Forecasting the Outcome of Closed‐Door Decisions: Evidence from 500 Years of Betting on Papal Conclaves

Closed‐door decisions may be defined as decisions in which the outcome is determined by a limited number of decision‐makers and where the process is shrouded in at least some secrecy. In this paper, we examine the use of betting markets to forecast one particular closed‐door decision: the election of the pope. Within the context of 500 years of papal election betting, we employ a unique dataset of betting on the 2013 papal election to investigate how new public information is incorporated into the betting odds. Our results suggest that the market was generally unable to incorporate effectively such information. We venture some possible explanations for our findings and offer suggestions for further research into the prediction and predictability of other ‘closed‐door’ decisions. Copyright © 2015 John Wiley & Sons, Ltd.