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University of Iowa News Release

 

Nov. 21, 2011

Gingrich debuts on Iowa Electronic Markets but Romney is still most probable candidate

Newt Gingrich's contract debuted on the Iowa Electronic Markets' Republican nomination market on Friday at 20 cents, but that price slid through the weekend.

This morning, Gingrich's contract was trading at 16.3 cents, which means traders believe there's a 16.3 percent probability that Gingrich will win the GOP nomination.

That price makes him the second most probable GOP nominee, according to the IEM, and he's one of only two contracts trading in double-digit figures. Mitt Romney was trading this morning for 71.3 cents, which means the market believes he has a 71.3 percent probability of being the party's nominee. He's been trading in the 70-to-80-cent range for the past several weeks.

A contract for Herman Cain was also made available for trading on Friday, debuting at 2 cents. This morning, it was trading at 1.8 cents.

Other contracts trading on the GOP nomination market include Rick Perry at 4.9 cents, Ron Paul at 2 cents and Michele Bachmann at .9 cents. The Rest of Field contract -- which represents anyone for whom no individual contract has been issued -- was trading at 2.7 cents.

The IEM is a real money futures market operated by the University of Iowa's Tippie College of Business. The IEM gives traders the opportunity to buy and sell contracts based on what they think the outcome of a future event will be. Contracts for the correct outcome pay off at $1, all other contracts pay off at zero. As a result, the price of the contract at any given time indicates the probability that the traders assign to the event's occurrence.

The current prices on the IEM's Republican nomination market can be found at http://iemweb.biz.uiowa.edu/quotes/356.html. More information on the IEM can be found at tippie.uiowa.edu/iem.

STORY SOURCE: University of Iowa News Service, 300 Plaza Centre One, Iowa City, Iowa 52242-2500

MEDIA CONTACT: Tom Snee, 319-384-0010 (office), 319-541-8434 (cell), tom-snee@uiowa.edu