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University of Iowa News Release

 

Sept. 8, 2011

Romney's price jumps post-debate on Iowa Electronic Markets' GOP nomination market

Mitt Romney was the big winner in Wednesday's GOP presidential candidate debate, according to traders on the Iowa Electronic Markets, as his price jumped 5 cents on the IEM's recently opened Republican nomination market.

The price of the former Massachusetts governor's contract as of 9 a.m. Thursday was 39 cents, which means traders believe he has a 39 percent probability of winning the GOP nomination. Before Wednesday's debate, his contract was trading at 34 cents.

Texas Gov. Rick Perry is still the likeliest GOP nominee, according to traders. The price of his contract is 41 cents, the same price it was selling for before the debate began.

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.

Other contracts on the GOP nominee market include Ron Paul and Michele Bachmann, both of whom were selling for 2 cents before the debate started. Post-debate, Paul's price increased slightly to 2.6 cents, while Bachmann's slumped to 1.6 cents.

The Rest of Field contract -— which represents None of the Above -— was selling for 18.2 cents Thursday morning, which means traders believe there is an 18.2 percent probability that another candidate will win the nomination. That price is down slightly from the 20 cents it was selling at before the debate.

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 CONTACTS: Joyce Berg, director, Iowa Electronic Markets, 319-335-0840, joyce-berg@uiowa.edu; Tom Snee, 319-384-0010 (office), 319-541-8434 (cell), tom-snee@uiowa.edu