2007-2008 Influenza Vaccine Effectiveness Market :: Prospectus
At 8:00 AM CST on December 17, 2007, a market will open for trading in contracts based on the effectiveness of the influenza vaccine in the United States during the 2007-08 influenza season. This document describes these contracts and the structure of the market in which they trade.
MARKET CURRENCYAll transactions in this market will be denominated in Influenza Vaccine Effectiveness dollars (IVE$), the unit of exchange for this market. Each new account will be endowed with IVE$50.00, and IVE$2.00 will be added each week for those who submit a new order. When the market closes at the end of the influenza season, the remaining IVE$ balance will be converted to US$ and distributed to the holder of that account (with the holder's consent) as a grant towards professional and educational expenses.
CONTRACTSContracts to be traded in the market are based on the effectiveness of seasonal influenza vaccine in the United States during the 2007-08 influenza season. Three contracts will be available, one contract for each of three possible outcomes of vaccine effectiveness. The three contracts cover possible comparisons to last season's vaccine as determined by the results of the Naval Health Research Center (NHRC) population-based surveillance for febrile respiratory illness (FRI) at US military basic training centers and the resulting calculations of vaccine effectiveness. (The 2006-07 influenza vaccine was rated as 87% effective by the NHRC.) For further discussion about the measurement, you can go to:
Strickler JK, Hawksworth AW, Myers C, Irvine M, Ryan MAK, Russell KL. "Influenza vaccine effectiveness among US military basic trainees, 2005–06 season," Emerging Infectious Diseases , 14(4), 2007, pp. 617-19.Available at http://www.cdc.gov/EID/content/13/4/617.htm
The three contracts to be introduced for trading in this market are as follows:
| Code | Contract Description |
| FVE_Better | FVE$1.00 if the 2007-2008 vaccine is noticeably more effective than last year's vaccine (more than 91% effective); FVE$0.00 otherwise |
| FVE_Same | FVE$1.00 if the 2007-2008 vaccine is about as effective as last year's vaccine (at least 82% but less than 91% effective); FVE$0.00 otherwise |
| FVE_Worse | FVE$1.00 if the 2007-2008 vaccine is noticeably less effective than last year's vaccine (less than 82% effective); FVE$0.00 otherwise |
The 3 contracts will be open for trading from 12/10/07 until 11:00 PM CST on March 31, 2008.
CONTRACT LIQUIDATION VALUESThese are "Binary Contracts", meaning there are two possible liquidation values, FVE$0.00 or FVE$1.00, for each contract. Within the 3 contracts, the one that denotes the actual outcome for influenza vaccine effectiveness for the 2007-08 season will have a liquidation value of FVE$1.00; all other contracts will have values of FVE$0.00.
For example, if the NHRC announces at the end of the influenza season that the 2007-08 vaccine had a vaccine effectiveness of 81.9%, the contract FVE_Worse will be liquidated for FVE$1.00. If any level of influenza vaccine effectiveness from 82% to 100% is announced, the liquidation value of the FVE_Worse contract will be FVE$0.00. Similarly, the other influenza vaccine effectiveness contracts will be liquidated for FVE$1.00 or FVE$0.00 depending upon whether or not the announced vaccine effectivness is in the range associated with that contract.
The seasonal report of the NHRC will be the official source for influenza vaccine effectiveness results. Liquidation formulas can be viewed while you are logged into the IEM trading system by clicking on the market name, FVE_07-08, at the upper right-hand corner of the market window. The judgment of the managers of the Iowa Health Prediction Markets will be final in resolving questions of interpretation and typographical or clerical errors.
Fixed-price bundles consisting of one share of each of the contracts can be purchased from or sold to the trading system at any time. The price of each bundle is FVE$1.00. Because only one outcome will be announced at the conclusion of the seasonal influenza season, the total payoff from holding a bundle consisting of one of each contract until the market closes is FVE$1.00.
To buy or sell fixed-price bundles from the exchange, use the "Market Orders" option from the trading console. Select the option "FVE$1 (buy at fixed price)" from the Market Orders list to buy bundles. Select the " FVE$1 (sell at fixed price)" option to sell bundles. Purchases will be charged to your cash account and sales will be credited to your cash account.
Bundles consisting of one share of each of the contracts in this market may also be purchased and sold at current aggregate market prices rather than the fixed price of FVE$1.00. To buy a market bundle at current ASK prices, use the "Market Order" option as above but select the option "FVE$1 (buy at market prices)". To sell a bundle at current BID prices, select the option " FVE$1 (sell at market prices)".
MARKET OPEN AND CLOSETrading in the set of contracts for the 2007-08 influenza season will open at 8:00 AM CST on 12/10/07 and close at 11:00 PM CST on 3/31/08. After results are available from the NHRC at the conclusion of the influenza season, liquidation values will be declared and funds credited to the accounts of market participants.
TRADING RIGHTS AND MARKET ACCESSParticipation is restricted to registered traders, and registration is by invitation only. Invitations will be extended to members of the medical community and others who may have particular expertise with influenza. Any person desiring an invitation to participate may indicate that interest by following the instructions on the join us page. If an account is approved by the market managers, a trader id and password will be created and returned to the applicant by email. For traders with open accounts, access to the market is achieved by pointing a web browser to http://fluprediction.uiowa.edu/trader-login.html and following the login instructions found there.
TRADING SYSTEM AND TRADING RULESTransactions on the Iowa Health Prediction Markets are executed either directly by the trader using a real-time, web-based system operating over the Internet or through an "electronic broker". In the latter case, traders complete and submit an order form indicating their beliefs about effectiveness of the current influenza vaccine. An automated procedure translates those beliefs into market actions and submits the resulting market orders to the trading system. The system, called Web Exchange (WebEx), is maintained by the Iowa Health Prediction Markets project in the University of Iowa's Tippie College of Business and Carver College of Medicine. The market operates in the Central time zone and is open for trading around the clock.
MARKET MANAGERSThe Iowa Health Prediction Market is a joint research project involving the Carver College of Medicine and the Tippie College of Business at the University of Iowa. Contact information for managers of the market can be found here.