Prediction Markets @

Case Study 3Name: Pujita Tipnis UID: <deleted>

Google ™

Reason: Prediction markets work so well

Works on collective intelligence of diverse crowdCorrectly aggregated crowd’s judgment = Accurate resultsUse of play money eliminates individual bias and increases liquidityDecentralized market (works better than a centralized one)More accurate than polls, surveys, etc.

Method adopted -

Motivation to participate -

Reputation buildingRewards and recognitionFinancial / non-financial incentivesAnonymous platform to express opinionsLow barriers to entryIncrease knowledge and awareness of issues and risk1

Socialize and build relationsFacilitate better corporate decision making

Reason: Prediction markets work so well @ Google

Collective intelligence of crowdUse of Goobles eliminates individual biasAnonymous venue to voice opinionFacilitates reputation buildingDecentralized market ensures diverse crowd and viewsRewards (lottery, gifts, etc.) and recognitions boost participation and moraleNon-financial incentives (T-shirts etc.) enhance traders’ performance

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= Google Prediction Markets

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Crowd

RewardsPlay money Trade

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Express opinionBuild reputation

Goodies

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… contd.

Reason: Prediction markets work so well @ Google

Non-monetary rewards eliminate counter-productive behaviorCut through office politics, pretense and puffery and get right to performance2

Low barriers to entryIntuitive and easy to useEnhances relationship building through knowledge sharingIntroduces element of fun at workplaceParticipate in shaping corporate objectiveAllows arbitrage to expedite liquidityHelps increase awareness of issues & risksMarkets are quarterly – they get more accurate with time

Conditions leading to successful Prediction Markets

• Enable liquidity• Ensure optimism• Encourage bragging3

• Boost participation in shaping corporate objectives

• Provide quick research links

• Formulate improved corporate objectives

• Enhance decision making• Use as forecasting & risk

management tool• Measure corporate data flow –

Proximity analysis4

• Good reputation system• Anonymous platform• Lottery system as incentive

• Use of play money• Decentralized system

• Support from management• Breaking cultural barriers• Low barriers to entry• Develop a simple & straightforward platform Genesis Launch

MaintainAnalyze Results

Prediction Markets for Decision Making

Shaping corporate objectivesProject timeline (internal performance) re-evaluation (e.g., Siemens Austria)5

Sales forecast of specific products (e.g., Hewlett-Packard Corporation)6

Demand forecasting (e.g., Google)Help set IPO price using predicted market capitalization of the company7 (e.g., Google)Study information flow within business to confirm role of micro-geography in corporate information flows8 (e.g., Google)Managing manufacturing capacity (e.g., Intel)9

Generate new business ideas (e.g., General Electric)10

Developing and selecting marketing campaigns (e.g., Starwood)11

“Research has shown that prediction markets will be right more often than any individual expert” - Bo Cowgill

Accurate and decisive prediction markets can be used for the following kinds of decision making:

References

1 The Noisy Channel (Daniel Tunkelang)http://thenoisychannel.com/2010/06/09/why-cant-we-just-use-prediction-markets2 Augur (official website) http://www.augur.net/3 Patrakaar2b (Blog)http://patrakaar2b.blogspot.com/2011/03/do-prediction-markets-work.html4,5,6,7,8 Prediction Markets: How they work and how well they work (Vincent Jacobs)http://vincentjacobs.com/thesis/Vincent%20Jacobs%20(2009).%20Prediction%20Markets%20-%20How%20They%20Work%20and%20How%20Well%20They%20Work.pdf9,10,11 Prediction Markets (Wikipedia)https://en.wikipedia.org/wiki/Prediction_market#cite_note-ga-1

Images

Cover Page Image: http://www.clipartbest.com/cliparts/9i4/o4X/9i4o4XE5T.pngGoogle corner tile: http://www.userlogos.org/files/logos/maximus09/Google.pngGraph corner tile: http://cdn.mysitemyway.com/etc-mysitemyway/icons/legacy-previews/icons/matte-white-square-icons-business/124648-matte-white-square-icon-business-charts1-sc1.pngCrowd: https://openclipart.org/image/2400px/svg_to_png/215499/users.pngPlay money: http://i.istockimg.com/file_thumbview_approve/17875803/3/stock-illustration-17875803-one-dollar-bill-cartoon.jpgOpinion: http://www.okcseminari.rs/pluginfile.php/4900/course/summary/naslovana_01.gifTrade dice: http://www.cliparthut.com/clip-arts/12/royalty-free-stock-photos-pair-of-red-and-green-dice-with-buy-sell--12087.jpgReputation: http://cdn.xl.thumbs.canstockphoto.com/canstock23439216.jpgRewards: http://arshinfo.com/images/EmployeeRecognitionRewards.pngT-shirt: http://clipartmountain.com/tshirt2.gifGoogle bullet: http://iconbug.com/data/d5/256/4087b168d40a74aff2a55f8685259ea7.pngRight bullet: https://az623841.vo.msecnd.net/public-container/images$8a1957082b1d40df828647a7c91a0203/ok.png

Thank You !