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Rietz Describes Iowa Electronic Markets

The Iowa Electronic Markets (IEM), supervised by University of Iowa Henry B. Tippie College of Business faculty, have shown that a political prediction market can forecast the outcome of an election better than national polls. "We run markets tied to outcomes of the election," said THOMAS RIETZ, a UI finance professor. "People can sign up with us on the Internet. The contracts we trade have values that apply to the election outcome. People are more willing to pay more for candidates they think are more likely to win." Research shows that the markets predict the election outcome 76 percent of the time.

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