IEM Prices Noted on Election Day

Online traders have swung in late trading on Tuesday toward Democratic challenger John Kerry topping George W. Bush for the U.S. presidency, perhaps driven by unconfirmed Internet Weblog reports of exit polls that showed Kerry with an early advantage. The Iowa Electronic Markets, which has been trading election contracts since 1988, also showed a switch with the winner-takes-all contract showing a 52.3 percent probability of Kerry victory compared with 45.6 percent for Bush. As of midnight Monday, Bush had a statistically insignificant 51 percent probability of winning the popular vote in the election, according to the Iowa contracts, slightly ahead of Kerry's 49 percent. The Iowa exchange traded 44,000 contracts on Monday. "What you're seeing is people have very strong opinions but they're very evenly split," said TOM RIETZ, an associate professor of finance at the University of Iowa, which runs the exchange as a way of studying markets. "We've never seen anything like this before."