Obstacles to Prediction Market Adoption

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BusinessWeek:

Harrah&#8217-s is setting up a pilot prediction market to forecast customer activity in one of its domestic casino operations. […]

Since the power of prediction markets hinges on effectively tapping into cognitive diversity throughout an organization, Page also argues convincingly that if members of a group do not have enough diversity in their perspectives, prediction markets can actually produce dismal results. […]

Until now, few of the companies sponsoring successful pilots or tests have deployed prediction markets on a broad or sustained basis. Why not? One explanation is that prediction markets are deeply subversive. After all, lots of midlevel executives are consumed with the task of forecasting. If prediction markets do a better job of it, doesn&#8217-t that discredit the efforts (and perhaps even the motives) of these executives? But as prediction markets shift their focus toward new knowledge creation, they may become less threatening within corporations. […]

I don&#8217-t buy this explanation &#8212-nor do I buy that other one.

My view is that we haven&#8217-t yet demonstrated clearly when and how prediction markets can be useful.

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