Abstract: A system and method for defining, structuring, and trading political event contracts is disclosed that implement a systematic process for defining political event contracts. The systematic process comprises a rigorous taxonomy of risk event classes that delimit the types of contracts to be defined. An event relevance scoring mechanism determines whether a derivative instrument embodying a specified event is economically warranted and useful to the marketplace as a mechanism for hedging risks not easily addressed through other market tools. The disclosed apparatus further comprises apparatus for modeling the value of a specified political event contract that captures both rational and intuitive analysis about an event using criteria based decision trees to provide highly structured calculation of relative probabilities. The tree components are weighted and compared by an analyst or other user to determine probabilities for various alternative outcomes to a specified political event.