IEM Futures Market: Congressional Control Currently Confounding
My prediction market of choice is Iowa Electronic Markets (IEM) run out of the University of Iowa. It is the oldest and has been highly predictive over the years. More predictive than polls, anyway.
That’s why I want to know more about why traders are bidding up “Other” in the congressional control market. “Other” is an outcome that has now tied “RH\RS” (Republican House/Republican Senate). Obviously, I’m not surprised RH/RS is tanking, and that RH/DS is now the clear favorite. But what does the movement on “other” foretell? A Democratic Senate and deadlocked House?
Here is the graph:
Here is the complete breakdown of predicted outcomes based on share prices. You can read the average column as an expression of the probability of any given outcome. (e.g RH_DS trading at 0.424 is about a 42.4% probability assigned to that outcome :
What does a trader have to do to record his choice as “Other?” Is Other a marker for No F’n Clue?
No. You are purchasing a futures contract that basically says “something other than RH/RS, RH/DS, DS/DS, or DS/RH is going to happen” it is like betting on a coin flip and taking “edge”
“something other than RH/RS, RH/DS, DS/DS, or DS/RH is going to happen”
Martial law?
Maybe. it seems more likely than a tie.
I see you liked the coin spin analogy from yesterday. I’ll let you nick it gratis. It’s yours now. Godspeed.
The perfect metaphor cannot be denied.
@DG: I’m pretty sure Rod Serling used it first.
Not in that context, but yeah, great episode… Dick York starred.
I’ll bet you thought of that episode when you used the metaphor. I did, anyway.
I didn’t actually, but I am a very big fan of The Twilight Zone! And I don’t even really dig Science Fiction. The only Sci Fi I like is Twilight Zone, Ray Bradbury books and that British Channel 4/Netflix series Black Mirror….
Oh, and has anyone else read the new DeLillo novel “Zero K”? It’s Science Fictiony, but it’s DeLillo, so…. strongly recommend.
Just read an online review. Looks good. I like an occasional science fiction.
http://www.sbnation.com/2016/6/8/11884360/copa-america-coin-toss-paraguay-colombia-lands-on-edge-soccer
So “other” has crashed. (h/t Dr. Frizzle vonFroozle). https://tippie.biz.uiowa.edu/iem/
So that was some strange “pump and dump” scheme, or people who thought a 50/50 senate split was happening, now don’t.