Business Overconfidence as seen thru Google’s Enterprise Prediction Markets

Bo Cowgill:

At OVERCOMING BIAS, Robin Hanson blogs about the overconfidence of CEOs, CFOs and software managers. Our paper also measured overconfidence in the workplace. We found that our marketplace was overconfident as a whole, although the market’s optimistic bias subsided as time passed. We also pointed out the particular overconfidence exhibited by new employees — but prediction markets can be used to measure overconfidence and other biases for any part of an organization. Note that our study was about overconfidence regarding their employers’ prospects on a variety of fronts. In a future draft, we hope to measure overconfidence for by looking at how people bet in markets related to their day-to-day jobs. In Table 9 of our paper, you can see some other information about what parts of the company produced the biases (although admittedly not in the most readable format).

Here’s the table 9. Right-click on the thumbnail to open it in another of your browser tabs.

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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)