Recovering Election Winner Probabilities from Stock Prices

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Reference

Hanke, M., Stöckl, S., & Weissensteiner, A. (2022). Recovering Election Winner Probabilities from Stock Prices. Finance Research Letters, 45, 1-5. (ABDC_2016: B; ABDC_2019: A; ABS_2018: 2; ABS_2021: 2; ISI_2016: 0.762; ISI_2016_5year: 0.842; ISI_2018: 1.709; VHB_3: B)

Publication type

Article in Scientific Journal

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.

Persons

Organizational Units

  • Chair in Finance

Original Source URL

Link

DOI

http://dx.doi.org/10.1016/j.frl.2021.102122