Watching the Markets

by Brian on November 2, 2004

Currently “Tradesports”: has Bush at about a 56% chance to win the Presidency. But the “Iowa Electronic Markets”: shows a slight lean towards a Kerry victory.

To be sure, the IEM tracks overall votes and Tradesports electoral votes, so these leanings could be consistent. And if Kerry wins the popular vote and loses outright they will be. But that looks rather unlikely. Kerry’s national vote has trailed his battleground states vote in just about every poll that’s looked at this split. This is not particularly surprising since the Bush campaign and its surrogates have massively overspent the Kerry campaign (and its surrogates) on _national_ advertising with Kerry focusing almost exclusively on battleground state advertising.

The IEM numbers are fairly close, but if they hold I suspect one or other (or quite likely both) markets will end up on the wrong side of this election. On the other hand, if Kerry does repeat Al Gore’s efforts and win the popular vote without taking over the White House, I might have to revise my faith in the success of these markets. (Of course if that happens I’ll have much more to worry about than being wrong on a technical question like this one.)



Detached Observer 11.02.04 at 9:04 am

Tradesports has a popular-vote-winner contract as well, and it is, at the time of writing this, leaning towards Bush, the opposite of the Iowa Electronic Market.

The nature of the tradesports site prevents me from linking to it but go to, click on politics -> us presidential elec. and scroll all the way to the bottom.


dsquared 11.02.04 at 9:09 am

Cross post … I’ve just noticed the same thing (great minds think alike, fools seldom differ).

NB that the single most probable outcome on IEM is still Bush with less than 52%. The IEM advantage to Kerry comes from the fact that a Kerry landslide is rated 20% probability while a Bush landslide is only 15%.


dsquared 11.02.04 at 9:12 am

Also, glancing at the Tradesports numbers, the big oddity is that they only give Bush a 25% chance of taking Minnesota, but a 56% chance of winning Florida. Poll data would certainly suggest taking the opposite view on this spread; I think that this is an interesting natural experiment.


Brian Weatherson 11.02.04 at 9:29 am

I’ve moved the timestamp on this one back a few minutes so my crosspost goes below Daniel’s – it’s only because I’m so slow in typing that it was in later.

I think that on the state-by-state results the Tradesports bettors might be taking the sensible position: Never bet against a relative of the guy running the election in a corrupt state.

Having said that, Kerry’s Minnesota numbers looked fine to me. Up 6 in Zogby and 8 in the Strib. I’d be very confident on the conditional if Kerry wins Florida he wins Minnesota.


dsquared 11.02.04 at 9:36 am

Brian is right; I meant Wisconsin, but to be honest, all those states blend into one big lump of Marriott Hotels, uninspiring restaurants, crap nightclubs and meetings with surprisingly well-informed gentlemen working for “The Teachers’ Retirement System of …” to me.


dsquared 11.02.04 at 9:40 am

f’k me! Kerry now at 45% on the IEM! The spread on the Kerry contracts has now blown out to more than four percentage points while the spread on the Bush contracts is less than a percent. The liquidity has just disappeared on this market and it looks like something funny is going on.


Andrew Brown 11.02.04 at 11:40 am

Those of us too simple to bet on these things could, last night, get 5/4 on Kerry at Victor Chandler.


abb1 11.02.04 at 6:00 pm

I opened an IEM account a couple of weeks ago and bought some options. This really is a teaching thing. For example, I placed an buy on limit order for 200 really cheap options, 6c/piece. My bid was inside the spread. Look how it was filled:

Date Time Market Action Quantity Unit Price

10/27/04 21:56:19 Congress04 Buy 1 0.060
10/27/04 21:40:50 Congress04 Buy 3 0.060
10/27/04 20:26:19 Congress04 Buy 1 0.060
10/27/04 20:24:00 Congress04 Buy 1 0.060
10/27/04 20:23:09 Congress04 Buy 9 0.060

I expected to get all 200 in one lot. Who would trade a single 6c option for chrissake? Yet, it’s like that there all the time.

Can someone explain what goes on there?



Cranky Observer 11.02.04 at 7:17 pm

> Who would trade a single 6c option
> for chrissake? Yet, it’s like that
> there all the time.
> Can someone explain what goes on
> there?

Um, there is no such thing as a “market” in presidential election options the way there is in gasoline, wheat, or wheat futures? And therefore everything that happens on the Iowa Electronic “Market” is just game playing by people with too much money and time on their hands?

And that furthermore, the Republican spin machine would think nothing of spending a few 100,000s to get a lot of otherwise left-leaning college professors seriously discussing how a “market mechanism” “proves” Bush is going to win?

Just a thought.


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