Here are short excerpts of the Forrester report on enterprise prediction markets and companies that provide software for enterprise prediction markets.

-

The Forrester executive summary:

The “wisdom of crowds” is capturing the attention of corporate strategists across the globe, and, as a result, many are now looking to prediction markets — speculative markets in which traders collectively predict future events — to generate collective intelligence. For enterprises, prediction markets bring unique value: They focus on the future, aggregate diverse information pools that can be applied to multiple decision-making domains, create streams of actionable data suitable for executive decision-making, and can often cut through corporate politics and pressures at lower cost than traditional forecasting methods. Market researchers will, however, need to have an active hand in the management of these mechanisms, ensuring strong management support, the right incentives for traders, and a focus on appropriate questions. When executed properly, the value to the enterprise is enormous; as a result, Forrester believes that prediction markets will ultimately find a permanent home in the market research toolbox.

-

For information on hard-copy or electronic reprints, please contact the Client Resource Center at +1 866.367.7378, +1 617.617.5730, or resourcecenter –at– forrester –dot– com. We offer quantity discounts and special pricing for academic and nonprofit institutions.

-

-

-

-

APPENDIX #1: Prediction Markets – DRM Review

-

APPENDIX #2:

-

Here is a list of companies that provide software for prediction markets:

-

Inkling Markets – (MSR + AMM)

NewsFutures – (CDA + optional AMM + SR)

Xpree – (MSR + AMM)

Zocalo – (CDA + MSR + AMM) – (open-source)

Nosco – (CDA + MSR + AMM)

QMarkets – (MSR + AMM)

Ask Markets – (MSR + AMM)

Exago Markets – (CDA + optional AMM)

Gexid – (?)

ProKons – (?)

Spigit – (?)

HSX Virtual Markets – (Virtual Specialist + AMM)

HubDub – (MSR + AMM) – (not licensed)

Yahoo!‘s Prediction Exchange – (MSR + AMM + DPMM) – (not licensed)

Google‘s Prediction Exchange – (CDA) – (not licensed)

MicroSoft PredictionPoint – (MSR + AMM) – (not licensed)

InTrade – (CDA + AMM for play money) – (not licensed)

TradeSports – (CDA + AMM for play money) – (not licensed)

Iowa Electronic Markets – (CDA) – (not licensed)

HedgeStreet – (CDA) – (not licensed)

TradeFair – (CDA) – (not licensed)

BetFair – (CDA) – (not licensed)

Trading Technologies International – (CDA) – (not for event derivatives)

-

Here’s a list of prediction market consultants:

-

Robin Hanson – (George Mason University, Virginia, U.S.A.)

• Robin Hanson does prediction market consulting work, and have no exclusive arrangements.
• “I’m more interested in helping groups that want to add lots of value to big decisions, versus groups that just want to dabble in a new fad.”

Inkling – URL: Inkling Markets – (Chicago, Illinois, U.S.A.)

• Adam Siegel
• Nathan Kontny

NewsFutures – (Maryland, U.S.A. & Paris, France, E.U.)

• Emile Servan-Schreiber — Post Archive at Midas Oracle
• Maurice Balick

Xpree – (California, U.S.A.)

• Mat Fogarty

Chris Hibbert – (California, U.S.A.)

• Chris Hibbert (Software architect / Zocalo project manager) — Post Archive at Midas Oracle
• Chris Hibbert’s personal website — Chris Hibbert’s personal blog —
• Chris Hibbert’s CommerceNet profile — (His stint there ended in mid 2006.)

Justin Wolfers – (University of Pennsylvania’s Wharton Business School, Pennsylvania, U.S.A.)

• Justin Wolfers takes on prediction market consulting work.
• The prediction market industry is “a case where the interaction between firm practice and academic research are reasonably close.”

Koleman Strumpf – (University of Kansas, Kansas, U.S.A.)

• Koleman Strumpf — Post Archive at Midas Oracle
• Koleman Strumpf can be approached to consult on prediction market projects.
• “Prediction markets help harness the knowledge of diverse groups. They have great potential as a tool for industry.”

Nosco – (Danemark, E.U.)

• Jesper Krogstrup
• Oliver Bernhard Pedersen

Qmarkets – (Israel)

• Noam Danon

Ask Markets – (Greece, E.U.)

• George Tziralis — Post Archive at Midas Oracle

HP Services & HP Labs – (U.S.A.)

• Predicting the future –with games — Introductory article
• Information Dynamics Lab — Internal prediction markets
• BRAIN – (Behaviorallly Robust Aggregation of Information in Networks) — Scoring Rules (i.e., non-trading technique)
• Bernardo A. Huberman – Bernardo Huberman – Senior Fellow & Director
• Kay-Yut Chen -
• Google Search for “prediction markets”

Hollywood Stock Exchange (HSX) & HSX Research – (L.A., California, U.S.A.)

• Prediction market consultancy firm
• Movie business

IntelliMarket Systems – (L.A., California, U.S.A.)

• Charles R. Plott – Charles Plott – (CalTech Inst., California, U.S.A.)

Gexid – Global Exchange for Information Derivatives – (Germany, E.U.)

• Bernd Ankenbrand — Post Archive at Midas Oracle

ProKons – (Germany, E.U.)

• Peter Gollowitsch

Exago Markets – (Portugal, E.U.)

• Pedro Da Cunha

NimaniX – (Israel)

• Elad Amir (CEO), Littal Shemer Haim (VP Business development), David Shahar (VP R&D)

Michael Giberson – (Texas, U.S.A.)

• Michael Giberson (Energy Economist – Center for Energy Commerce, Rawls College of Business, Texas Tech University) — Post archive at Midas Oracle
• Knowledge Problem – Blog on economics, energy policy, more.

Other Consulting Firms

McKinsey – (U.S.A.)

• Google Search for “prediction markets”
• The Promise Of Prediction Markets – by McKinsey – 2008-04-XX

Accenture – (U.S.A.)

• Google Search for “prediction markets”

Gartner – (U.S.A.)

• Google Search for “prediction markets”

Forrester – (U.S.A.)

• Google Search for “prediction markets”
• Prediction Markets: Wisdom Of The Crowd Comes To The Enterprise. – 2008-07-14

The Boston Consulting Group – (U.S.A.)

• Google Search for “prediction markets”

CapGemini – (U.S.A.)

• Google Search for “prediction markets”

KPMG – (U.S.A.)

• Google Search for “prediction markets”

Price Waterhouse Cooper – (U.S.A.)

• Google Search for “prediction markets”

Ernst & Young – (U.S.A.)

• Google Search for “prediction markets”

Deloitte – (U.S.A.)

• Google Search for “prediction markets”

IBM – (U.S.A.)

• Google Search for “prediction markets”

EDS – (U.S.A.)

• Google Search for “prediction markets”

-

Midas Oracle = About + Archives + Authors + Best + Contact + Information Technology + Links + Probabilistic Predictions + Post-Mortem Predictions + Prediction Exchanges + Prediction Software + Publish Your Post + How To Publish

CFM: Scholars

Check that CFM page for updates. And contact me so I can make additions to the list. (I’ll then re-publish that updated list on Midas Oracle.)

-

• Michael Abramowicz – Michael B. Abramowicz – (Law School, George Washington University, Washington, D.C., U.S.A.) — Post Archives at Midas Oracle
• Bernd H. Ankenbrand – Bernd Ankenbrand – (Lecturer, Witten/Herdecke University, Germany, E.U.) — Post Archives at Midas Oracle
• James Annan – (Global Environment Modelling Research Program, Frontier Research Center for Global Change, Japan)
• Werner Antweiler – (UBC Election Stock Market, Sauder School of Business, University of British Columbia, Vancouver, Canada)
• Kenneth J. Arrow – Kenneth Arrow – (Economics Department, Stanford University, California, U.S.A.)
• Tom W. Bell – Tom Bell – (Law School, Chapman University, California, U.S.A.) — Post Archives at Midas Oracle
• Joyce E. Berg – Joyce Berg – Profile – (Iowa Electronic Markets, Accounting, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• Richard Borghesi – (Finance, Texas State University at San Marcos, Texas, U.S.A.) — Post Archives at Midas Oracle
• Kay-Yut Chen – (Information Services & Process Innovation Lab, HP Labs, HP, California, U.S.A.)
• Yiling Chen – (Micro-Economic and Social Systems, Yahoo! Research Labs, New York, U.S.A.) — Post Archives at Midas Oracle
• Eric Crampton – (Department of Economics, University of Canterbury, New Zealand) — Post Archives at Midas Oracle
• Ely Dahan – (Marketing, Anderson School, University of California at Los Angeles, Los Angeles, California, U.S.A.)
• Anita Elberse – (Marketing, Harvard Business School, Harvard University, Massachusetts, U.S.A.)
• Leslie R. Fine – Leslie Fine – (Information Dynamics Lab, HP Labs, California, U.S.A.)
• Gary William Flake – Gary W. Flake – Gary Flake – (MicroSoft, U.S.A.)
• Robert Forsythe – (Dean, College of Business Administration, University of South Florida, Florida, U.S.A.) — Previously: (Economics, Iowa Electronic Markets, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• Lance Fortnow – Lance J. Fortnow – (Department of Electrical Engineering and Computer Science, McCormick School of Engineering, Northwestern University, Illinois, U.S.A.)
• Keith Jacks Gamble – Keith Gamble – (Economics (University of California at Berkeley) – California, U.S.A. — Post Archives at Midas Oracle
• Michael Gorham – (IIT Center for Financial Markets, Stuart School of Business, Illinois Institute of Technology, Illinois, U.S.A.) — Previously: (CFTC)
• Thomas S. Gruca – Thomas Gruca – Profile – (Iowa Electronic Markets, Marketing, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• Refet Gurkaynak – (Department of Economics, Bilkent University, Turkey)
• Friedrich August Von Hayek — R.I.P. — The market as an information aggregation tool: The Use of Knowledge in Society —
• Robert W. Hahn – Robert Hahn – (Executive Director, Reg-Markets Center, American Enterprise Institute, Washington, D.C., U.S.A.) — Post Archives at Midas Oracle
• James D. Hamilton – James Hamilton – (Department of Economics, University of California at San Diego – California, U.S.A.) — Post Archives at Midas Oracle
• Robin Hanson – Robin D. Hanson – (Economics, James M. Buchanan Center, George Mason University, Virginia, U.S.A.) — Post Archives at Midas Oracle
• M. Todd Henderson – (Law School, University of Chicago, Chicago, Illinois, U.S.A.)
• Chris Hibbert – (Software Architect, Zocalo Project Manager, California, U.S.A.) — Post Archives at Midas Oracle
• Charles Holt – Charles A. Holt – (Department of Economics, University of Virginia, Virginia, U.S.A.)
• Bernardo A. Huberman – Bernardo Huberman – (Social Computing Lab, HP Labs, California, U.S.A.)
• Frédéric Koessler – (Economics, Centre Nationale de la Recherche Scientifique, France, E.U.)
• Anthony M. Kwasnica – Anthony Kwasnica – (Business Economics, Department of Insurance and Real Estate, Smeal College of Business Administration, Penn State University, Pennsylvania, U.S.A.)
• Nicolas Lambert – (Department of Computer Science, Stanford University, California, U.S.A.)
• John O. Ledyard – John Ledyard – (Economics and and Social Sciences, Division of Humanity and Social Sciences, California Institute of Technology, California, U.S.A.)
• Andrew Leigh – (Economics, Research School of Social Sciences, Australian National University, Australia)
• Steven Levitt – Steve Levitt – Steven D. Levitt – (Economics, Director of the Becker Center on Chicago Price Theory, Graduate School of Business, University of Chicago, Illinois, U.S.A.)
• Saul Levmore – (Law School, University of Chicago, Illinois, U.S.A.)
• Robert E. Litan – Robert Litan – (Vice President for Research and Policy, Kauffman Foundation, Kansas City, Missouri, U.S.A.)
• Thomas W. Malone – Thomas Malone – Tom Malone – (MIT Center for Collective Intelligence, Management, MIT Sloan School of Management, Massachusetts Institute of Technology, Massachusetts, U.S.A.)
• Charles F. Manski – Charles Manski – (College of Arts and Sciences, Norwestern University, Illinois, U.S.A.)
• Adam Meirowitz – (Department of Politics, Princeton University, New Jersey, U.S.A.)
• Paul Milgrom – (Department of Economics, Stanford University, California, U.S.A.)
• Tracy Mullen – (Information Sciences and Technology, Penn State University, Pennsylvania, U.S.A.)
• Forrest Nelson – Profile – (Iowa Electronic Markets, Economics, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• George R. Neumann – George Neumann – Profile – (Iowa Electronic Markets, Economics, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• Ryan Oprea – Profile – (Director of the LEEPS laboratory, Economics, University of California at Santa Cruz, California, U.S.A.)
• Gerhard Ortner – (University of Applied Sciences, Austria, E.U.)
• Marco Ottaviani – (Management and Strategy, Kellogg School of Management, Northwestern University, Illinois, U.S.A.) – Formerly: (Economics Department, London Business School, United Kingdom, E.U.) — Post Archives at Midas Oracle
• David Paton – (Industrial Economics, Business School, Nottingham University, United Kingdom, E.U.)
• David M. Pennock – David Pennock – (Principal Research Scientist, Micro-Economic and Social Systems, Yahoo! Research Labs, New York, U.S.A.) — Post Archives at Midas Oracle
• Charles R. Plott – Charles Plott – (Economics and and Social Sciences, Division of Humanity and Social Sciences, California Institute of Technology, California, U.S.A.)
• David Porter – (Economics and Finance, Chapman University, California, U.S.A.)
• Todd Proebsting – Todd A. Proebsting – (Microsoft & University of Arizona, U.S.A.)
• Russ Ray – (Finance, College of Business, University of Louisville, Kentucky, U.S.A.)
• Daniel Reeves – (Micro-Economic and Social Systems, Yahoo! Research Labs, New York, U.S.A.) — Post Archives at Midas Oracle
• Paul W. Rhode – Paul Rhode – (US Economic History, College of Management, The University of Arizona, Arizona, U.S.A.) – Formerly: (University of North Carolina, North Carolina, U.S.A.)
• Thomas A. Rietz – Thomas Rietz – Profile – (Iowa Electronic Markets, Finance, Henry B. Tippie College of Business, University of Iowa, Iowa, U.S.A.)
• Richard Roll – (University of California at Los Angeles, Los Angeles, California, U.S.A.)
• Thomas W. Ross – Thomas Ross – (UBC Election Stock Market, Sauder School of Business, University of British Columbia, Vancouver, Canada)
• Rahul Sami – (School of Information, University of Michigan, Michigan, U.S.A.)
• Sam L. Savage – Sam Savage – (Consulting Professor, Stanford U., California, U.S.A.) — Post Archives at Midas Oracle
• Thomas C. Schelling – Thomas Schelling – (Economics, School of Public Affair, University of Maryland, Maryland, U.S.A.)
• Emile Servan-Schreiber – (NewsFutures, New York City, New York, U.S.A. & Paris, France, E.U.) — Post Archives at Midas Oracle
• Robert J. Shiller – Robert Shiller – Profile – (Economics, Yale University, Connecticut, U.S.A.)
• Bernd Skiera – (Electronic Commerce, Goethe University, Germany, E.U.)
• Vernon L. Smith – Vernon Smith – (Economics, Economic Science Institute, Chapman University, California, U.S.A.)
• Erik Snowberg – (Stanford University, California, U.S.A.) — Soon at CalTech
• Peter Norman Sorensen – (Finance, Department of Economics, University of Copenhagen, Denmark, E.U.)
• Martin Spann – (Marketing and Innovation, University of Passau, Germany, E.U.)
• Koleman Strumpf – Koleman S. Strumpf – (Economics, School of Business, University of Kansas, Kansas, U.S.A.) – Formerly: University of North Carolina, North Carolina, U.S.A.) — Post Archives at Midas Oracle
• Cass Sunstein – Cass R. Sunstein – (Law School, University of Chicago, Chicago, Illinois, U.S.A.)
• James Surowiecki – (The Wisdom Of Crowds) – (New York, U.S.A.)
• Paul C. Tetlock – Paul Tetlock – (Finance, Business School, University of Texas at Austin, Texas, U.S.A.) — Post Archives at Midas Oracle
• Philip Tetlock – Philip E. Tetlock – (Leadership, University of California at Berkeley, California, U.S.A.)
• Hal R. Varian – Hal Varian – (Chief Economist, Google, California, U.S.A.) — Formerly: (Haas School of Business, Department of Economics, University of California at Berkeley, California, U.S.A.)
• Dorina Tila – (Economics, George Mason University, Virginia, U.S.A.)
• Leighton Vaughan-Williams – (Economics and Finance, Business School, Nottingham Trent University, United Kingdom, E.U.)
• Michael Wellman – Michael P. Wellman – (Computer Science and Engineering, University of Michigan, Michigan, U.S.A.)
• Justin Wolfers – Justin J. Wolfers – (Business and Public Policy, Wharton Business School, University of Pennsylvania, Pennsylvania, U.S.A.) — Post Archives at Midas Oracle
• Eric Zitzewitz – Eric W. Zitzewitz – (Economics, Dartmouth College, Massachusetts, USA) – Formerly: (Stanford University, California, U.S.A.) — Post Archives at Midas Oracle

-

Midas Oracle = About + Archives + Authors + Best + Contact + Information Technology + Links + Probabilistic Predictions + Post-Mortem Predictions + Prediction Exchanges + Prediction Software + Publish Your Post + How To Publish

Consultants

-

-

Inkling – URL: Inkling Markets – (Chicago, Illinois, U.S.A.)

• Adam Siegel — Post Archives at Midas Oracle
• Nathan Kontny

-

NewsFutures – (Maryland, U.S.A. & Paris, France, E.U.)

• Emile Servan-Schreiber — Post Archives at Midas Oracle
• Maurice Balick

-

Xpree – (U.S.A.)

• Mat Fogarty — Post Archives at Midas Oracle

-

HP Services – HP Labs – (U.S.A.)

• Predicting the future –with games — Introductory article
• Information Dynamics Lab — Internal prediction markets
• BRAIN – (Behaviorallly Robust Aggregation of Information in Networks) — Scoring Rules (i.e., non-trading technique)
• Bernardo A. Huberman – Bernardo Huberman – Senior Fellow & Director
• Kay-Yut Chen -
• Google Search for “prediction markets”

-

Hollywood Stock Exchange (HSX) & HSX Research – (L.A., California, U.S.A.)

• Prediction market consultancy firm
• Movie business

-

Chris Hibbert – (California, U.S.A.)

• Chris Hibbert (Software architect / Zocalo project manager) — Post Archives at Midas Oracle
• Chris Hibbert’s personal website — Chris Hibbert’s personal blog —
• Chris Hibbert’s CommerceNet profile — (His stint there ended in mid-2006.)

-

Robin Hanson – (George Mason U., Virginia, U.S.A.)

• Robin Hanson — Post Archives at Midas Oracle
• Robin Hanson does prediction market consulting work, and have no exclusive arrangements.
• “I’m more interested in helping groups that want to add lots of value to big decisions, versus groups that just want to dabble in a new fad.”

-

Justin Wolfers – (U. of Pennsylvania’s Wharton business school, Pennsylvania, U.S.A.)

• Justin Wolfers — Post Archives at Midas Oracle
• Justin Wolfers takes on prediction market consulting work.
• The prediction market industry is “a case where the interaction between firm practice and academic research are reasonably close.”

-

Koleman Strumpf – (U. of Kansas, Kansas, U.S.A.)

• Koleman Strumpf — Post Archives at Midas Oracle
• Koleman Strumpf can be approached to consult on prediction market projects.
• “Prediction markets help harness the knowledge of diverse groups. They have great potential as a tool for industry.”

-

Michael Giberson – (Virginia, U.S.A.)

• Michael Giberson (energy economist, who is also an expert in prediction markets) — Post archives at Midas Oracle
• Knowledge Problem – Blog on economics, energy policy, more.

-

Robert Hahn – (American Enterprise Institute, Washington, D.C., U.S.A.)

• Robert Hahn — Post Archives at Midas Oracle
• Robert Hahn does consulting focused on improving decision making in the private and public sector. “This work builds on our evolving understanding of prediction markets and other economic tools.”

-

IntelliMarket Systems – (L.A., California, U.S.A.)

• Charles R. Plott – Charles Plott – (CalTech Inst., California, U.S.A.)

-

Mercury Research and Consulting – (United Kingdom, E.U.)

• Jed Christiansen — Post Archives at Midas Oracle

-

Ask Markets – (Greece, E.U.)

• George Tziralis — Post Archives at Midas Oracle

-

Gexid – Global Exchange for Information Derivatives – (Germany, E.U.)

• Bernd Ankenbrand — Post Archives at Midas Oracle

-

Nosco – (Danemark, E.U.)

• Jesper Krogstrup — Post Archives at Midas Oracle
• Oliver Bernhard Pedersen

-

Qmarkets – (Israel)

• Noam Danon — Post Archives at Midas Oracle

-

ProKons – (Germany)

• Peter Gollowitsch

-

Hive Insight – (Raleigh-Durham, North Carolina, U.S.A. & London, U.K., E.U.)

• Robert Wilburn (ex-NewsFutures)

-

Foresight Markets – (??)

• BPH Technologies

-

NimaniX – (Israel)

• Elad Amir (CEO), Littal Shemer Haim (VP Business development), David Shahar (VP R&D)

-

PrediCom – (London, United Kingdom, E.U.)

• Mikael Edholm

-

Midas Oracle = About + Archives + Authors + Best + Contact + Information Technology + Links + Probabilistic Predictions + Post-Mortem Predictions + Prediction Exchanges + Prediction Software + Publish Your Post + How To Publish

I haven’t turned up the latest edition of Science magazine mentioned yesterday by Chris F. Masse, but a version of the Science article “The Promise of Prediction Markets“, is available from the AEI Center for Regulatory and Market Studies (find link to article on this page).

The first thing of note is that the extensive list of authors overlaps that of the “Statement on Prediction Markets” of a year ago (but lacking Statement signers Daniel Kahneman, Charles R. Plott, and Shyam Sunder). A quick scan of the piece reveals it pursues that same controversial strategy as the earlier statement – seeking CFTC safe harbor protection for a limited set of small stakes, non-profit prediction market exchanges.

We would therefore urge the CFTC to explore other approaches to ensuring safe harbors, for example, formal rules or guidance approved by the commission.

We suggest that three types of entities be eligible for safe harbor treatment. The first would be not-for-profit research institutions, including universities, colleges and think tanks wishing to operate exchanges similar to the Iowa Electronic Markets. The second would be government agencies seeking to do research similar to that of nongovernmental research institutions. The third group would consist of private businesses and not-for-profits that are not primarily engaged in research, which would only be allowed to operate internal prediction markets with their employees or contractors.

In all cases, markets would be limited to small-stakes contracts. Although the definition of small stakes is somewhat arbitrary, we use the term to mean an exchange in which the total amount of capital deposited by any one participant may not exceed some modest sum, perhaps something like $2,000 per year.

The exchanges themselves would be not-for-profit but would be allowed to charge modest fees to recoup administrative and regulatory costs. Brokers and paid advisers would be barred, reducing the risks that contracts would be sold to inappropriate or vulnerable customers or that customers would be charged fees above the amounts needed to maintain the markets. Exchanges would be self-regulated, leaving them with the responsibility to make reasonable efforts to keep markets free from fraud and manipulation.

For its part, the CFTC should allow contracts that price any economically meaningful event. This definition could allow for contracts on political events, environmental risks, or economic indicators, such as those offered by the Iowa Electronic Markets, but would presumably not include contracts on the outcomes of sports events.

… Congress should support the CFTC’s efforts to develop prediction markets.

And so on.

Maybe this is the best strategy for gaining political protection for progress, it is a difficult judgment to make. But the Science magazine placement is high profile and will certainly help raise the issue among folks who might otherwise be unaware of the need for progress on this front.

Perhaps more comments after I’ve had a change to read the piece more carefully. No doubt by then Chris F. Masse and the hard-core PM crowd will have, in their wisdom, torn this timid suggestion to shreds.

Midas Oracle = About + Archives + Authors + Best + Contact + Information Technology + Links + Probabilistic Predictions + Post-Mortem Predictions + Prediction Exchanges + Prediction Software + Publish Your Post + How To Publish

Kay-Yut Chen

—

Publications & Conference Papers

Kay-Yut Chen and Tad Hogg, “Aggregating Diffuse Information with Subgroups”, in the proc. of IADIS E-Commerce Conf, Dec 2004.

Kay-Yut Chen, Leslie Fine and Bernardo Huberman, “Eliminating Public Knowledge Biases in Small Group Predictions”, Management Science, Volume 50, Number 7, pp. 983-994, July 2004.

Kay-Yut Chen, Tad Hogg and Nathan Wozny, “Experimental Study of Market Reputation Mechanisms”, In the proc. of ACM E-Commerce Conf, May 2004.

Kay-Yut Chen and Ren Wu, “Computer Games and Experimental Economics”, In the proc. of ICEIS Apr 2003.

Kay-Yut Chen, Leslie Fine and Bernardo Huberman, “Predicting the Future”, Information System Frontier, 5:1, 47-61, Jan 2003.

Kay-Yut Chen, “Defeating Terrorists with Games”, Position paper presented at DARPA GAMBIT conference, Mar 2002.

Kay-Yut Chen, Leslie Fine and Bernardo Huberman, “Forecasting Uncertain Events with Small Groups”, In Proc. of the ACM Conference on E-commerce, Oct 2001.

Working Papers

Kay-Yut Chen and Charles R. Plott, “Information Aggregation Mechanisms: Concept, Design, and Implementation for a Sales Forecasting Problem”, working paper, Mar 2002.

Midas Oracle = About + Archives + Authors + Best + Contact + Information Technology + Links + Probabilistic Predictions + Post-Mortem Predictions + Prediction Exchanges + Prediction Software + Publish Your Post + How To Publish

Statement on Prediction Markets – (Click here to read the abstract and download the petition from the SSRN site) – by Kenneth J. Arrow, Robert Forsythe, Michael Gorham, Robert Hahn, Robin Hanson, Daniel Kahneman, John O. Ledyard, Saul Levmore, Robert Litan, Paul Milgrom, Forrest D. Nelson, George R. Neumann, Charles R. Plott, Thomas C. Schelling, Robert J. Shiller, Vernon L. Smith, Erik Snowberg, Cass R. Sunstein, Paul C. Tetlock, Philip E. Tetlock, Hal R. Varian, Marco Ottaviani, Justin Wolfers, and Eric Zitzewitz – 2007-05-XX

—

Executive Summary

Prediction markets are markets for contracts that yield payments based on the outcome of an uncertain future event, such as a presidential election. Using these markets as forecasting tools could substantially improve decision making in the private and public sectors. We argue that U.S. regulators should lower barriers to the creation and design of prediction markets by creating a safe harbor for certain types of small stakes markets. We believe our proposed change has the potential to stimulate innovation in the design and use of prediction markets throughout the economy, and in the process to provide information that will benefit the private sector and government alike.

Introduction

Prediction markets are markets for contracts that yield payments based on the outcome of an uncertain future event, such as a presidential election, the release date for new software, or the action taken by the Federal Reserve on short-term interest rates. A key benefit is that the market price of these contracts can potentially provide more accurate forecasts of future events than other methods. Using these markets as forecasting tools could substantially improve decision making in the private and public sectors. They also can help manage risk more efficiently. It is precisely because prediction markets have great potential that we think the government should facilitate rather than hinder the introduction of these markets.

There are significant regulatory barriers to establishing prediction markets in the United States, in part because they are potentially subject to gambling laws. We argue that U.S. regulators should lower barriers to the creation and design of prediction markets by creating a safe harbor for certain types of small stakes markets. We believe our proposed change has the potential to stimulate innovation in the design and use of prediction markets throughout the economy, and in the process to provide information that will benefit the private sector and government alike.

[...]

Conclusion

We believe prediction markets can significantly improve decision making in both the private and public sectors. One of the clear benefits of allowing small stakes, non-profit markets to operate would be the greater use of prediction markets to inform both public and private decision making. A second benefit would be that access to better information could promote greater transparency and accountability in decision making. A third benefit might be that other countries and regions would promote prediction markets with more sensible regulation. Finally, we think there would be benefits from the development of new knowledge on how to design prediction markets.

We are aware that Congress did not intend the CFTC to regulate gambling and we believe that it is important to design this safe harbor in such a fashion that socially valuable prediction markets can get in, but gambling markets cannot.

Prediction markets have great potential for improving economic welfare and the decisions of private and public institutions alike. To help achieve that potential, the regulatory impediments to the use of prediction markets in the U.S. should be lowered. Here, we have suggested one approach for reducing those regulatory barriers.

AEI-Brookings Joint Center – The views in this paper represent those of the authors and do not necessarily represent the views of the institutions with which they are affiliated.

Kenneth J. Arrow – Stanford University

Robert Forsythe – University of South Florida

Michael Gorham – Illinois Institute of Technology

Robert Hahn – AEI-Brookings Joint Center

Robin Hanson – George Mason University

Daniel Kahneman – Princeton University

John O. Ledyard – California Institute of Technology

Saul Levmore – University of Chicago

Robert Litan – AEI-Brookings Joint Center

Paul Milgrom – Stanford University

Forrest D. Nelson – University of Iowa

George R. Neumann – University of Iowa

Charles R. Plott – California Institute of Technology

Thomas C. Schelling – University of Maryland

Robert J. Shiller – Yale University

Vernon L. Smith – George Mason University

Erik Snowberg – Stanford University

Cass R. Sunstein – University of Chicago

Paul C. Tetlock – University of Texas at Austin

Philip E. Tetlock – University of California at Berkeley

Hal R. Varian – University of California at Berkeley

Marco Ottaviani – London Business School

Justin Wolfers – University of Pennsylvania

Eric Zitzewitz – Stanford University

–

Previous: Statement on Prediction Markets – by Robert Hahn – 2007-05-07

Midas Oracle = About + Archives + Authors + Best + Contact + Information Technology + Links + Probabilistic Predictions + Post-Mortem Predictions + Prediction Exchanges + Prediction Software + Publish Your Post + How To Publish