IEM Noted As Prediction Market

The IEM is noted in a review of James Surowiecki's book "The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations." Since 1988, the University of Iowa has run the IOWA ELECTRONIC MARKETS, which allow people to bet on the outcome of presidential elections. As a predictor, the Iowa Electronic Markets have produced extraordinarily accurate judgments, often doing better than professional polling organizations. In the week before each of the last four elections, the predictions in the Iowa market have shown an average absolute error of just 1.5 percentage points, a significant improvement over the 2.1 percentage point error in the final Gallup Polls.

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