News & Events

Obama, McCain Lead Iowa Electronic Markets on N.H. Primary Day

Barack Obama and John McCain were the clear leaders on a busy Iowa Electronic Markets as voting started in the New Hampshire primary Tuesday morning.

Contract prices for Obama, who took over the lead on the IEM's Democratic nomination market Friday after winning the Iowa caucuses the day before, were at 69.2 cents as of 10 a.m. CST Tuesday. That meant investors on the IEM believe there is a 69.2 percent probability that Obama will be the Democratic Party's nominee for president.

Hillary Clinton, who had led the Democratic nomination market for months before a third place finish in Iowa, was in second place with a contract price of 22.5 cents. John Edwards' price was at 5.2 cents while the Rest of Field contract was priced at 2.2 cents.

On the Republican market, McCain led with a contract price of 37.1 cents. Rudy Giuliani, who had led the Republican market for months before fading in recent weeks, had climbed back into second place with a contract price of 26.6 cents.

Mitt Romney was in third place with a price of 18.3 cents and Iowa caucus winner Mike Huckabee was in fourth place with a contract price of 16.4 cents.

Other Republican contracts included Fred Thompson at 2.3 cents and Rest of Field at 1.2 cents.

Joyce Berg, IEM director and assistant professor of accounting in the Tippie College of Business, said the first week of January was busy for the IEM. In the seven days that saw the Iowa caucuses and several days of intense campaigning in New Hampshire, the IEM traded 125,187 contracts in the two nomination markets for a total of $25,588. On Monday alone, more than 17,000 shares traded for about $4,500.

The Iowa Electronic Markets is a real-money political futures prediction market operated by the University of Iowa's Tippie College of Business. 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.

Obama and McCain both held leads in the final New Hampshire public opinion polls released Monday, and both won this morning's vote in Dixville Notch, the northern New Hampshire outpost that traditionally casts the first votes in the first-in-the-nation primary at midnight. The IEM's Republican market took a noticeable turn after the 16 ballots were counted. After winning Dixville Notch with 6 votes, the price of his contract jumped from 34.6 cents to 42.5 cents. Giuliani, who received only 1 vote in Dixville Notch, dropped from 27 cents to 24.4 cents.

The price for an Obama contract, meanwhile, fell from 74.1 cents to 70.1 cents despite his winning Dixville Notch with 7 votes.

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.


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