April 19, 2005 | BBCWorldwide electronic markets work so well because there is a collective wisdom among the tens of thousands of people all over the world who trade on them. The point about these markets, and there are many of them, is that they are very good at predicting what will happen. When the punditocracy were opining that Senator John Kerry might well win the election against President Bush, the people investing their real money in the electronic futures market were having none of it. The markets got it right, down to the share of the vote of each candidate. In presidential elections since 1988, for example, the Iowa Electronic Market organized by the College of Business at the UNIVERSITY OF IOWA has out-performed the polls consistently.
Contact: Robert Forsythe