Journal article
Emotions and the status quo: The anti-incumbency bias in political prediction markets
International journal of forecasting, Vol.41(2), pp.571-579
04/01/2025
DOI: 10.1016/j.ijforecast.2024.06.003
Abstract
Emotions are often associated with politics, with new research confirming this connection. There is a link between negative emotions and political actions that oppose an incumbent candidate or party. We examine whether this “anti-incumbency” bias extends to political prediction markets, where such emotions can conflict with economic rationality. We analyze unique data from Media Predict, a commercial prediction market. Before a trade is executed, participants are asked to write a justification for their actions. Using text analysis, we measure the emotional sentiment of the justifications of traders buying contracts predicting a change in the incumbent candidate or party. Consistent with anti-incumbency bias, the justifications of buyers of a challenger contract had significantly more negative emotional sentiment scores. We document this finding in prediction markets associated with the 2012 US Presidential Election and the 2015 UK General Election. We conclude that, despite incentives to the contrary, traders’ actions in political stock markets are associated with strong emotions tied to incumbency status.
Details
- Title: Subtitle
- Emotions and the status quo: The anti-incumbency bias in political prediction markets
- Creators
- Vahid Karimi Motahhar - Sabancı ÜniversitesiThomas S. Gruca - University of Iowa, MarketingMohammad Hosein Tavakoli - University of Warwick
- Resource Type
- Journal article
- Publication Details
- International journal of forecasting, Vol.41(2), pp.571-579
- DOI
- 10.1016/j.ijforecast.2024.06.003
- ISSN
- 0169-2070
- eISSN
- 1872-8200
- Publisher
- Elsevier B.V
- Number of pages
- 9
- Language
- English
- Date published
- 04/01/2025
- Academic Unit
- Marketing
- Record Identifier
- 9984938143102771
Metrics
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