Iowa: About as expected
Mitt Romney went into the Iowa Caucus night favored to win the Republican nomination with about 77 percent likelihood; he will catch his flight to New Hampshire with just about the same odds. We still don't know whether he will eke out a victory in Iowa, but it simply isn't important. He survived Iowa, and that's what the market cares about.
Sources: Betfair and Intrade
Rick Santorum went into the night with decent odds of victory and a high likelihood of finishing first or second. He met those expectations, and the market rewarded him with the same expectations they've always afforded him: Very low ones. He lacks money, a national organization, and has yet to get traction with the general Republican electorate.
The same is true of Ron Paul: Many expected him to place first or second. He very nearly did, and the only effect of his near-miss was a slight downward shift in his odds of winning a few early states.
Newt Gingrich came into the Iowa caucuses severely weakened by attack ads and expected to finish fourth. He obeyed, further ceding ground to Santorum in the Anti-Romney department. But there remains, for the time being, very little real estate in that department in the first place.
Sources: Betfair and Intrade
David Rothschild is an economist at Yahoo! Research. He has a Ph.D. in applied economics from the Wharton School of Business at the University of Pennsylvania. His dissertation is in creating aggregated forecasts from individual-level information. Follow him on Twitter @DavMicRot and email him at thesignal@yahoo-inc.com.
