Chris F. Masse March 17th, 2008
Much, much better. Last year at the same time, in March 2007, I was selectively critical of some of the statements they did put in their (now old) version of their website. Adam Siegel has made good progress in mastering and conveying the problematic of enterprise prediction markets. I think that if Inkling Markets can truly deliver a service that can help companies mitigate business risks, and if they can prove positive results, then their client roll could be multiplied by a factor of 1,000 or so in the next 10 years.
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Adam Siegel:
Two years ago the only way to run a prediction marketplace was to roll your own or call a vendor/consultant and have them set up software and run markets for you. It took many weeks, often months. Today with Inkling Markets it take seconds. [...]
[#1] Improve forecasting of key performance indicators
Track and raise awareness of key success metrics to identify and mitigate risk factors before it’s too late.
[#2] Expose product quality problems early
Identify design and production anomalies before a product (physical or virtual) is brought to market to avoid expensive repairs and recalls.
[#3] Predict risk to your supply chain
Run a “web” of markets about the risk factors to your supply chain to predict internal and external events that would cause inefficiencies or disruptions.
[#4] Foster a culture of innovation
Determine which new ideas and process improvements will have real business impact vs. the “nice to have.”
[#5] Create new interactions with users
Build a dedicated community of users around a marketplace of questions relevant to your business area and brand. [...]
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Adam Siegel (Inkling Markets CEO) in Forbes:
[Prediction markets] can significantly:
- improve forecasts of key performance indicators,
- provide a more realistic understanding of project-completion dates,
- identify quality-control problems early in the development life cycle,
- improve demand forecasts within the supply chain,
- and allocate resources more appropriately across research-and-development projects.
[I have edited the formatting of this excerpt.]
Tags: business risk, corporate prediction markets, enterprise prediction markets, Forecasting, Inkling, inkling markets, internal prediction markets, private prediction markets, risk
Chris F. Masse March 17th, 2008
The most credible explanation of why risk management based on state-of-the-art statistical models can perform so poorly is that the underlying data used to estimate a model’s structure are drawn generally from both periods of euphoria and periods of fear, that is, from regimes with importantly different dynamics.
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FOLLOW UP
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Tags: Alan Greenspan, econometry, Economics, Finance, risk, risk management, US economy
Chris F. Masse January 27th, 2008
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- In February 2001, Fortune magazine named ENRON the “most innovative company”.
- In October 2007, Robin Hanson, on the Overcoming Bias blog, re-published the falsehood that James Surowiecki (and 3 other book authors in their respective book) made a mistake about Francis Galton in his book, The Wisdom Of Crowds.
- In January 2008, the “BetFair Prof” (Leighton Vaughan-Williams) claimed, on the BetFair blog, that the “betting markets” foresaw the Republican race in the Michigan primary.
- In January 2008, Risk magazine named SOCIETE GENERALE (recently busted by one of its traders, which lead to a loss of 7.2 billion dollars) the “equity derivatives house of the year”.
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TAKEAWAY: Either by complete incompetence or by lack of investigation means, journalism is not up to its lofty goal —telling the truth to people.
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(Via Marc Andreessen.)
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Jerome Kerviel, soon to be named “person of the year” by Risk magazine? 
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Tags: Blogs, errors, failures, Jerome Kerviel, journalim, mistakes, risk, Risk magazine, Societe Generale
Michael Giberson January 2nd, 2008
Chris Masse has already linked to The Economist story on futurists, which ends with a plug for prediction markets:
The most heeded futurists these days are not individuals, but prediction markets, where the informed guesswork of many is consolidated into hard probability. Will Osama bin Laden be caught in 2008? Only a 15% chance, said Newsfutures in mid-October 2007. Would Iran have nuclear weapons by January 1st 2008? Only a 6.6% chance, said Inkling Markets. Will George Bush pardon Lewis “Scooter” Libby? A better-than-40% chance, said Intrade. There may even be a prediction market somewhere taking bets on immortality. But beware: long- and short-sellers alike will find it hard to collect.
Like Chris, I’m partial to the plug for prediction markets, but the story from the past year that best fits the five pieces of advice to futurists in the article (think small, think short-term, admit uncertainty, embed in an industry, and listen more) was not about the “wisdom of crowds.” Rather, this profile by Michael Lewis of hedge fund entrepreneur/insurance risk modeler John Seo in the NYT Magazine seems to fit the bill.
[NOTE: This post is a somewhat revised version of a posting on Knowledge Problem: What will futurists do in the future? Chris has also already linked to the story on John Seo that was published in August 2007.]
Tags: futurism, futurists, futurology, hedge funds, prediction markets, risk
