UBC Sauder’s election prediction markets take on pollsters

A stock market at the UBC Sauder School of Business is aiming to predict the winner of B.C.’s upcoming provincial election. The only election stock market in Canada, the UBC Sauder Prediction Markets allow investors to use their own money to buy and sell “shares” representing political parties, with those who predict correctly reaping the financial rewards after the polls close May 9.

According to the market’s developer Werner Antweiler, UBC Sauder associate professor, election stock markets reflect voter sentiment faster and more accurately than opinion polls.

“When people invest their own money, prediction results are often more reliable because investors tend to let go of their biases and analyze events more carefully in order to maximize returns,” he said. “While many traders follow polling trends, other investors take contrarian views and benefit if they are right.”

The platform currently has three markets running, predicting percentage of popular vote for four major political parties in this year’s election, seat share for each party in the legislature, and which party will form a majority government.

In previous election markets, traders seemed particularly adept at predicting seat distributions. This could be due, in part, to investors crowdsourcing information from multiple sources such as debates, news coverage, polls and pundits, said Antweiler.

As of March 14, the BC Liberals have a slight edge over the NDP in the Prediction Markets. However, the markets also indicate a possibility that the Green Party may gain seats and even has a small chance of holding the balance of power.

The Prediction Market is run on a not-for-profit basis and is an important tool for teaching and research, since it can provide important insight into the dynamics of futures market trading. The markets are open to Canadian residents over the age of 19 who invest a minimum of $25, up to a maximum of $1,000 per person.