You are right to question this stuff. There is a lot of bullshit out there and frankly I cringe when I see articles or statements about the “accuracy” of markets because it hurts everyone in the long run. It’s why we’ve written 3 or 4 times on our blog about what “accuracy” in a marketplace really means – that you can’t just look at 5 or 10 markets and say “we nailed it.” Unfortunately it’s something we have to deal with because the application is called a “prediction” market after all so it’s the first question that naturally comes to mind. That said I wish Chris wouldn’t make blanket statements [*] about “the vendors, e.g. Inkling Markets” getting the use cases all wrong in enterprise prediction markets. Because frankly, for quite some time “accuracy” has been a secondary argument to a number of other advantages we discuss about markets (in fact on the page on our website that describes the value proposition to companies, we don’t even list “accuracy” as a key benefit). This is also an expectation we set with our clients right from the beginning.
Anyways, I made the statement about business increasing year over year based on our own experience/numbers and as Jed mentioned, by looking at the activity of some of our competitors who have made hires, added clients, etc. I also base the statement on the types of professional services companies we are working with/hearing from and our discussions about prediction markets and what they are going to try and do in the future. I don’t think so many would be interested in adding markets to their toolset and expending resources putting together offerings if they didn’t see them as a long term, worthwhile business capability. So for those that agree with Chris that 6 years is enough time to evaluate a new business capability, I’d like to politely disagree. I could be wrong but these things haven’t been used beyond the experimental/pilot stage in companies for more than 2 or 3 years. We’re just at the cusp of understanding what benefits they’re going to bring. We’ve seen some promising trends, we’ve also seen people try to use Inkling for something and it failed miserably. This is just standard lifecycle stuff, especially for a capability that is designed, as I said in my blog post, to bring about more transparency and break down organization barriers.
[*] Adam, it was not a “-statement”-, it was a 2-choice hypothesis.
An uncertain future – A novel way of generating forecasts has yet to take off. – by The Economist – 2009-02-26
“-Yet to take off,”- however, does not equate to “-bad idea.”- The facts are that uptake among companies has been increasing year over year, more business schools are covering prediction markets in their curriculum, industry analysts have begun to track progress in the space, and an increasing number of management consulting firms, market research firms, and system integrators are adding prediction markets to their repertoire of services.
– How vendors are scuttling the field of enterprise prediction markets —and the prediction market industry, as a whole
– The Economist: The enterprise prediction markets are flopping, big time.
No TweetBacks yet. (Be the first to Tweet this post)
Was that easy/difficult to predict?
During the class, Adam Siegel, the founder of Inkling Markets, a prediction markets consulting firm, spoke about his experiences. Of the benefits, he said that prediction markets bring clarity around information, prevent political fudging and backstabbing regarding information. Nobody is the whistleblower for challenging optimistic assumptions, rather, “-it’-s the market.”- […]
Given that many executives and managers want to hide their poor performance, I asked Adam about who typically approaches his firm. He responded that he is usually approached by either third parties who have no P&-L responsibility, such as strategic planning groups, or forward thinking managers who are sick of bad forecasts being submitted. […]
Read Adam Siegel’-s post about his intervention.
Contra Alex Kirtland, I believe that the development of play-money prediction exchanges using MSR (like HubDub or AskMarkets), which popularity is now proved, is much more important news than stuff about CFTC-regulated, real-money prediction exchanges (like HedgeStreet or the Cantor Exchange), which popularity is uncertain.
Inkling Markets, HubDub and AskMarkets have been techcrunched —-that has not been the case for HedgeStreet or the Cantor Exchange. Practically, that means a great injection of PageRank, hundreds if not thousands of bookmarks, and plenty of new users. That’-s not what I call being “-overshadowed”-.
Previously: About Justin Wolfers’-s column
Justin Wolfers’- Freakonomics post (which suggests that BetFair would have a better predictive power if US traders could use it).
Justin Wolfers gives his views about the (now past) differences between the probabilistic predictions given by InTrade on the 2008 US presidential elections…- and the ones generated by the other real-money and play-money prediction exchanges. One hypothesis: US political insiders can’-t access BetFair, legally, and thus can’-t arbitrage. (But they can trade legally on the Iowa Electronic Markets, NewsFutures, Inkling, and HubDub, one could retort.)
Emile Servan-Schreiber’-s hypothesis still holds.
Or else —-your own hypothesis is welcome.
P.S.: The latest news is that InTrade now gives Barack Obama slightly above John McCain.
I am usually very sympathetic to Inkling Markets and Adam Siegel. I think they are the most professional prediction market consultants. However, I am more impressed by the recent Xpree hiring than by the recent Inkling hiring. Leslie Fine is a market design specialist and a fine researcher, who will bring credibility and expertise to Xpree. Very good coup by mister Mat Fogarty. I am very impressed. Wow.
So, just like flipping a coin, if Inkling told you something has a 15% probability of coming true, you can’-t just look at one outcome (i.e. one coin flip). You need to look at multiple scenarios where Inkling said something would happen 15% of the time. If those things actually come true, 15% of the time, Inkling is doing well at this.