Emile Servan-Schreiber (of NewsFutures):

From: Emile Servan-Schreiber
Date: Mon, 15 Jun 2009 22:45:43 +0200
Subject: Re: GE Imagination Market License

That’s pretty funny, considering that the creator of the GE Imagination Market herself concludes in several published papers that “using markets to rank ideas may be no better than other methods of idea ranking,” (1) and that “a survey of market participants yielded mixed results regarding the market’s effectiveness at ranking ideas.” (2) Elsewhere, on [General Electric]‘s own blog, one of those participants details at length the conceptual and practical incoherence of such self-referential “preference markets”. (3)

(1) http://portal.acm.org/citation.cfm?id=1265501
(2) http://www.ingentaconnect.com/content/ubpl/jpm/2009/00000003/00000001/art00004
(3) http://www.grcblog.com/?p=378

Previously: General Electric’s internal betting exchange: The Imagination Market

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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.

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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.

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APPENDIX #1: Prediction Markets – DRM Review

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APPENDIX #2:

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

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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)

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Here’s a list of prediction market consultants:

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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”

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Nigel Eccles.

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John Delaney and Emile Servan-Schreiber are good, but they are too much ignorant of information technology.

Adam Siegel and David Perry are too much focused on their internal process.

BetFair seems to be a consensual machine. It’s not a place for heroes.

David Pennock is an admirable man and a great research scientist, but he is an ambulatory marketing disaster.

As for Robin “High IQ” Hanson, he is a great inventor (MSR), but he has not proved yet that he is a great innovator.

His little fanboy, Chris Hibbert, is a great software architect, but he is totally impermeable to pleasantry. [I completely forgot to tell you that that was my criterion #1. ]

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Consensus Point and Xpree are graded 5 / 10.

Brought to you by Koleman Strumpf (circa November 2007):

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Henry Berg, Microsoft <slides>
Discussant: Robin Hanson (George Mason Department of Economics) <slides>
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Christina Ann LaComb, GE (The Imagination Market; abstract is free, text is gated) <slides>
Discussant: Marco Ottaviani (Kellogg School of Management, Management and Strategy) <slides>
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Dawn Keller, Best Buy (Best Buy’s TAGTRADE Market) <slides>
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Bo Cowgill, Google (Putting Crowd Wisdom to Work) <slides>
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Jim Lavoie, Co-Founder and CEO, Rite-Solutions <slides>
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David Perry, Co-Founder and President, Consensus Point <slides>
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Mat Fogarty, Founder and CEO, Xpree Inc <slides>

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Tom W. Bell, Chapman University School of Law <slides>

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

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

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

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

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Xpree – (U.S.A.)

• Mat Fogarty — Post Archives at Midas Oracle

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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”

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

• Prediction market consultancy firm
• Movie business

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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.)

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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.”

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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.”

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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.”

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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.

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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.”

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

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

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

• Jed Christiansen — Post Archives at Midas Oracle

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Ask Markets – (Greece, E.U.)

• George Tziralis — Post Archives at Midas Oracle

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

• Bernd Ankenbrand — Post Archives at Midas Oracle

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Nosco – (Danemark, E.U.)

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

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Qmarkets – (Israel)

• Noam Danon — Post Archives at Midas Oracle

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ProKons – (Germany)

• Peter Gollowitsch

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

• Robert Wilburn (ex-NewsFutures)

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Foresight Markets – (??)

• BPH Technologies

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NimaniX – (Israel)

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

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

• Mikael Edholm

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Here are the good points they made, along with my associated thoughts:

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Loic Le Meur:

1. A very good product, by itself, will get you users and traction. TradeSports, BetFair, HubDub and NewsFutures attained success because early users like those services.
2. The CEO (e.g., Emile Servan-Schreiber, Adam Siegel, Nigel Eccles, and John Delaney) should be the spokesperson of the company. [As a counter-point, see the point #9, there.]
3. You should build your community without marketing and promoting in mind —more like entertaining and helping friends of yours, than pitching prospects.

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Jason Calacanis:

1. “Evolution is the révolution.” Everything is iteration. Look at the fantastic R&D that BetFair is building into its products.
2. Don’t be a smart ass. Be a smart entrepreneur. Start something (a company, a group blog, whatever). That way you will be able to “iterate”. (Remember point #1? ) The best decision that David Perry made in his life was to start off Consensus Point with Ken Kittlitz.

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Robert Scoble:

1. You should create visually rich experiences. Prediction exchanges (like InTrade and BetFair) should focus on developing dynamic, compound chart widgets with customizable news markers.
2. You need to reach the “influentials” (the blogging élites). Get to them.
3. Have luck. Luck is part of the success. Go reading Robert Scoble’s point #3 on Qik.com.

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Taking his propos and applying them to Adam Siegel and Nate Kontny, you’d get that:

• The key is Adam Siegel and Nate Kontny’s determination. They refuse to fail.
• The key for Nate Kontny was to find out a good co-founder —that was Adam Siegel.
• [M]arket is the biggest determinant in the outcome of successful startups. [...] Smart people [like Adam Siegel and Nate Kontny] will find big markets.

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Same things could be said of David Perry and Ken Kittlitz, or Emile Servan-Schreiber and Maurice Balick.

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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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