Wednesday, September 17, 2008

New Stocks launch today: SEATS.MAORI and MAJORITY.NAT

Today we launch two contracts to do with Parliamentary seats that will be allocated to two parties – the Maori Party and the National Party, but with each stock we have a different purpose in mind.

SEATS.MAORI is a stock aimed at counting the number of electorate seats the Maori Party will win. The contract pays 10 cents for each seat won by the Maori Party. As with all our stocks, pay out is capped at $1 per contract. The purpose of this question is to measure one source of overhang in the next Parliament – that is, the total number of seats it will have.

Overhang occurs when a party wins more electorate seats than its share of the party vote would entitle it to. The current Parliament has an overhang of one seat because in 2005 the Maori Party won four electorate seats when their party vote entitled them to three seats. SEATS.MAORI asks how many electorates – Maori or General – the Maori Party will win in 2008. In combination with another contract on iPredict, VOTE.MAORI, we will be able to estimate the overhang the Maori Party will produce.

Overhang is important - it can determine who leads the next government - and tactical voting can produce large distortions. One idea floated recently was for Maori roll voters to split their vote: give their electorate vote to the Maori Party but their party vote to Greens. If every Maori Party voter did that, and if the Maori Party won seven electorate seats, then an overhang of 7 would occur, meaning a Parliament of 127.

As David Farrar pointed out earlier this year, overhang could determine the election:
Let’s say National gets 51% of the vote and 62 MPs. They should get to be the Government under MMP - this is exactly what MMP is meant to guarantee. But by this strategy of deliberate vote splitting to ensure over-hang, then Labour, Greens and Maori Party could gain 65 MPs instead of the 58 they would have on the party vote only, and get to form a Government which only a minority of NZers voted for.
SEATS.MAORI is trading at $0.5597.

Our second contract is MAJORITY.NAT, which asks a simple question: will the National Party win an absolute majority of seats in the next Parliament. This is a yes/no question which asks whether this election will produce the first FPP-style government under MMP. This contract is trading now at $0.3300.

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