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At the end, the conversation barged on the issue of “advisory boards“. And he told me that Robin Hanson and Justin Wolfers have helped him TREMENDOUSLY —in terms of solving problems with new software features, case studies, applied research, etc.

Wow.

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In August 2004, Todd Proebsting, a researcher in Microsoft’s platform and services division, was approached by a manager in the company’s testing organization who had spent months helping to create a piece of software to be used by other Microsoft programmers. Although it was an internal product, the software still had a rigid development schedule and an official launch date: November 2004, just a few months away. The manager had heard a talk by Proebsting about something called a prediction market, a sort of stock market for ideas, in which Microsoft employees would in effect place bets on predictions, instead of on racehorses or football teams. A lot was riding on the timely completion of the testing software. “You said that a market could be used to predict schedules,” the manager said. “I want to know when my team will finish writing the software.” Proebsting created a market with six possible bets: that the product would ship before November, in November, in December, in January, in February, or later than February. His pool of bettors included members of the development team itself, other developers, and program managers from related teams, as well as internal “customers”—the programmers within Microsoft who would use the software. He showed them all how to use the market, gave them each US $50 with which to wager, and then sat back and watched prices fluctuate. “All six months were started equally at 16 2/3 cents on the dollar,” Proebsting says, meaning that you only had to bet that amount to win $1 if you were right. “Within seconds, the pre-November market went to $0.00 and never moved from there.” So much for beating the deadline. “The November date went down to 1.2 cents in about 3 minutes.” So much for meeting the deadline. “The director of the group came to see me. He asked, ‘What have you done?’?” “No one believes your product will ship on time,” Proebsting told him. The director replied, “No one on the team is telling me this.” After discussing things with his development team, the director came to accept what the market was “saying.” He decided to cut some of the software features that were holding things up. “And the price of the markets started to reflect that—the November price rose,” Proebsting says. “Then the internal customers got wind of the fact that some of their favorite features were being cut and demanded their features back. So the market then reflected that!” In other words, the markets that predicted the software would be very late went back up. “In the end,” Proebsting says, “the product shipped in February, which is what the market predicted.” [...]

Chris F. Masse, a [] consultant in Sophia Antipolis, France, who specializes in prediction markets, says that by 2010, “10 percent of Fortune 500 companies will have gone public about their use of internal prediction markets, and probably another 10 percent will be testing some projects.” [...]

Henry Berg, who runs the Information Markets group within Microsoft, notes that in many cases a company has no formal prediction methods in place. “An organization adopting prediction markets needs to make two major adjustments: deciding to start making formal predictions about the future and choosing to use prediction markets as the mechanism,” Berg says. “In my experience, the first adjustment is greater than the second.” [...]

BetFair, NewsFutures and HSX Research are not cited.

Other than that, it’s a nice article. — Bet on It! – (page two – page three) — Via Steve Roman