Book chapter
Chapter 80 Results from a Dozen Years of Election Futures Markets Research
Handbook of Experimental Economics Results, pp.742-751
Elsevier B.V
2008
DOI: 10.1016/S1574-0722(07)00080-7
Abstract
Each market is related to a specific future event, for instance a presidential election, and contains a set of contracts with liquidation values pegged to the outcome of the future event. Contracts enter into circulation by the voluntary purchase from the IEM trading system of bundles of contracts that we call “unit portfolios,” or they are removed from circulation by sales of unit portfolios back to the system. These unit portfolios consist of one of each contract available in the market, and they are purchased from and sold to the system for a fixed price, which is the predetermined aggregate payoff to that portfolio. This use of unit portfolios ensures that the market operates as a zero-sum game and it permits the supply of contracts to be determined endogenously by the net number of unit portfolios that have been purchased by traders. Unit portfolios are employed only to place contracts in circulation; transactions among traders occur with individual contracts at prices determined by the participants.
Details
- Title: Subtitle
- Chapter 80 Results from a Dozen Years of Election Futures Markets Research
- Creators
- Joyce Berg - University of IowaRobert Forsythe - University of IowaForrest Nelson - University of IowaThomas Rietz - University of Iowa
- Resource Type
- Book chapter
- Publication Details
- Handbook of Experimental Economics Results, pp.742-751
- Publisher
- Elsevier B.V
- DOI
- 10.1016/S1574-0722(07)00080-7
- ISSN
- 1574-0722
- Language
- English
- Date published
- 2008
- Academic Unit
- Finance; Economics; Accounting
- Record Identifier
- 9984380490302771
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