Ray C. Fair

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Discussion Paper

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A method is proposed in this paper for predicting Electoral College victory probabilities from state probability data. A “ranking” assumption about dependencies across states is made that greatly simplifies the analysis. The method issued to analyze state probability data from the Intrade political betting market. The Intrade prices of various contracts are quite close to what would be expected under the ranking assumption. Under the joint hypothesis that the Intrade price ranking is correct and the ranking assumption is correct, President Bush should not have won any state ranked below a state that he lost. He did not win any such state. The ranking assumption is also consistent with the fact that the two parties spent essentially nothing in most states in 2004.

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