New Zealand Follows in the Footsteps of Trailblazing IEM
New Zealand's most accurate forecaster of economic and political events, Victoria University's online predictions market iPredict, has completed launching contracts forecasting the result of New Zealand's 2014 General Election.
iPredict's nearly 6000 registered traders, and anyone else who signs up for free at www.ipredict.co.nz, can now trade the 2014 Election Stocks at https://www.ipredict.co.nz/app.php?do=browse&cat=319.
The design of the stocks for the 2014 General Election reflects the success of iPredict in almost perfectly forecasting the share of the vote that was won by the National, Labour and Green parties in the 2011 General Election. Over the three months before election day, iPredict forecast National's party vote to within an amazing 0.01% of its actual election night result, while overestimating Labour's vote by just 1.67% and underestimating the Greens by just 0.42%.
The design also reflects learnings from the 2011 forecasts for smaller parties which, while superior to traditional polls, were not as accurate as for the larger parties, most probably as a result of the cost of taking a long position being substantially less than taking a short position. These learnings have been discussed with iPredict's sibling predications markets around the world, including at the University of Iowa where the world's first predictions market was launched for the U.S. election in 1988.
For the 2014 election, therefore, iPredict is offering the following stocks:
* For major parties, a bundle of indexed contracts asking for the party vote share of the National, Labour, Green and "all other" parties, with 1c equalling 1% of the vote. The combined value of these stocks should always be $1.
* For minor parties, non-bundled indexed contracts asking for the party vote share of the New Zealand First, Conservative, Maori, Mana, Act, UnitedFuture and Aotearoa Legalise Cannabis parties, with 10c equalling 1% of the vote. If the market operates fully efficiently, the combined value of these stocks should never exceed 10 times the value of the "all other parties" stocks in the major parties bundle.
* Stocks asking how many electorate seats will be won by the Maori and Mana parties, and whether or not the Act, Conservative, Green, New Zealand First and UnitedFuture parties will win at least one electorate seat.
* A bundle of binary contracts asking whether the next Prime Minister will be a member of the National, Labour or "other" parties.
Trading since the 2011 election in the 2014 Prime Minister stocks has consistently given Labour the edge over National (see https://www.ipredict.co.nz/app.php?do=contract_detail&contract=PM.2014.LABOUR). As at 5.10 pm today, the market was suggesting that party vote results in 2014 would be: National 43.1%, Labour 34.1%, Greens 10.0%, New Zealand First 5.0%, Conservatives 2.7%, Maori 1.4%, Act 1.2%, Mana 1.0%, UnitedFuture 0.6% and Aotearoa Legalise Cannabis 0.5%.
If the next election is prior to 2014, the 2014 election stocks will all pay out on the result of that earlier election.