Hi Bo Cowgill,
In light of the previous blog post (Anonymity is important for employees trading on internal prediction markets), I have a question regarding Google’s internal prediction markets. You said at Yahoo! Confab that your fellow Google colleagues were highly motivated in raising their ranking on the Google leader board —showing off their “bragging rights” (making sure that their colleagues are aware of their predictive power).
OK, but could that compromise the necessary anonymity of event derivative trading?
I assume that it’s often the cases at Google that market results surpass the executives’ expectations, but what about a corporation (say, an old search engine firm from the mid-nineties) that is on the downside. If I am an employee of that firm and persuaded that my firm will continue on its losing strike (despite the optimistic expectations of my managers), I will short-sell any corporate event derivative contracts, and, if I’m right, my name will pop up in the top-ten traders list —which will send the clear signal to my managers that I did short-sell their expectations.
I’m now “outed” as a corporate bastard —someone who bet against his/her firm’s stated goals. The trading anonymity is broken —my managers have divined how I traded.
What do you make of this?
Thanks.
Signed: Chris Masse
As a last resort, the ranking software could allow users to opt-out. However, I don’t think the issue you point out is likely to be problematic.
First, the circumstances would be rare — particularly when several dozen markets are open simultaneously, including “fun” markets — when the only way to make lots of money is to bet against the company.
Second, I doubt think that all the higher managers in the firm would stigmatize someone on this basis. If you’re a senior manager, you’re probably more concerned about someone voting against YOU indivually — not someone else in the company.
In fact, you might actually want people to bet against your colleague — if he’s the person whom you think is holding the company back, or who you’re competing for promotion with. I’ve heard a few internal corporate PM stories about rival factions short selling each other in the markets.
Bottom line: You may not be stigmatized for betting against someone in the company, so long as nobody knows who the someone is.
Thanks.
“including ‘fun’ markets”:
- I would like to know whether the other firms experimenting with prediction markets do open some “fun” lines, or if Google is an isolated case.
(Nobody can answer this question, probably.)