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On Thursday I wrote about the series of political choices now facing New Jersey Gov. Chris Christie, who continues to be at the center of rumors about a possible 2012 presidential run. Christie is at a crossroads of sorts in sizing up his political prospects: He could run for reelection in New Jersey, run for federal office, or continue to flirt with both. And the least inviting path forward for him, I suggested, was to continue the status quo, which has Christie conspicuously flirting with both options, and potentially jeopardizing his chances at both the state and national level.
Meanwhile, should Christie throw his hat into the presidential ring, he would do well to heed recent results in the predictions markets concerning another governor who recently entered the race--Texas Gov. Rick Perry. On Friday I wrote about Perry's free fall in the prediction markets (both Betfair and Intrade). I emphasized that it was steep and continuing to grow. Going into Thursday's debate Perry had a 38.5 percent likelihood of victory in the Republican primary; as of Monday morning that was down to 25.4 percent. Yet, while Romney has gained some of Perry's strength, moving from 39.5 percent to 45.4 percent, as of Friday the markets were still groping for where the bulk of Perry's strength had gone.
This early buyers' remorse over Perry became even more germane to Christie over the weekend when the markets, the media, and even SNL, started to look at Christie's position. The chart below plots out the likelihood that Christie will run for president. Note that while the speculation over a possible Christie run continues to build, the likelihood of him running is still a modest 25 percent or less
Christie's week is perfectly scheduled to make an announcement. He plans to go around the country fundraising, with a high-profile appearance on Tuesday at the Ronald Reagan Library. Certainly, there are few locations better suited for a would-be Republican candidate to make a major announcement.
If Christie runs, he will immediately be a top contender. Right now the prediction markets give him a 24.5 percent chance to run for President and an 8.0 percent chance to win the Republican nomination. However, should he proceed with a run, my projections suggest that the prediction markets would instantly grant him a 25 to 35 percent likelihood of gaining the nomination.
If Christie does not run, he may lose his moment. The markets are reflecting growing unease in the Republican party over the current crop of candidates. The reason that Romney did not gain all of Perry's strength is that the Republicans are looking for someone to take him on for the nomination. If Christie does not grab this chance, someone else will--former Alaska Gov. Sarah Palin, for instance, or some other dark horse contender. If Perry continues to falter--and if Christie passes on a 2012 presidential run--the predictions markets suggest that GOP field is still fairly wide open.
David Rothschild is an economist at Yahoo! Research. He has a PhD in applied economics from the Wharton School of Business at the University of Pennsylvania. His dissertation is in creating aggregated forecasts from individual-level information. You can follow him on Twitter @DavMicRot and email him at PredictionBlogger@Yahoo.com.