IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

Consistency in the US Congressional Popular Opinion Polls and Prediction Markets

  • Elliot Tonkes
  • Dharma Lesmono
Registered author(s):

    Prediction and betting markets have evolved with contracts based on electoral outcomes and the traded prices provide a measure of speculators' views on electoral outcomes. Conversely, popular opinion polls yield data which provide statistics on the public's declared voting intentions. This article formulates a model to describe the stochastic evolution of opinion polls, and the resultant probability distribution of seats won in the US House of Congress. Based on standard methods from financial option pricing theory, we can then determine the theoretical value of observed contracts in the prediction markets. Our results show that qualitative predictions are obeyed, but there exist significant deviations between the actual prices traded in the Iowa Electronic Market (IEM) and our theoretical valuation under real-world expectations. Some explanations are provided, which are consistent with conclusions drawn by other authors who have studied electoral prediction markets.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Article provided by University of Buckingham Press in its journal Journal of Prediction Markets.

    Volume (Year): 4 (2010)
    Issue (Month): 2 (September)
    Pages: 45-64

    in new window

    Handle: RePEc:buc:jpredm:v:4:y:2010:i:2:p:45-64
    Contact details of provider: Web page:

    Order Information: Web: Email:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:buc:jpredm:v:4:y:2010:i:2:p:45-64. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Victor Matheson, College of the Holy Cross)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.