Tag Archives: enterprise prediction markets

Prediction Markets at Google – by Peter A. Coles, Karim R. Lakhani, Andrew McAfee

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No GravatarAlas, that paper is not free to access.

Andrew McAfee&#8217-s post reveals this:

Prediction markets were (sic) very much like stock markets. They contained securities, each of which had a price. [&#8230-]

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Not sure why they used the past tense.

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Prediction markets are in fact event derivative markets.

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Papers from Robin Hanson, Justin Wolfers, Eric Zitzewitz, Koleman Strumpf, etc., are free to download.

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Via George Tziralis, of Ask Markets.

Previously: Do Google’s enterprise prediction markets work?

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Previous blog posts by Chris F. Masse:

  • “Annette 15”, the once-hot female poker star sponsored by BetFair Poker, does blog only twice a month on the official BetFair blog… when she blogs at all… if you call that blogging.
  • Inkling Markets bring in awards, honors, advisors, and new clients —leaving competition in the dust.
  • No need of enterprise prediction markets to boost intra-corporation communication
  • Inkling Markets is included in the 2008 list of “Cool Vendors” by Gartner.
  • BetFair-TradeFair has won its second Queen’s Award for Enterprise in its eight-year history.
  • Inkling Markets is one of the “Hot Companies To Watch In 2008”, according to Forrester.
  • Plenty of great news coming from Inkling Markets in the coming weeks

STRAIGHT FROM THE DOUBLESPEAK DEPARTMENT: NewsFutures CEO Emile Servan-Schreiber, well known to chase tirelessly the Infidels who dare calling prediction markets their damn polling system, is eager to sell the confusion to his clients and whomever would listen.

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Emile&#8217-s made up a phrase that means nothing (except in his fertile imagination), &#8220-a proprietary prediction market variant&#8220- &#8212-sounds like a red herring to me.

Unlike Consensus Point, Inkling Markets and Xpree, NewsFutures is the only prediction market software vendor not to have adopted Robin Hanson&#8217-s MSR &#8212-a simplified trading technology now in use in most enterprise prediction markets.

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You cant measure the usefulness of a system by how many resources it consumes.

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No GravatarMakes sense, doc.

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Doc, I didn&#8217-t say that &#8220-this effort by Starbucks somehow implies a devaluation of enterprise prediction markets.&#8221- I said that it implies a devaluation of the enterprise prediction markets that are overhyped as intra-corporation communication tools &#8212-I&#8217-m of course fine with them used as forecasting tools, which is our collective goal from day one (IEM in 1988). The complexity of prediction markets is bearable if and only if they are a bit more accurate than the other mechanisms. Now, if the objective is to get feedback and suggestions from employees, no need to pay for this complexity &#8212-a simple voting mechanism is more than enough and will do the trick.

In that regard, I would point to Xpree, which use that simple, voting mechanism when and where it makes sense to use it.

Mat Fogarty is well versed in the discipline of forecasting, and should be listened to more, here, I believe.

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Previous blog posts by Chris F. Masse:

  • Red Herring’s list of the top 100 North-American high-tech startups includes Inkling Markets —but not NewsFutures, Consensus Point, or Xpree.
  • Professor Koleman Strumpf explains the prediction markets to the countryland people.
  • Professor Koleman Strumpf tells CNN that a prediction market, by essence, can’t predict an upset.
  • Time magazine interview the 2 BetFair-Tradefair co-founders, and not a single time do they pronounce the magic words, “prediction markets”.
  • One Deep Throat told me that this VC firm might have been connected with the Irish prediction exchange, at inception.
  • BetFair Rapid = BetFair’s standalone, local, PC-based, order-entry software for prediction markets
  • Michael Moore tells the Democratic people to go Barack Obama in Pennsylvania (a two-tier state), but the polls and the prediction markets tell us that that won’t do the trick.

REBUTTAL: SalesForce, StarBucks and Dell demonstrate that enterprise prediction markets as intra-corporation communication tools (as opposed to forecasting tools) are overhyped by the prediction market software vendors and a little clique of uncritical courtisans.

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SalesForce

My Starbucks Idea

Dell&#8217-s IdeaStorm

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No need of trading technology to get feedback and suggestions from employees. A simple voting mechanism is more than enough.

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Previously: Enterprise prediction markets give voice to serious, technology-minded professionals who really know their vertical (engineers, analysts and contractors) —and reveal how frivolous and unpertinent most horizontal managers are.

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The Promise Of Enterprise Prediction Markets – The McKinsey conference should have been rooted in the economic science and McKinsey should have invited economists.

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No GravatarMcKinsey: The Promise Of Prediction Markets

James Surowiecki: The premise is that under the right circumstances, the collective judgment of a large group of people will generally provide a better picture of what the future might look like than anything one expert or even a small group of experts will come up with. [&#8230-]

James Surowiecki: The Wisdom of Crowds is not an argument against experts. It is saying that you shouldn’t rely wholly on the judgment of one person or even a very small group of people. But for a crowd to be smart, it needs to satisfy certain criteria. It needs to be diverse, so that people are bringing different pieces of information to the table. It needs to be decentralized, so that no one at the top is dictating the crowd’s answer. It needs to summarize people’s opinions into one collective verdict. And the people in the crowd need to be independent, so that they pay attention mostly to their own information and don’t worry about what everyone around them thinks.

James Surowiecki: [&#8230-] One shortcoming is that a lot of people inside organizations don’t find the market mechanism intuitive or easily understood. They find it very challenging to use, which limits the pool of people who participate.

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On James Surowiecki&#8217-s last remark, I would say that Robin Hanson&#8217-s MSR technology (which powers most enterprise prediction exchanges but Google&#8217-s one) brought much needed simplification to trading.

Overall, a good roundup, but the conference speakers should have mentioned Robin Hanson&#8217-s pioneering work, and McKinsey should have invited him. He would have towered anybody and given great insights.

See Jed Christiansen for other remarks.

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As an aside, I&#8217-d say I prefer the sketch that is supposed to represent Bo rather than the real photo. The sketch makes him look like he is subtitle, charming, smiling, humble, and modest &#8212-quite a quantum leap. :-D

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Bo Cowgill

Bo Cowgill – Economics at Google

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  • PhotoShop designers improve the look of models on glossy magazine covers.
  • Sketchy artists improve the look of testosteroned, ultra-serious, ambitious, young business managers. :-D

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Previously: Do Google’s enterprise prediction markets work?

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Previous blog posts by Chris F. Masse:

  • Collective Error = Average Individual Error – Prediction Diversity
  • When gambling meets Wall Street — Proposal for a brand-new kind of finance-based lottery
  • The definitive proof that it’s presently impossible to practice prediction market journalism with BetFair.
  • The Absence of Teams In Production of Blog Journalism
  • Publish a comment on the BetFair forum, get arrested.
  • If I had to guess, I would say about 50 percent of the “name pros” you see on television on a regular basis have a negative net worth. Frightening, I know.
  • You can’t measure the usefulness of a system by how many resources it consumes.

Enterprise prediction markets give voice to serious, technology-minded professionals who really know their vertical (engineers, analysts and contractors) -and reveal how frivolous and unpertinent most horizontal managers are.

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Via prediction market pioneer Emile Servan-Schreiber of NewsFutures [*], the New York Times (2 pages):

At InterContinental Hotels, Zubin Dowlaty, vice president for emerging technologies, decided to create an online market last fall to “harvest and prioritize ideas” from within the hotel’s 1,000-person technology staff. “We wanted to tap the creative class that may not be able to voice their ideas,” Mr. Dowlaty said. With InterContinental’s prediction market, players were asked to submit ideas anonymously, with a description and the benefit to customers and company. The bettors were given virtual tokens, each receiving 10 green ones to be placed on the best ideas and three red for bad ideas. There were no limits on the number of times bettors could change their wagers as new ideas came to market, and the market was open for four weeks. The five top ideas (most green tokens), five bottom ideas (most red) and the top five bettors (most accurate, according to market consensus) were listed regularly. The winners got $500, while second- and third-place finishers received $250 each. The winners, Mr. Dowlaty said, were engineers, analysts and contractors, not managers. More than 200 people participated, submitting 85 ideas. One person proposed bringing back quarter-operated vibrating beds. “That one got beat down really fast,” Mr. Dowlaty said. The winning ideas were suggestions to improve searching the company’s Web site to find and book hotel rooms. Two projects have been started as a result of the market, Mr. Dowlaty said. Next, he said, prediction markets may be opened up to InterContinental’s customers, probably beginning with members of its Priority Club loyalty program. They could bet in markets for improving service and offerings, with points redeemed. “It’s the next frontier and the natural progression for this,” Mr. Dowlaty said.

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InTrade-TradeSports, unlike BetFair-TradeFair, do manage internal, enterprise prediction markets.

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Previously: Do Google’s enterprise prediction markets work?

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New Product Innovation: Enterprise Prediction Markets Can Help.

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Via the New York-based Yahoo! Research scientist who was video-interviewed by the New York Post, the other day- Teck-Hua Ho &amp- Kay-Yut Chen:

New Product Blockbusters: The Magic and Science of Prediction Markets
Teck-Hua Ho &amp- Kay-Yut Chen
50/1 (Fall 2007): 144-158

New product innovation is a strategic business activity that involves significant financial resources and managerial attention. Most new product launches fail because existing methods are unable to forecast their commercial successes accurately. In this article, we describe a market-based method to address this gap. This method capitalizes on the power of the “wisdom of crowds” by allowing people to interact in organized markets governed by well-defined rules. The working of these markets relies on five scientific principles referred to as I4C (pronounced as “I foresee”). These markets motivate people to share information freely through a price discovery process. Prediction markets seek information aggregation from a large group of diverse individuals by encouraging active participation. We demonstrate the power of the markets with real application examples from a wide variety of industries.

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More:

The principles are incentive, indicator, improvement, independence, and crowd.

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New Product Innovation: NewsFutures, Inkling Markets, Consensus Point and Xpree can help.

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New Product Innovation: Enterprise Prediction Markets Can Help.

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Via the New York-based Yahoo! Research scientist who was video-interviewed by the New York Post, the other day- Teck-Hua Ho &amp- Kay-Yut Chen:

New Product Blockbusters: The Magic and Science of Prediction Markets
Teck-Hua Ho &amp- Kay-Yut Chen
50/1 (Fall 2007): 144-158

New product innovation is a strategic business activity that involves significant financial resources and managerial attention. Most new product launches fail because existing methods are unable to forecast their commercial successes accurately. In this article, we describe a market-based method to address this gap. This method capitalizes on the power of the “wisdom of crowds” by allowing people to interact in organized markets governed by well-defined rules. The working of these markets relies on five scientific principles referred to as I4C (pronounced as “I foresee”). These markets motivate people to share information freely through a price discovery process. Prediction markets seek information aggregation from a large group of diverse individuals by encouraging active participation. We demonstrate the power of the markets with real application examples from a wide variety of industries.

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More:

The principles are incentive, indicator, improvement, independence, and crowd.

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New Product Innovation: NewsFutures, Inkling Markets, Consensus Point and Xpree can help.

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Enterprise Prediction Markets: Co-Creating An Organizations Future

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Prediction Markets: Co-Creating An Organization&#8217-s Future – (PDF file) – by Inside Knowledge Magazine&#8217-s Victoria Axelrod and Jenny Ambrozek – 2008-05-10

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David Perry of Consensus Point:

Yes, markets are early warning systems for many things, they give you a sense of what your people know and do not know.

Prediction markets are not necessary if everyone has perfect knowledge- markets are designed to tell people what they do know, to be quiet when they do not
know and are designed to get around take place over time, allowing for prices to fluctuate depending on traders’ confidence.

The longer the markets run, the more informed. They are like wine, they get better with time.

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Emile Servan-Schreiber of NewsFutures is cited too.

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The New York Times article doesnt mention Googles enterprise prediction markets, alas. – Bo Cowgill says that the illustration published in the sidebar defines exclusively what is done at Google.

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Right-click on the New York Times graphic below, open Bo Cowgill&#8217-s post in another browser tab, and read his arguments.

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NYT PMs

Image Credit: Chris Gash for the New York Times

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Adam Siegel of Inkling Markets is also out with a post on that NYT article, but it is of no intellectual interest. Maybe Adam should blog less quickly and eat more fish.

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I forgot to tell you, the other day, that Best Buy is a Consensus Point client, but you knew that already.

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Previously: The New York Times is telling the business world that enterprise prediction markets are an essential management tool.

[Via Xpree]

Previously: Do Google’s enterprise prediction markets work?

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Previous blog posts by Chris F. Masse:

  • The Terror Finance Blog
  • Playing fantasy sports is not gambling. The Unlawful Internet Gambling Enforcement Act includes a specific exemption for fantasy sports, provided the prizes are determined in advance and the imaginary teams don’t correspond to any real teams.
  • Inkling Markets’ Advisory Board… which does not want to tell its name
  • BetFair created the world’s largest ad banner —as certified by the Guinness Book of World Records.
  • Why Emile Servan-Schreiber is on to something with Bet 2 Give —and why InTrade, TradeSports and BetFair should each have a philanthropy wallet.
  • The CFTC is going to close the comments in 14 days. We have 14 days left to convince the CFTC to accept FOR-PROFIT prediction exchanges, and counter the evil petition organized by the American Enterprise Institute (which has on its payroll Paul Wolfowitz, the bright masterminder of the Iraq war).
  • The purpose of X2 is to identify future disruptions, opportunities, and competitive landscapes related to the content and dynamics of global science and technology innovation- to develop a new platform for understanding global innovation trends- and to present this information to policy- and decision-makers, as well as the general public, in a useful form.