Forsythe Comments on IEM Predictions
May 25, 2004 | Hemispheres MagazineThis year, Americans will see repeated references to the Iowa Electronic Markets, a futures market in which people buy and sell contracts on the candidate they think will be elected president. ROBERT FORSYTHE helped set up the IEM at the University of Iowa. "At any point in time, you can use the price of the contracts as a prediction of the probability that each candidate will be the winner," Forsythe says. According to one analysis of the last four presidential elections, the Iowa market was compared with 600 surveys and its results were closest to the election results 75 percent of the time. "It's been demonstrated that the price system in a futures market does a pretty good job of aggregating and disseminating the pieces of information that are in the trader's heads," Forsythe said. Hemispheres is published by United Airlines.
Contact: Robert Forsythe