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Berg Explains IEM

How did the crack squad of futures investors on the Iowa Electronic Markets feel about the first round of presidential debates? The University of Iowa's Internet-based teaching tool, in which participants can spend between $5 and $500 on share futures in candidates, has a strong track record of predicting political results. The market responds mostly to surprise events, said Iowa accounting professor JOYCE BERG. "If something happens at the debates that people weren't expecting, you'll see that show up in the market price," Berg said. "If all that happens in the debates is that candidates are confirming what traders are already thinking about them, you won't see any change in the price. I think what the [Republican] markets are starting to say is that they're actually thinking there's a pretty good chance it will be none of the above."

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