Aug. 21, 2008
IEM, Minnpost.com team up for Coleman-Franken Minnesota Senate market
The Iowa Electronic Markets has teamed with MinnPost.com to open a political prediction market for the Minnesota Senate race between incumbent Republican Norm Coleman and DFL challenger Al Franken.
Joyce Berg, a professor of accounting at the Tippie College of Business and IEM director, said the race is one of the higher profile Senate races in this fall's election and should attract investors from around the country. The partnership with the MinnPost.com will help bring increased awareness to the Minnesota Senate race market and provide information that investors need.
"In order for any market to be successful, investors need information they can aggregate to help them make a decision on what contracts to buy," Berg said. "With a high-profile incumbent like Coleman and a challenger with national recognition like Franken, there will be lots of news coverage, and lots of information to aggregate."
The IEM is a real-money futures market in which traders can invest up to $500 to buy and sell contracts based on which candidate they think will win. Opened in 1988, the IEM is a research and teaching tool operated by professors at the University of Iowa's Tippie College of Business that examines how markets operate and seeks to understand their value as a predictive tool.
The IEM has operated markets in every presidential election since 1988, and a study earlier this year showed it to be more successful at predicting winners than 74 percent of the public opinion polls conducted during that time.
MinnPost.com is a Twin Cities-based online news organization that focuses on local and state news in Minnesota. It can be found online at www.minnpost.com.
Two markets are open for the race: a Winner Take All market, in which traders buy and sell contracts based on which candidate they think will win; and a Vote Share market, in which traders buy and sell contracts based on the percentage of the vote the trader thinks a candidate will receive.
Three contracts will be offered on each market: a Republican contract, a Democratic/DFL contract and a Rest of Field market. The Republican contract represents the candidate who wins September's Republican primary, and the Democratic/DFL contract represents the candidate who wins the DFL primary.
The Rest of Field contract will represent independent or third party candidates.
Price quotes, account opening instructions and prospectuses are available online at the IEM's Minnesota Senate market Web site at http://www.biz.uiowa.edu/iem/markets/MNSen08.html. Traders are strongly advised to read the prospectus before opening an account.
STORY SOURCE: University of Iowa News Service, 300 Plaza Centre One, Iowa City, Iowa 52242-2500