The 2008 Presidential Primaries through the Lens of Prediction Markets

To explore the influence of primary and caucus results during the 2008 nomination process we leverage a previously unused methodology---the analysis of prediction market contracts. The unique structure of prediction markets allows us to address two questions. First, we analyze whether primary and caucus results affect candidates' chances in the general election, as candidates who take extreme positions during the nomination contest may be unable to easily appeal to centrist voters in the general election. We also assess whether states with early primaries, such as Iowa and New Hampshire, have a disproportionate effect on the nominating process. We show that the length of the primary process has a minimal impact of the electability of candidates in the general election, and that some states have a disproportionate impact on the nominating process. However, the states that have the largest impact are not necessarily New Hampshire and Iowa, the two that have often been assumed to be the most influential because of their early position on the primary calendar.