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University of Iowa News Release

 

Jan. 3, 2012

IEM traders give caucus probabilities to Romney, Paul

Caucus day has arrived in Iowa, and traders on the Iowa Electronic Markets believe Mitt Romney has the highest probability of finishing in the top two in the caucuses and also winning the GOP nomination.

Below are the contract prices for the candidates on the IEM's Iowa caucus market as of 9 a.m. Central time Tuesday:

--Mitt Romney, 76.6 cents, which means traders believe he has a 76.6 percent probability of finishing in the top two in the Iowa caucuses.
--Ron Paul, 65 cents.
--Rest of Field, represents candidates who do not have an individual contract, in this case most trading is likely for Rick Santorum, 54.8 cents.
--Newt Gingrich, 1 cent
--Rick Perry, 1 cent
--Michele Bachmann, .3 cents
--Herman Cain, 0 cents

Below were Tuesday morning's prices on the IEM's GOP nomination market:

--Romney, 82.2 cents, which means traders believe there is an 82.2 percent probability Romney will be the Republican nominee.
--Rest of Field, 7 cents
--Gingrich, 4.4 cents
--Ron Paul, 3.9 cents
--Rick Perry, 1.2 cents
--Herman Cain, .3 cents
--Michele Bachmann, .2 cents

On the IEM's presidential election market, the Democratic contract was selling for 56 cents, which means traders believe there is a 56 percent probability that Barack Obama will be re-elected president.

A real money futures market operated by the University of Iowa's Tippie College of Business, the IEM gives traders from around the world 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 is the probability that the traders believe that event will happen. Traders can invest up to $500 in the market.

The latest prices on the GOP Convention market are available online at http://iemweb.biz.uiowa.edu/quotes/356.html. The latest Iowa Caucus market quotes are available at http://iemweb.biz.uiowa.edu/quotes/355.html.

More information on the IEM is available at http://tippie.uiowa.edu/iem/markets/.

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