There are few things more certain than the average human’s quotidian and Sisyphean consideration of – and occasional obsession with – the future. Even the most mindless decisions, like who to vote for in a presidential election, require some flirtation with foresight.
With Super Tuesday on our toes, and with pundits and papers all atwitter with prediction fever, this might be a good time to take a quick look at what the Iowa Electronic Markets have to say about the presidential nominations. In particular, the race for the Democratic nomination may not be as close as it seems.
The Iowa Electronic Markets, founded by the University of Iowa in 1988, are real-money markets that deal with predicting future events. More succinctly put, the IEM are futures markets. Within the IEM there are several different markets, and conceptually they work something like the Dow Jones stock market. For example, in the Democratic nomination market, a buyer may purchase shares – called contracts in the IEM parlance – in the candidate she thinks is most likely to win the nomination. Or, the buyer may purchase shares in a candidate whose price is low but she thinks will go up.
