Wednesday, September 17, 2008

McCain and Obama Presidential Futures Contracts

I talk about the Intrade Political Futures markets a lot in my classes. They're a good example of how markets process dispersed information. There's a lot of debate about whether they actually predict many kinds of events or merely (in the case of the Presidential elections) merely react to polls. But despite that, they're a fairly simple market that's useful for demonstrating a number of concepts about markets (expected values, bud-ask spreads, trading volume, etc...).

Also, I'm a political junkie, so it's fun to see students in a finance class actually think about politics in a different way.

In any event, it now seems like the McCain for President contract and the Obama contracts have switched places (they're trading at $0.495 and $0.50 respectively). I always find it interesting to see how they react to various news events.

As an aside, I usually get a bit of a traffic spike when I post something on McCain, Obama, or the presidential elections. Unfortunately, it also results in a lot of fevered comments that I have to delete to protect all my many readers' (all three of them) delicate sensibilities.

Of course, if I did it for the traffic, I'd just mention that I have Sarah Palin Bikini pictures.

But that would be wrong. Very, very wrong.