IEM's 'Superior Performance' Cited

Some of the most well-known and accurate prediction markets are the IOWA ELECTRONIC MARKETS, run by the UNIVERSITY OF IOWA's business school, where traders speculate about a variety of political and financial forecasts. With IEM's Presidential Vote Share Market, for instance, political junkies can invest as much as $500 in futures contracts based on what percentage of the popular vote President Bush and Sen. John Kerry will each get on Election Day. Currently, each $1 contract is going for around 50 cents, which means the market is predicting a dead-even contest. The superior performance of the Iowa market reflects one reason why these predictive exchanges work better than simple opinion polls.