Newswise — The Iowa Electronic Markets has opened a Congressional control prediction market, giving traders the opportunity to predict the party alignment of Congress after next year's mid-term elections.
Three markets are open on the Congressional control market. In two of them, traders can buy and sell contracts that will predict whether the Democrats will gain seats in each of the Senate and House of Representatives, maintain its current number of seats, or lose seats to the Republicans.
In the third market, traders can buy and sell contracts based on overall control of Congress. Four contracts are available for trade on the market: Republicans control both the House of Representatives and the Senate; Democrats control both the House and Senate; Republicans control the House and Democrats control the Senate; Republicans control the Senate and Democrats control the House.
Payoffs will be determined based on which party controls the most seats in each chamber at the start of the 111th Congress in January 2011.
The Iowa Electronic Markets is a real-money political futures prediction market operated by the University of Iowa's Tippie College of Business. All contracts are priced between zero cents and 1 dollar, so the current price of any contract is the probability of that event occurring.
Begun in 1988, the IEM is a research and teaching tool that has achieved an impressive prediction record, substantially superior to alternative mechanisms such as opinion polls. Such markets have been significantly more accurate than traditional tools in predicting outcomes ranging from political election results to movie box office receipts.
Price quotes, account opening instructions and prospectuses are available online at the IEM's Web site at http://www.biz.uiowa.edu/iem/. Traders are strongly advised to read the prospectus before opening an account.
Current prices/probabilities can be viewed online at http://iemweb.biz.uiowa.edu/quotes/Congress10_quotes.html.