CONTACT: GEORGE MCCRORY
300 Plaza Centre One
Iowa City IA 52242
(319) 384-0012; fax (319) 384-0024
Release: Nov. 4, 2002
Election eve: Iowa Electronic Markets show status quo in U.S. Congress
the eve on the Nov. 5 Congressional elections, traders in the Iowa Electronic
Markets (IEM) continue to see a Democratic-controlled Senate and a Republican-controlled
House of Representatives as the most likely outcome in Congress
Early trading on Nov. 4 shows an 85 percent probability of Republican control
of the House, and a 70 percent probability of Democrats controlling the Senate.
Six professors at the Henry B. Tippie College of Business at the University
of Iowa operate the web-based futures market at http://www.biz.uiowa.edu/iem/markets/Cong02.html.
The IEM provides political pundits and neophytes alike the opportunity to
predict whether the Democrats or Republicans will control Congress. Traders
back up their predictions by buying and selling futures contracts in the IEM
based on different election outcomes.
"As we approach the election, the market is indicating no sure outcome,
but the most likely scenario is the status quo in Congress. Recent volatility
and price changes are indicating great deal of uncertainty about the election,"
said Thomas Rietz, IEM co-director and associate professor of finance at the
The IEM is a small-scale, 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 worldwide. At the close of trading
on Nov. 7, the liquidation value of the contract that represents the actual
outcome of the election will be $1. All other contracts will have a value
Since its beginning in the 1988 U.S. Presidential election, the IEM has
established a reputation for forecasting election results with great accuracy,
with an average prediction error of 1.37 percent. For more information, see
the Iowa Electronic Market website at http://www.biz.uiowa.edu/iem
or contact the IEM office at (319) 335-0881.