Obama To Win Reelection in 2012, Based on Iowa Electronic Markets

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Conservatives and Tea Party groups will not like this.

The Iowa Electronic Markets’ 2012 presidential election prediction market has opened, and early trading gives President Barack Obama an edge in his re-election bid.

Last week, the Democratic contract was trading for 57.2 cents on the IEM’s Winner Take All market, which means traders believe Obama has a 57.2 percent probability of being re-elected.

The GOP contract was selling for 42.7 cents, which means traders believe that the Republican Party’s eventual nominee has a 42.7 percent probability of winning the 2012 general election.

The IEM is a real-money prediction market operated by researchers at the University of Iowa’s Tippie College of Business and is open for trading to the general public. The presidential election market opened July 1.

Payoffs are determined based on the popular election results of the 2012 general election. Contracts for the candidate who receives the most popular votes pay $1; losing contracts pay nothing. This payoff structure means that IEM prices reflect the probability of each candidate’s winning the nomination.

The trading market, contract prospectuses and registration information can be found on the IEM 2012 U.S. Presidential Election Markets website at: http://tippie.uiowa.edu/iem/markets/pres12.html.

Begun in 1988, the IEM is a research and teaching tool that achieved an impressive prediction record, substantially superior to alternative mechanisms such as opinion polls, according to researchers.

Such markets, they say, have been significantly more accurate than traditional tools in predicting outcomes ranging from political election results to movie box office receipts.

Alan Gray is the Publisher and Editor-in-Chief of NewsBlaze Daily News and other online newspapers. He prefers to edit, rather than write, but sometimes an issue rears it’s head and makes him start pounding the keyboard. Alan has a fascination with making video and video editing, so watch out if he points his Canon 7d in your direction.