McCain Closing Gap with Democrats on IEM Presidential Market
As of 9 a.m. Monday, March 31, the price of a Republican contract on the IEM's Winner Take All presidential election market was 47 cents, meaning investors believe there is a 47 percent probability that McCain will win the popular vote next fall. Although the price of the Democratic contract is still selling at a higher price -- 53.3 cents -- the margin between the two is as narrow as it's been since the market opened in June 2006.
As recently as August, the Democratic contract was trading in the mid-60 cent range while the Republican contract was trading in the mid-30s. Even as recently as March 1, the Democratic contract was trading at 57 cents and the Republican contract at 35 cents. The figures mean that on March 1, investors believed there was only a 35 percent probability that the Republican nominee would be the next president.
However, the numbers have been moving closer together as the nomination process in the Democratic Party becomes more protracted and nominees Hillary Clinton and Barack Obama trade increasingly sharper barbs.
On the IEM's Democratic Nomination Market, investors still believe Obama will be the likely nominee to face McCain. As of 9 a.m. Monday, March 31, Obama's contracts were trading at 79 cents and Clinton's at 15.2 cents.
The IEM is a real-money political futures prediction market operated by professors in the UI'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.
The IEM's Winner Take All market covers the winner of the popular vote in November's general election. Contracts are currently identified as Republican and Democratic, and while McCain has wrapped up the Republican nomination, the names of the two contracts won't be changed until the parties formally nominate their candidates at their conventions this summer.
The latest prices on the IEM's Winner Take All and Vote Share presidential election markets are updated every 15 minutes online at iemweb.biz.uiowa.edu/quotes/Pres08_quotes.html.
The latest quotes on the IEM's Democratic nomination market can be found at iemweb.biz.uiowa.edu/quotes/Nomination08_quotes.html.
Contact: Joyce Berg, director, Iowa Electronic Markets, 319-335-0840