Berg Compares Iowa Electronic Markets, Polls
Bookmark & ShareMarch 11, 2008
Source: Financial Times
A recent study by the University of Iowa shows that it Iowa Electronic Markets are more accurate than polls in predicting the outcome of elections. JOYCE BERG, the director of the IEM, said the market was more accurate for several reasons. First, it uses real money. Investors open accounts of between $5 and $500 and trade contracts based on which candidate or party they think will win a presidential election. Berg said IEM investors are also self-selected: they join the market voluntarily and tend to be people who are interested in politics and thus well informed. "Polls tend to be a static, one-time prediction," she said. "The market is a dynamic system that can respond instantaneously to the arrival of new information and asks traders to forecast how everyone will vote in the actual upcoming election, not just how they, the individual, will vote."
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