Armchair political pundits put their money where their mouth is in election stock market

UBC Media Release

UBC's Sauder School of Business Prediction Markets are up and running with traders already speculating on who will win Canada's federal election this October.

The only election stock market in Canada, the online platform allows participants to use their own funds to purchase and trade "shares" representing political parties.

"Using their own money makes the predictions more reliable, as the traders let go of bias in order to maximize their returns," said associate professor Werner Antweiler, who developed the online market.

The market is run on a not-for-profit basis and is an important tool for teaching and research, said Antweiler. It also provides important insights into the dynamics of futures market trading.

There are four markets running, predicting: the popular vote for Canada's five major political parties; seat counts in the House of Commons; which party will get the most seats; and which—if any—will lead a majority government. Returns will be paid out after the election.

Traders seem to be particularly adept at predicting seat distributions as they crowdsource from debates, news coverage, polls and pundits to judge how well the different parties will perform.

"The market also reacts quickly to new developments and changes in momentum," said Antweiler. "For example, there was a rush of trading immediately after the first leaders' debate, as traders adjusted their predictions without waiting for poll results to be released.

The markets are open to Canadian residents over the age of 19. A minimum investment of $25 is required, up to a maximum of $1,000 per person.

"The UBC Election Stock Market has consistently predicted election results as well or even better than pollsters," said Antweiler. The market first went live in 1993.

Posted Tuesday, August 18, 2015 at 09:30