CONTACT: GEORGE MCCRORY
300 Plaza Centre One
Iowa City IA 52242
(319) 384-0012; fax (319) 384-0024
Release: Oct. 18, 2001
Iowa Electronic Markets opens trading on New York City mayoral race
IOWA CITY, Iowa The Iowa Electronic Markets (IEM) have opened a web-based
futures market on the outcome of the New York City mayoral race.
Traders can buy contracts in Democratic nominee (currently Mark Green, based
on unofficial runoff vote counts) or Republican nominee Michael Bloomberg
in the market (http://www.biz.uiowa.edu/iem/markets/nycmayor.html), which
is run by six professors at the Henry B. Tippie College of Business at the
University of Iowa.
In this winner-takes-all market, contract payoffs will be $1 if the Democratic
nominee wins in the Nov. 7 election, $1 in the Republican nominee is elected,
or $1 if another candidate is declared the winner. Thus, prices predict each
nominee's chances of election.
The markets opened Oct. 3, with traders initially favoring Green, whose
contract is trading at about 80 cents, which means the traders believe he
has an 80 percent chance of winning the election; Bloomberg contracts are
at 20 cents or a 20 percent chance of election. Contacts for "other"
candidates were trading at less than a penny.
The IEM is a real- money market used as a teaching and research laboratory.
For an investment of as little as $5 or as much as $500, trading in the markets
is open to participants world-wide. The IEM also has opened a new futures
market on the federal funds rate target for public trading; a similar market
was only open to academic traders previously (http://www.biz.uiowa.edu/iem/markets/fedpolicyb.html).
Throughout the 2000 elections, the IEM conducted markets in the presidential
race, the New York Senate race, and Republican or Democratic control of the
two houses of Congress. During the 2000 presidential elections, the IEM had
7,600 traders and more than $ $240,000 in equity.
For more information, see the Iowa Electronic Markets website at http://www.biz.uiowa.edu/iem
or contact the IEM office at (319) 335-0881.