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About this Market
Previous Elections
Election Forecasting
Research
 
 
About the Market
 
The UBC Election Stock Market was a financial market in which the ultimate values of the contracts being traded are based on the outcome of the elections to the House of Commons in Ottawa and to provincial parliaments and legislatures around Canada. Participants invested their own funds, buy and sell listed contracts, and bear the risk of losing money as well as earning profits.
 
           The UBC-ESM was operated as a not-for-profit venture. The method of issuing contracts and making final payoffs on these contracts ensures that the UBC-ESM does not realize financial profits or suffer losses. No commissions or transactions fees were charged.
 
           The exclusive purposes for conducting this market were teaching and research. Through the UBC-ESM, participants learned first-hand about the operation of a financial market and, because they have an added incentive to do so, they often become better informed about not only the current election but also the election process itself. As a research project, the UBC-ESM generated valuable data that will provide insights into market and trader behaviour. Participation in the UBC-ESM was open to all Canadian residents who are at least 19 years of age.
 
 
The UBC-ESM Team
 
Prof. Thomas Ross, Ph.D., Director
Prof. Werner Antweiler, Ph.D., Director
Jessie Lam, Market Administrator
 
 
Mailing Address
 
UBC-ESM
Sauder School of Business
Attention: Jessie Lam
2053 Main Mall
Vancouver, BC, V6T 1Z2

 
Questions and Answers
 
What are the objectives of the UBC Election Stock Market?
    The market has four objectives. First, investors are trying to predict the election outcome. Efficient markets are very good at reflecting all available information and can often reflect information faster than opinion polls that take several days to complete and process. To this extent the market has a public service function. Second, the researchers learn about trader behaviour in a controlled setting, which may be augmented by information obtained from traders through questionnaires. Third, the market engages traders to follow the political process more carefully. And fourth, the market teaches participants about financial markets and trading strategies such as "long" and "short" positions. Because of the educational aspects of the UBC Election Stock Market, we particularly encourage participation from students at high schools and universities. The UBC Election Stock Market is open to all who have an interest in Canadian politics.
 
Why do traders in the UBC Election Stock Market need to invest real money; wouldn't "play money" accomplish the same objective?
     We believe that real money is important -- there is a branch of economics now that studies behaviour in a laboratory setting (like psychologists have been doing for decades) and it is believed that if you want to understand market activity in a lab you need to recreate the incentives of the market which includes financial rewards. Many markets have been run with "play money" and the results are generally disappointing from the perspective of getting your participants to focus on the task at hand and care about the outcome -- they way they would care in real markets, for example.
 
Does the market further the involvement of participants in the political process?
     We think that the Election Stock Market is complementary to the political process because the market makes participants pay more attention to the election. As investors are challenged to put their money where there mouths are, they need to take the election process very seriously by paying attention and analyzing events carefully.
 
Does UBC make money from the UBC Election Stock Market?
    No. UBC makes no money from this market at all -- the total money invested is paid back out (to the penny). There are no commissions or surcharges. But of course, some individual investors will lose and some will gain.
 
How successful is the UBC Election Stock Market?
    Based on the results from markets for several federal and provincial elections in Canada, the markets deliver predictions of popular vote shares that are often more accurate than public opinion polls. Our seats market is also one of the few sources of predictions of the distribution of seats in the federal and provincial parliaments.
 
How can I profit from trading in the UBC Election Stock Market?
    Traders typically "buy low and sell high" to make profits. Contracts in the UBC Election Stock Market reflect expected election outcomes. Thus, if a trader finds that a contract is currently undervalued, buying this "cheap" contract may turn out to be profitable if the price of this contract increases over time, or if the ultimate payout of the contract as determined by the election outcome is higher than the purchase price. Holding contracts in anticipation of an increase in price is known as taking a "long position". Traders can also profit when they see a contract that appears "overvalued". In this case they take a "short position". Traders can profit from buying a $1 unit portfolio of all contracts in a given market and selling the overvalued contract. The details of the long and short strategies are described in the trader's manual.

© 2017 Sauder School of Business, University of British Columbia.