News & Events

Iowa Electronic Markets Open 2008 Presidential Nomination Market

Political futures contracts based on who will be the 2008 Democratic and Republican presidential nominees are now trading on the Iowa Electronic Markets at the University of Iowa's Henry B. Tippie College of Business.

Separate markets have been established for each of the two parties. In each market, traders buy and sell contracts that will pay off $1 if the associated candidate becomes the party's nominee. The payoff structure means that IEM prices reflect the probability of each candidate winning the nomination.

This year, the online current events magazine Slate is also covering the IEM as part of its regular 2008 presidential campaign coverage. The magazine will provide regular updates of prices on the IEM, which it calls the "big daddy of political prediction markets," and other electronic prediction markets.

In the Democratic market, traders can buy and sell four contracts: Hillary Clinton, John Edwards, Barack Obama and Rest of Field. Four contracts are also available on the Republican side: Rudy Giuliani, John McCain, Mitt Romney and Rest of Field. As of 10 a.m. Thursday, March 22, Obama led the Democrat field with a contract price of 41 cents and Giuliani led the Republican field with a price of 35 cents.

The trading market, contract prospectuses and registration information can be found on the IEM 2008 U.S. Presidential Nomination Markets Web site at: tippie.uiowa.edu/iem/markets/nomination08.html.

Begun in 1988, the IEM is a research and teaching tool that has achieved an impressive prediction record, substantially superior to alternative mechanisms such as opinion polls. Such markets have been significantly more accurate than traditional tools in predicting outcomes ranging from political election results to movie box office receipts.


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