An options-pricing approach to forecasting the US election

John Fry, Steve Bennett and Thomas Hastings

Economics Letters, 2025, vol. 256, issue C

Abstract: A subjective probability argument suggests vote-share estimates from polls can be interpreted as market prices. The corresponding election constitutes the price at a known future date. This makes an options-pricing approach particularly attractive. The approach works well for proportional systems. Here, we show how to adjust the approach for non-proportional first-past-the-post systems. We illustrate our approach with an application to the most recent 2020 and 2024 elections.

Keywords: Elections; First past the post; Forecasting; Options pricing; US election (search for similar items in EconPapers)
JEL-codes: C1 C5 G1 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:256:y:2025:i:c:s0165176525004690

DOI: 10.1016/j.econlet.2025.112632

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