`Brokers' pocket poll winnings

十月 27, 1994

After poll day came pay day for university "brokers" at German universities who speculated on the result of the country's general election on a stock exchange for voters.

In the months running up to the election, students and professors at the universities of Bochum, Essen, Bamberg and Regensburg bought and sold shares on the exchange based on the standing of the political parties. Buying and selling took place via the university computer.

The game had a serious academic aim: to find out if markets are more accurate predictors of election results than traditional opinion polls. The results were astoundingly successful. The final quotation tallies to within one per cent of the actual election results. Particularly impressive was the market's spot on prediction of the performance of the PDS, the reformed East German communist party, which was this election's unknown quantity.

The electronic election exchange was invented by the University of Iowa in the United States. Investors paid a DM20 (Pounds 8) joining fee in return for a user code and password enabling them to tap into a central computer in Iowa via Internet.

When the market was launched, shares packages were issued at DM1, each containing seven securities representing the seven main political groups. Investors then bought and sold shares at whatever price they were willing to pay. After the poll, each share paid a liquidation value of DM1 times the political party's share of the vote. Maximum winnings will be DM100 (Pounds 40).

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