It's an axiom in politics: Denying an accusation that turns out to be true can inflict more damage on a politician than the revelation itself. Bill Clinton dug himself into a public and ultimately legal hole in 1998 less for his philandering than for his lying about his philandering. In June, New York congressman Anthony Weiner resigned under pressure after insisting for more than a week that the lewd photos he posted on Twitter were the handiwork of a nonexistent hacker.
Herman Cain's turn to play defense began Sunday, when a Politico investigation revealed evidence that, while Cain was president and CEO of the National Restaurant Association, the group settled at least two lawsuits accusing him of sexual harassment.
At first, Cain denied knowledge of the details or even the existence of the settlements. "If the restaurant association did a settlement, I wasn't even aware of it and I hope it wasn't for much," he told Fox News on the morning of Oct. 31. "If there was a settlement, it was handled by some of the other officers at the restaurant association."
By that evening, Cain acknowledged, in an interview on PBS, that he "was aware that an agreement was reached", and by the morning of Nov. 1, he told the news channel HLN he would take back his initial denial if he could, explaining that, "after 12 hours during the day, many events, many interviews, I was gradually able to recall more and more details about what happened."
Cain's reversal was swifter and far less dramatic than either Clinton's or Weiner's, but it still offers us an opportunity to investigate whether the candidate's election hopes were at all affected by the allegation or Cain's shifting explanation.
On prediction markets like Betfair and Intrade, election watchers bet real money on who will win the Republican nomination, shifting money in and out of candidates when events like Cain's scandal erupt and unfold. By tracking how energetically traders sold their stakes in Cain in the wake of Politico's report and in the days that followed, we can get a measure of how harmful the allegations were for Cain and how well he is controlling the damage.
Between 8 p.m. and 10 p.m. on Oct. 30, Cain's chances of winning the Republican nomination--computed as an average of Betfair and Intrade -- dropped precipitously, from 8.1 percent to 4.8 percent. By cutting his likelihood of winning the nomination nearly in half in the span of two hours, traders sent a strong message that the charges of sexual misconduct were a serious, and potentially fatal, problem for Cain.Read More »from Harassment allegations vs. shifting denials: What hurt Herman Cain more?