CONTACT: GEORGE MCCRORY
100 Old Public Library
Iowa City IA 52242
(319) 384-0012; fax (319) 384-0024
Release: Oct. 18, 2000
Iowa Electronic Markets continue to show tight presidential race
IOWA CITY, Iowa -- The Iowa Electronic Markets (IEM) show a very tight race
after the third presidential debate, showing very small vote share margins
between the candidates.
The IEM, the University of Iowa's real-money market where traders buy and
sell political futures, show Al Gore with a narrow lead at 50.2 cents and
George W. Bush at 49.8 cents after Tuesday's debate. In this vote share market,
prices can be seen as predicting the percentage of the vote each candidate
"This race is very tight -- surprisingly tight compared to other races
the IEM has tracked," said Tom Rietz, UI associate professor of finance
and IEM co-director.
The IEM also operates a "winner-take-all" market where prices
predict each candidate's chances of winning the nomination rather than the
size of the victory. In this market, IEM traders currently favor Gore, whose
price is at 50 cents while Bush's price is at 48 cents. But prices in this
market can fluctuate rapidly with new information, such as campaign news or
After the second debate, Bush shares rallied in the winner-take-all market,
recovering from a 31-cent low Oct. 5 and climbing to 52.9 cents on Monday
to overtake Gore, whose shares had dropped 47.6 cents from a 68-cent high
on Oct. 5. However, IEM traders seemed to give Gore a slight edge in the third
debate, with his shares up about three cents and Bush shares retreating three
Rietz says the Bush surge over the past two weeks might be attributed to
traders being influenced by two events -- recent troubles in the Mideast and
a downturn in the stock market. Rietz will be watching to see if the market
continues its slide and its impact on the IEM, as the fortunes of the incumbent
party are frequently tied to prosperity.
"Since Oct. 5, the S&P 500 has been down about 4 percent, (not
counting what happens today) while Gore contracts have been down 40 percent
in the IEM winner-take-all market," Rietz said.
The 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 $175,000 in equity. For
an investment of as little as $5 or as much as $500, trading in the markets
is 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. See the markets online
for the latest prices.
For more information on the IEM, contact Jeanine Alcocer, IEM Operations
Manager at (319) 335-0794.