Recovering Election Winner Probabilities from Stock Prices

10 Pages Posted: 10 Dec 2020

See all articles by Michael Hanke

Michael Hanke

University of Liechtenstein

Sebastian Stöckl

University of Liechtenstein

Alex Weissensteiner

Free University of Bolzano Bozen

Date Written: November 30, 2020

Abstract

After the 2020 U.S. presidential election, counting votes and calling states took more time than usual, particularly in battleground states. In the days following the election, winning probabilities changed frequently as new results were tabulated. Based on the sensitivity of stocks to changes in winning probabilities observed before the election, we show how the stock market's assessment of the unobserved post-election winning probabilities can be backed out from stock prices. Our approach is based solely on publicly available data.

Keywords: Election winner probabilities, Political prediction markets, Election portfolios

JEL Classification: G11, D72

Suggested Citation

Hanke, Michael and Stöckl, Sebastian and Weissensteiner, Alex, Recovering Election Winner Probabilities from Stock Prices (November 30, 2020). Available at SSRN: https://ssrn.com/abstract=3739982 or http://dx.doi.org/10.2139/ssrn.3739982

Michael Hanke

University of Liechtenstein ( email )

Fuerst Franz Josef-Strasse
Vaduz, FL-9490
Liechtenstein

Sebastian Stöckl

University of Liechtenstein ( email )

Fürst-Franz-Josef-Strasse
Vaduz, FL-9490
Liechtenstein

HOME PAGE: http://www.sebastianstoeckl.com

Alex Weissensteiner (Contact Author)

Free University of Bolzano Bozen ( email )

Universitätsplatz 1
Bolzano, 39100
+39 0471 013496 (Phone)

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