Markets as Predictors of Election Outcomes: Campaign Events and Judgement Bias in the 1993 UBC Election Stock Market

Economists believe that markets are efficient aggregators of information. The 1993 UBC Election Stock Market was designed to use this ability to predict the outcome of the 1993 Canadian federal election. The final market predictions of vote shares going to the various parties were very close to the actual results. The market also generated a large body of data on the standings of the parties at every point in time during the campaign. This paper makes use of some of these data to study two sets of questions about trader behaviour. First, according to the traders and the Market, what were the significant events of the 1993 election campaign? Second, did UBC-ESM traders exhibit judgement bias in their trading activity? That is, did they tend to hold shares in parties that they wanted to be successful?