Sunday, June 15, 2008

Intrade Election Forecast II

If the perceptions of people risking their money are to be believed, Barack Obama's Electoral College margin over John McCain has increased over the past week. According to current prices for the derivatives for each of the 51 states and the District of Columbia on the Intrade trading platform, Obama now leads in New Hampshire and (by a razor thin margin) in Virginia. The addition of these two states gives Obama 306 electoral votes to 232 electoral votes for McCain.

As I noted last week, these derivatives are based on which political party will win the electoral votes in a given state. The "price" of the derivative is the perceived probability of the event taking place, that is, the price ranges between 0 and 100. The current "price" in a given state therefore reflects the market's perception of which candidate is ahead in a given state. For example, the current "price" for the Democratic candidate in New Mexico is 68.5, meaning that the perceived probability the Democratic candidate will receive more votes than the receiving Republican candidate in New Mexico is 68.5%.

The map below shows the market's perception of which candidate is ahead in each state as of June 14th:

Check back next week for the weekly update of this map.

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