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Iowa Electronic Markets give slight pre-election edge to Bush

Traders in the Iowa Electronic Markets (IEM) still see a very close presidential election, but give George W. Bush a slight edge in the final days of the campaign.

The IEM, the University of Iowa's real-money market where traders buy and sell political futures, show Bush with a narrow lead at 52 cents with Al Gore close behind at 48 cents in the IEM vote share market. Vote share prices can be seen as predicting the percentage of the vote each candidate will receive.

In the "winner-take-all" market, IEM traders favor Bush at 63 cents over Gore at 37 cents. These prices predict each candidate's chances of winning the greatest share of the popular vote rather than the size of the victory.

"While the Bush lead seems large it pales in comparison to the leads enjoyed by eventual winners in previous markets," said Tom Rietz, UI associate professor of finance and IEM co-director. See the markets online at http:/tippie.uiowa.edu/iem/ for the latest prices.

Bush shares in the winner take all market have shown a general upswing for Bush who recovered from a 31-cent low Oct. 5. Gore shares now reside in this territory, after a 68-cent high on Oct. 5. See graph at http://iemweb.biz.uiowa.edu/graphs/Pres00_WTA.gif

However, the IEM vote share market has been predicting a close race since it opened in January, with only a few cents separating the candidates over several months. This stands in contrast to many polls which have swung from Bush to Gore and back to Bush," said Joyce Berg, UI accounting professor and IEM co-director. (See http://iemweb.biz.uiowa.edu/graphs/pres00_VS.gif)

In the IEM congressional control market, the IEM traders are signaling a Republican senate but a close race in the House. Prices in this market show an 85 percent chance of a Republican Senate, but only a 53 percent probability of a Republican house for this outcome (See http://iemweb.biz.uiowa.edu/graphs/Congress00.gif).

Hillary Clinton is leading the New York Senate market at 65 cents, compared to Rick Lazio at 35 cents. (See http://iemweb.biz.uiowa.edu/graphs/nysenate.gif).

IEM has forecasted election results with great accuracy, tracking the Democratic and Republican vote shares in the last three presidential elections within an average of less than 2 percent. The IEM has 7,000 traders and more than $200,000 in equity. For an investment of as little as $5 or as much as $500, trading was open to participants worldwide.

Six faculty members at the University of Iowa Tippie College of Business operate the markets as a research and teaching tool.

For more information on the IEM, contact Jeanine Alcocer, IEM Operations Manager at (319) 335-0794.


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