The Election Prediction Market Effect on EBay Outcomes: Obama and McCain Memorabilia

Campaign memorabilia have been a part of presidential elections from the beginning; buying and selling them on eBay is a more recent development. The purpose of the present paper is to investigate the determinants of the number of bids and the final sales price of 2008 presidential memorabilia for auctions that closed on or before the election itself.  In addition to a standard set of determinants, the paper considers three “political variables.”  The first was simply whether the auction was for a McCain item or an Obama item.  The second was the number of days before the election.  The third variable was taken from the Iowa Electronic Market (IEM) website, specifically, the 2008 Presidential Winner-Take-All Market.  In this prediction market, traders buy an all or nothing contract that pays a dollar if the given nominee wins the popular vote.  The results of the paper suggest that auctions of Obama memorabilia were different from those of McCain memorabilia—in the number of bidders, the final sales price, or both.

At the most basic level, an auction for an Obama item attracted more bids than that of a McCain item, but there were no systematic differences in final selling prices. The effects of the other political variables are considerably more complicated.  The closer an auction to the election the greater the number of bids in the full sample and in the subsample of just Obama items, but not in the subsample of McCain items.   On the other hand, the closer an auction was to election day the higher the final sales price for McCain items, but not for Obama items. The effect on the full sample was positive when significant, but the effect was not always significant.            An increase in the Iowa Electronic Market variable is an increase in the vote-share prediction that a given candidate will win the popular vote. For McCain items, an uptick in his IEM variable was associated with an increase in bids on McCain items and with willingness to pay for them.  For the full sample, an uptick in the McCain IEM variable had a positive effect on bids but no discernable effect on price. On the other hand, for Obama items, an uptick in his IEM variable was associated with a decrease in bids with no effect on final sales price. For the full sample, an uptick in the Obama IEM variable had a negative effect on bids and again no effect on price. At a minimum, these results suggest a considerable difference in attitude between buyers of Obama and McCain memorabilia in the run-up to the election; one group increases its auction participation in response to good news while the other decreases its auction participation.