The Iowa Electronic Markets (IEM) are a group of real-money

prediction market Prediction markets, also known as betting markets, information markets, decision markets, idea futures or event derivatives, are open markets that enable the prediction of specific outcomes using financial incentives. They are exchange-traded mar ...

futures market A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts defined by the exchange. Futures contracts are derivatives contracts to buy or sell specific quantities of a commodity or f ...

s operated by the

University of Iowa The University of Iowa (U of I, UIowa, or Iowa) is a public university, public research university in Iowa City, Iowa, United States. Founded in 1847, it is the oldest and largest university in the state. The University of Iowa is organized int ...

Tippie College of Business Tippi or Tippie can refer to: * Tippi (name), list of people with the name * Tepi, Ethiopia, a town in Ethiopia ** Tippi Airport, a former airport * Tippie College of Business, University of Iowa, United States *Tippi, a diacritic used in the Gurm ...

. Unlike normal futures markets, the IEM is not-for-profit; the markets are run for educational and research purposes.

Overview

The IEM allows traders to buy and sell

contract A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of thos ...

s based on, among other things, political election results and economic indicators. Some markets are only available to academic traders. The IEM also trades futures based on financial markets, such as predicting whether the Fed Funds rate will be increased at the next meeting. The IEM has often been used to predict the results of political elections with a greater accuracy than traditional polls.IEM and Poll Accuracy, 2008 Presidential Race
Accessed: 10/26/2012 A precursor to the IEM was the

Iowa Political Stock Market The Iowa Electronic Markets (IEM) are a group of real-money prediction markets/futures markets operated by the University of Iowa Tippie College of Business. Unlike normal futures markets, the IEM is not-for-profit; the markets are run for educa ...

(IPSM), invented by George Neumann, and developed by

Robert E. Forsythe Robert E. Forsythe is an American economist. He is a former dean of the School of Business at Wayne State University in Detroit, Michigan. Prior to that, he was the dean of the school of business at the University of South Florida, in Tampa, Flori ...

Forrest Nelson Forrest may refer to: Places Australia *Forrest, Australian Capital Territory *Forrest, Victoria, a small rural township *Division of Forrest, a federal division of the Australian House of Representatives, in Western Australia *Electoral distric ...

, and George Neumann.

Rules and limits

The IEM is neither regulated by the U.S. Commodity Futures Trading Commission (CFTC) nor by any other agency due to its academic focus and the small sums that are involved. Indeed, the IEM has received two no-action letters that extend no‑action relief. A speculator may put at risk in the IEM only between $5 and $500. In contrast, other future markets like

Nadex Nadex (Northern American Derivatives Exchange), formerly known as HedgeStreet, is a US-based retail-focused online binary options exchange. It offers retail trading of binary options and spreads on the most heavily traded forex, commodities and ...

are regulated by the CFTC and allow speculators to take on or financially offset significant amounts of risk regarding economic events or the prices of commodities.

References

External links

The Iowa Electronic Markets website
for 2008 US Presidential Election Markets

(about the IPSM) ''

The New York Times ''The New York Times'' (''NYT'') is an American daily newspaper based in New York City. ''The New York Times'' covers domestic, national, and international news, and publishes opinion pieces, investigative reports, and reviews. As one of ...

'', 1992
The "Election Futures Market": More Accurate Than Polls?
''

Businessweek ''Bloomberg Businessweek'', previously known as ''BusinessWeek'' (and before that ''Business Week'' and ''The Business Week''), is an American monthly business magazine published 12 times a year. The magazine debuted in New York City in Septembe ...

'', 1996
Porkbellies and Politics

TheStreet.com ''TheStreet'' is a financial news and financial literacy website. It is a subsidiary of The Arena Group. The company provides both free content and subscription services such as Action Alerts Plus, a stock recommendation portfolio co-managed by ...

, 2000
Bookies seen outbidding election polls: Betting sites better at predicting winner, economists claim
''

MSNBC MSNBC is an American cable news channel owned by the NBCUniversal News Group division of NBCUniversal, a subsidiary of Comcast. Launched on July 15, 1996, and headquartered at 30 Rockefeller Plaza in Manhattan, the channel primarily broadcasts r ...

'', 2004
The Iowa Electronic Markets are still going for Bush
''

Salon.com ''Salon'' is an American politically progressive and liberal news and opinion website created in 1995. It publishes articles on U.S. politics, culture, and current events. Content and coverage ''Salon'' covers a variety of topics, includ ...

'', 2004
Iowa 'futures' show Republican weakness
''

CNN Cable News Network (CNN) is a multinational news organization operating, most notably, a website and a TV channel headquartered in Atlanta. Founded in 1980 by American media proprietor Ted Turner and Reese Schonfeld as a 24-hour cable ne ...

'', 2006
PollyVote - Forecasting the U.S. Presidential Election
Prediction markets University of Iowa

Overview

Rules and limits

See also

References

Further reading

External links