Search engine expert Barry Schwartz:
[…-] Why does Google encourage such activity from their employees? […-] It also helps stimulate an “-optimism bias,”- which in turn encourages Google employees to work harder to achieve a certain outcome they have predicted in the [prediction] market[s]. […-]
Related Links: Using Prediction Markets to Track Information Flows: Evidence From Google – (PDF file – PDF file) – by Bo Cowgill (Google economic analyst), Justin Wolfers (University of Pennsylvania) and Eric Zitzewitz (Dartmouth College)
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Schwartz assumes that Google employees always took the optimistic side of the trade, but since they used a two-sided market (I think I read they used a two-sided auction) there was always a Google employee on both side of the trade.
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In addition, it is likely most employees were not in a position to decide or materially influence the outcome of most contracts. (How many employees were involved in deciding whether to open an office in Russia?)
In addition, rather that stimulating an optimism bias, the markets tended to reduce optimism bias over time. (Or rather, more exactly, the authors report that the detected amounts of optimism bias declined over time.)
Yeah, I think Mr. Schwartz read the coverage too fast and didn’t understand what was going on. Nobody at Google is trying deliberately to create this (or any) bias in the prediction market.
Schwartz assumes that Google employees always took the optimistic side of the trade, but since they used a two-sided market (I think I read they used a two-sided auction) there was always a Google employee on both side of the trade.
.
In addition, it is likely most employees were not in a position to decide or materially influence the outcome of most contracts. (How many employees were involved in deciding whether to open an office in Russia?)
In addition, rather that stimulating an optimism bias, the markets tended to reduce optimism bias over time. (Or rather, more exactly, the authors report that the detected amounts of optimism bias declined over time.)
Yeah, I think Mr. Schwartz read the coverage too fast and didn’t understand what was going on. Nobody at Google is trying deliberately to create this (or any) bias in the prediction market.