How exact are political prediction markets?
The results of various elections of the Iowa Political Stock Market (IPSM) between 1988 and 2000 have been subject of scientific research. The Value of IPSM-shares on the eve of the President elections only varied by 1.37% other elections showed similar results with only 2.12% and 3.43% difference to the actual election results. All these results have been closer in 3 of 4 cases as the ones from established research departments. The results in per cent are based on the MAE (mean average error). This is meant to be the closest regarding accuracy in surveys and for prediction markets. The MAE is based on absolute deviation of each variable value from the arithmetic average over all tested values.
