How Bets Among Employees Can Guide a Company’-s Future –- Internal prediction markets enable colleagues to wager on the fate of crucial projects and the success of products in the pipeline. –- Technology Review
Download this post to watch the video if your feed reader does not show it to you.
Business leaders rely on metrics and data to inform decisions around new products and opportunities, but traditional forecasting methods suffer from bias and lack of first-hand information. That’s why business forecasting is an ideal target for the application of crowd wisdom. While bets are made anonymously, some prediction market software applications have built-in reward systems for accurate forecasters. And the accuracy of prediction markets over traditional forecasting methods is proven again and again. […] Prediction markets will then aggregate this knowledge to produce actionable, people-powered forecasts. The result is an ultra-rich information source that will lay the foundation for smarter, better-informed company decisions. […]
Download this post to watch the video —-if your feed reader does not show it to you.
Leslie Fine (CrowdCast Chief Scientist) to me:
Actually, our mechanism is a market, it’-s just not a stock market. We use an automated market maker to efficiently price every bet, adjust crowd beliefs, and price an interim sell. In essence, participants trade binary spreads with the market maker.
Because our new version was not yet market-ready, I did not enter the markets vs. non-markets debate when you were having it some months ago. However, among other reasons, we avoid collective forecasting because it is too similar to collaborative forecasting, which is key in supply chain. Honestly, when all is said and done, our clients care not what the mechanism is. They care that we can efficiently gather team intelligence and translate it into actionable business intelligence. That is our mission.
As Emile points out, in 2003 I started experimenting with (and empirically validating) alternatives to the traditional stock-market metaphor that will be more viable in corporate settings. We found the level of confusion and lack of interest in the usual fare led to a death spiral of disuse and inaccuracy. BRAIN was a first stake in the ground in prediction market mechanism design with usability as a fundamental premise.
When I joined Crowdcast (then Xpree) in August of 2008, Mat and the team already recognized the confusion around, and consequent poor adoption of, the MSR mechanism. The number of messages I fielded in my first month here asking me to explain pricing, shorting, how to make money, etc. was astounding. We all knew that we had to start from scratch, and rebuild a mechanism that was easy to use, expressive both in terms of the question one can ask and the message space in which one can answer, and provided a high level of user engagement. We have abandoned the MSR in favor of a new method that users are already finding much simpler and that requires a lower level of participation and sophistication than the usual stock market analogy.
I wish I could go into more detail. However, we need to keep a little bit of a lid on things for our upcoming launch. I can only beg your patience a little while longer, and I hope you will judge our offering worth the wait.
Nota Bene: IAM = information aggregation mechanism