Iowa Electronic Markets

I'm not big on politics, but the Iowa Electronic Markets are pretty interesting.

These markets are small-scale, real-money futures markets where contract payoffs depend on economic and political events such as elections.

The 2004 DEMOCRATIC NATIONAL CONVENTION MARKET in particular has been interesting to follow over the last couple of weeks.

This is a Winner-Takes-All market. The contract that denotes the actual outcome of the 2004 Democratic Convention will have a liquidation value of $1.00, all others will have values of $0.00..

With that in mind, take a look at the Daily Prices Graph. You can see Dean as the clear favorite until the Iowa Caucus. Since then, he's been in a free fall, while Kerry's becoming a runaway favorite. There's a slight hesitation in the market right before the NH primary, and then Kerry's upward surge continues. That probably isn't anything you didn't already know, but it's fascinating to watch the chart change each day.

You might also want to check out the 2004 US PRESIDENTIAL VOTE SHARE MARKET.