song; and American Sniper for at least one of the sound categories.
"This is the type of question" - who will win the Oscars? - "where markets do really well," said David Rothschild, an economist at Microsoft Research, a branch of Microsoft, who also helps runs PredictWise.
There are several reasons that the Academy Awards are almost an ideal subject for prediction markets. The awards happen every year, with the same categories, allowing bettors to learn from the past. The Oscars are preceded by a series of other prizes, like the Screen Actors Guild Awards, which offer a kind of test run for bettors' views.
The outcome is also knowable in advance, at least hypothetically. It is based on human decisions - the votes of Academy members - that have already been made. By contrast, a political campaign or a sports contest, two other types of events that are the subject of prediction markets, involve more random chance, like the weather on Election Day or the direction of a bouncing football.
"The Academy voters all socialise and talk movies, and a conventional wisdom develops," said Eric Zitzewitz, an economics professor at Dartmouth who has studied prediction markets. "If you are plugged in to those conversations, it's pretty clear how the votes will go, at least most of the time. Serious bettors make sure to talk to people who are plugged in."
It is possible that even some Academy voters are quietly participating in the betting markets.
These factors often cause Oscar odds to reach confidence levels - 90 per cent or even 99 per cent - that other prediction-market odds usually do not. The New England Patriots, for example, were strongly favoured to beat the Indianapolis Colts in the AFC Championship last month (and ultimately won, 45-7). Yet before the game, markets gave the Patriots only a 75 per cent of winning, according to PredictWise.
With the Oscars, the best picture favourite has had at least an 86 per cent chance of victory in each of the past three years. All three - 12 Years a Slave, Argo and The Artist - won.
This year's best picture race is more exciting. Birdman has roughly a 66 per cent chance of winning, with Boyhood at 32 per cent, according to PredictWise. Avello, the Wynn oddsmaker, also listed Birdman as the favourite last week, although he gave Boyhood almost as good a chance to win.
The category has shown how the markets react to new information. Just after the nominations were announced, Boyhood was the favourite, but much of the preshow chatter has pointed toward Birdman.
These shifts are not necessarily obvious to many movie fans. Boyhood, after all, won the Golden Globe for best drama, while Birdman lost best musical or comedy to The Grand Budapest Hotel. But there is a reason for the phrase "the smart money."
To compare broad public opinion with the views of prediction markets, a Google Consumer Survey conducted last week, for The Upshot, asked internet users which movie they expected to win best picture.
American Sniper was the most popular answer. More than 40 per cent of respondents said they thought it would win, when given a list of all eight nominees. No other movie received more than 15 per cent.
Of course, American Sniper has also done vastly better at the box office than any of the other nominees, bringing in slightly more revenue than all its seven competitors combined. American Sniper was also the clear winner when Google asked people to name the best movie they had seen in the past year. Again, more than 40 per cent of respondents chose American Sniper. Selma, Boyhood and Birdman finished behind it, each with between 10 per cent and 15 per cent.
The results highlight the advantage of asking people to take a financial stake in their prediction. When no money is at stake - as in a survey like Google's - people often let their preferences about which movie they want to win affect their answers about which movie will win. They seem to be more objective when they have to back up their guesses with money.
For this reason, some technology companies have set up internal prediction markets, in which employees can bet on whether a project finishes on schedule, for example. "The market forces the awkward conversations to occur sooner, rather than later," Zitzewitz said.
But there is a crucial caveat that many people ignore when looking at odds: Being a strong favourite is not the same as being a sure thing. Even if the markets were omniscient, a 90 per cent favourite would win only about 90 per cent of the time - and events with 10 percent odds happen all the time.
It snows about 10 per cent of all days in Denver or Minneapolis. About 10 per cent of adult women are at least 5 foot 8. If you flip a coin three times, you'll get three heads only slightly more than 10 per cent of the time.
All of which means that at least one of this year's favourites is likely to lose. Last year, for instance, Helium won the Oscar for live-action short despite market odds of only 11 per cent. In 2013, Lincoln won production design with 9 per cent odds.
The Oscars will still have moments of legitimate suspense, as most human endeavours do. The suspense just won't be quite as common as the show's producers pretend.
Not only will the award for best picture most likely go to Birdman or Boyhood, but the best director award also seems destined for one of those two films. Eddie Redmayne (The Theory of Everything) will probably win best actor, though Michael Keaton (Birdman) has a shot. The other acting categories - best actress, best supporting actress and best supporting actor - appear to offer even less suspense, with Julianne Moore (Still Alice), Patricia Arquette (Boyhood) and J K Simmons (Whiplash) each a runaway favourite.
There is nothing new, of course, about Hollywood going into Oscar night with a very good idea of what will happen. That's been the case for years. The new development is that any of the rest of us who want to know the likely outcomes can do so, with nothing fancier than an internet connection.
Several betting markets, including European bookmakers, the Wynn Las Vegas casino and a prediction market known as the Hollywood Stock Exchange, publicly list Oscar odds. And their record over the past decade is remarkably good.
Big underdogs rarely win. Johnny Avello, executive director of the Race and Sports Book at Wynn, said that only two Oscar long shots have won in a major category in the past decade. Ang Lee took best director in 2013, despite having 9-to-1 odds, which suggests roughly a 10 percent chance of victory. In 2006, Crash won best picture with 4-to-1 (or roughly 20 per cent) odds.
On the other end of the spectrum, nominees who have more than a 90 per cent chance of winning - as Moore, Arquette and Simmons do, according to PredictWise, which aggregates betting market odds - have ended up winning more than 90 per cent of the time.
Other strong favourites this year, according to the prediction markets, include: How to Train Your Dragon 2 for animated feature; The Grand Budapest Hotel for costume design and makeup and hairstyling; Citizenfour for documentary feature; Ida for foreign-language film; Glory, from Selma, for original song; and American Sniper for at least one of the sound categories.
"This is the type of question" - who will win the Oscars? - "where markets do really well," said David Rothschild, an economist at Microsoft Research, a branch of Microsoft, who also helps runs PredictWise.
There are several reasons that the Academy Awards are almost an ideal subject for prediction markets. The awards happen every year, with the same categories, allowing bettors to learn from the past. The Oscars are preceded by a series of other prizes, like the Screen Actors Guild Awards, which offer a kind of test run for bettors' views.
The outcome is also knowable in advance, at least hypothetically. It is based on human decisions - the votes of Academy members - that have already been made. By contrast, a political campaign or a sports contest, two other types of events that are the subject of prediction markets, involve more random chance, like the weather on Election Day or the direction of a bouncing football.
"The Academy voters all socialise and talk movies, and a conventional wisdom develops," said Eric Zitzewitz, an economics professor at Dartmouth who has studied prediction markets. "If you are plugged in to those conversations, it's pretty clear how the votes will go, at least most of the time. Serious bettors make sure to talk to people who are plugged in."
It is possible that even some Academy voters are quietly participating in the betting markets.
These factors often cause Oscar odds to reach confidence levels - 90 per cent or even 99 per cent - that other prediction-market odds usually do not. The New England Patriots, for example, were strongly favoured to beat the Indianapolis Colts in the AFC Championship last month (and ultimately won, 45-7). Yet before the game, markets gave the Patriots only a 75 per cent of winning, according to PredictWise.
With the Oscars, the best picture favourite has had at least an 86 per cent chance of victory in each of the past three years. All three - 12 Years a Slave, Argo and The Artist - won.
This year's best picture race is more exciting. Birdman has roughly a 66 per cent chance of winning, with Boyhood at 32 per cent, according to PredictWise. Avello, the Wynn oddsmaker, also listed Birdman as the favourite last week, although he gave Boyhood almost as good a chance to win.
The category has shown how the markets react to new information. Just after the nominations were announced, Boyhood was the favourite, but much of the preshow chatter has pointed toward Birdman.
These shifts are not necessarily obvious to many movie fans. Boyhood, after all, won the Golden Globe for best drama, while Birdman lost best musical or comedy to The Grand Budapest Hotel. But there is a reason for the phrase "the smart money."
To compare broad public opinion with the views of prediction markets, a Google Consumer Survey conducted last week, for The Upshot, asked internet users which movie they expected to win best picture.
American Sniper was the most popular answer. More than 40 per cent of respondents said they thought it would win, when given a list of all eight nominees. No other movie received more than 15 per cent.
Of course, American Sniper has also done vastly better at the box office than any of the other nominees, bringing in slightly more revenue than all its seven competitors combined. American Sniper was also the clear winner when Google asked people to name the best movie they had seen in the past year. Again, more than 40 per cent of respondents chose American Sniper. Selma, Boyhood and Birdman finished behind it, each with between 10 per cent and 15 per cent.
The results highlight the advantage of asking people to take a financial stake in their prediction. When no money is at stake - as in a survey like Google's - people often let their preferences about which movie they want to win affect their answers about which movie will win. They seem to be more objective when they have to back up their guesses with money.
For this reason, some technology companies have set up internal prediction markets, in which employees can bet on whether a project finishes on schedule, for example. "The market forces the awkward conversations to occur sooner, rather than later," Zitzewitz said.
But there is a crucial caveat that many people ignore when looking at odds: Being a strong favourite is not the same as being a sure thing. Even if the markets were omniscient, a 90 per cent favourite would win only about 90 per cent of the time - and events with 10 percent odds happen all the time.
It snows about 10 per cent of all days in Denver or Minneapolis. About 10 per cent of adult women are at least 5 foot 8. If you flip a coin three times, you'll get three heads only slightly more than 10 per cent of the time.
All of which means that at least one of this year's favourites is likely to lose. Last year, for instance, Helium won the Oscar for live-action short despite market odds of only 11 per cent. In 2013, Lincoln won production design with 9 per cent odds.
The Oscars will still have moments of legitimate suspense, as most human endeavours do. The suspense just won't be quite as common as the show's producers pretend.
©2015 The New York Times News Service