McCain, Clinton Lead Iowa IEM Nomination Markets on Caucus Day
Meanwhile, Hillary Clinton continues to hold her long-time lead on the Democratic market.
As of noon CST today, McCain's contract price led the Republican nomination market with a value of 29.3 cents, which means IEM investors believe there is a 29.3 percent probability that McCain will be the Republican nominee. His contracts traded for as little as 8 cents as recently as Dec. 7.
Mitt Romney was in second place on the Republican nomination market, with a contract value of 26 cents. Rudy Giuliani, whose contract had the highest value on the Republican market for several months, continued his late decline that has seen his contracts fall in value to 21 cents at noon today, a 4 cent drop since Thursday.
Other Republican contract values include Mike Huckabee at 13.7 cents, Fred Thompson at 3.9 cents and Rest of Field at 7.4 cents.
Joyce Berg, professor of accounting in the UI's Tippie College of Business and a director of the IEM, said the volatility is the result of investors factoring in the latest news as the nominating season gets underway.
"In 2004, there were significant changes in price of the candidates the day after the Iowa caucus," said Berg.
Meanwhile, Clinton leads the Democratic market with a contract value of 56.9 cents. Barack Obama is second at 31 cents and John Edwards is third at 11.2 cents. The Democratic Rest of Field contract is valued at 1.8 cents.
The IEM markets will pay off when the two parties officially name their presidential nominees at their respective conventions this summer. Berg said The markets do not attempt to predict the winners of the Iowa caucuses.
The Iowa Electronic Markets is operated by the University of Iowa's Tippie College of Business as a real-money futures prediction market. 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.
The IEM can be found online at tippie.uiowa.edu/iem>. Nominating market prices can be found at iemweb.biz.uiowa.edu/quotes/Nomination08_Quotes.html. Prices are updated every 15 minutes so the results of tonight's Iowa caucuses will be reflected in contract values immediately.
Contact: Tom Snee, UI News Services, 319-384-0010