Results from the Iowa Political Stock Market are analyzed to ascertain how well markets work as aggregators of information. The authors find that the market worked extremely well, dominating opinion polls in forecasting the outcome of the 1988 presidential election, even though traders in the...

Each market is related to a specific future event, for instance a presidential election, and contains a set of contracts with liquidation values pegged to the outcome of the future event. Contracts enter into circulation by the voluntary purchase from the IEM trading system of bundles of...