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Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
Practical dos and don'ts of enterprise prediction markets
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Practical dos and don'ts of enterprise prediction markets

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Transcript

  • 1. Effec%ve
Enterprise
Markets:
 What
makes
them
work
and
Why
 Dr.
Robin
Hanson,
Chief
Scien%st
 Rebecca
W
Munn,
Senior
Vice
President
 KM
Chicago
 September
14,
2010

  • 2. Agenda
 •  Introduc;ons
 •  What
makes
Enterprise
Markets
work
 •  Why
markets
as
a
medium
for
predic;ng
the
future
 •  Enterprise
Do’s
and
Don’ts

 •  Discussion

  • 3. What
Makes
Markets
Work
 Buy
Low,
Sell
High
 Will price rise or fall? “Pays $1 if Obama wins” sell E[ price change | ?? ] buy price sell Lots of ?? get tried, buy price includes all!
  • 4. What
Makes
Markets
Work
 Example:
Current
Event
Prices
 70‐71%
Republicans
win
US
House
in
11/2010
 42‐47%
California
legalizes
marijuana
in
11/2010
 
6‐16%

California
credit
default
by
2011

 10‐20%
US
overt
strike
on
N.
Korea
by
4/2011
 

24%




US
or
Israel
overt
strike
on
Iran
by
2012
 10‐19%
US
Sup.
Court
bans
med.
mandate
by
2012
 16‐18%
Palin
is
Republican
nominee
in
2012
 11‐30%
Japan
says
it
has
nuke
by
2013
 45‐48%
US
Cap
&
Trade
system
by
2013
 12‐14%
China
war
act
on
Taiwan
by
2013
 15‐38%
Higgs
Boson
seen
by
2014
 www.InTrade.com
  • 5. What
Makes
Markets
Work
 Beats
Alterna%ves
 •  Vs.
Public
Opinion

 –  I.E.M.
beat
presiden;al
elec;on
polls
709/964
(Berg
et
al
‘08)
 –  Re
NFL,
beat
ave.,
rank
7
vs.
39
of
1947
(Pennock
et
al
’04)
 •  Vs.
Public
Experts
 –  Racetrack
odds
beat
weighed
track
experts
(Figlewski
‘79)

 •  If
anything,
track
odds
weigh
experts
too
much!

 –  OJ
futures
improve
weather
forecast
(Roll
‘84)

 –  Stocks
beat
Challenger
panel

(Maloney
&
Mulherin
‘03)
 –  Gas
demand
markets
beat
experts
(Spencer
‘04)
 –  Econ
stat
markets
beat
experts
2/3
(Wolfers
&
Zitzewitz
‘04)
 •  Vs.
Private
Experts
 –  HP
market
beat
official
forecast
6/8
(Ploh
‘00)
 –  Eli
Lily
markets
beat
official
6/9
(Servan‐Schreiber
’05)
 –  Microsoi
project
markets
beat
managers
(Proebs;ng
’05)

  • 6. What
Makes
Markets
Work
 Example:
Iowa
Electronic
Market
 Item 1988 1992 1996 2000 2004 All # big 59 151 157 229 368 964 polls Poll 25 43 21 56 110 255 “wins” Market 34 108 136 173 258 709 “wins” % 58% 72% 87% 76% 70% 74% Market P-value 0.148 0.000 0.000 0.000 0.000 0.000 “Prediction Market Accuracy in the Long Run” Joyce Berg, Forrest Nelson and Thomas Rietz, Jan. 2008.
  • 7. Why
Markets
as
a
Medium
for
Forecas%ng
 Advantages
 Incen(ves
 •  Numerically
precise
 Self‐Selec(on
 •  Consistent
across
many
issues
 Correct
Biases
 •  Frequently
updated
 •  Hard
to
manipulate
 •  Need
not
say
who
how
expert
when
 –  Issue
is
not

experts
vs.
amateurs
 •  At
least
as
accurate
as
alterna;ves

  • 8. Why
Markets
as
a
Medium
for
Forecas%ng
 Collec%ve
Forecas%ng
 Forecasts
 On
Requested
 User

 Topics
 Contribu;ons
 User
Scores
 Engagement

  • 9. Why
Markets
as
a
Medium
for
Forecas%ng
 Collec%ve
Forecas%ng
Ques%ons
 What
exactly
is

 Consensus
 What
exactly
are
my
 my
influence?
 incen7ves?
 My
Forecast
 My
Score
 How
exactly
do

 I
express
my
 Truth
 opinion?

  • 10. Why
Markets
as
Medium
for
Forecas%ng
 Edi%ng
Interface
Is
Transparent
 If
my
edit
increases
 
I
directly

 Consensus
 the
consensus
chance

 change
the
 of
true
state,
I
win.

 consensus
 Else,
I
lose.
 My
Edits
 My
Score
 Truth

  • 11. Why
Markets
as
Medium
for
Forecas%ng
 Factors
Might
Influence
Sales
 E[Sales|Factor]
 P[Factor]
 •  Economy
recovers
fast?
 •  Compe;tors
introduce
new
version?
 •  We
do
big
promo;on?
 •  We
lower
prices?

They
lower
prices?
 •  We
add
distribu;on
channel?
 •  We
add
feature
F?

They
add
feature
F?
 •  Our
defect
rate
very
low?

  • 12. Why
Markets
as
Medium
for
Forecas%ng
 Issues
 Input:
Contribu%ons
 Output:
Forecasts,
Scores
 •  What
info
can
express?
 •  What
ques(ons
can
ask?
 •  How
account
for
costs?
 •  How
account
for
value?
 •  Who
let
in
where?
 •  Use
or
validate
system?
 •  Enough
Incen;ves
 •  Should
adjust
outputs?
 –  T‐shirts
enough?
 –  Zero‐sum
scoring?
 •  Who
let
see
outputs?
 •  Limit
Costs
 •  Sabotage
&
manipula;on
 –  Awkward
Interface
 •  Legal,
P.R.
risks?
 –  Wait
for
offer
accept
 –  Retribu;on

  • 13. Why
Markets
as
Medium
for
Forecas%ng
 Requirements
 Use: •  Ques%ons
really
want
answered
now
 –  Will
eventually
know
answer
(or
parts)
 –  Suspect
not
geong
frank
info
via
usual
channels
 –  Don’t
mind
par;cipants
knowing
best
es;mates
 •  People
who
have
or
can
get
key
info
 –  Their
;me
is
the
main
cost
 –  Lihle
penalty
for
invite
many
don’t
know
 •  Incen%ves
to
en;ce
careful
par;cipa;on
 –  Money,
ahen;on,
influence
can
legally
offer
 –  Valued
when
ques;ons
answered
 Validate: •  Many
fast
ques;ons,
status
quo
es;mates

  • 14. Enterprise
Do’s
and
Don’ts
of
Enterprise
 Markets
 Customer
 •  Do
 –  Integrate
into
Enterprise
processes
 –  Nurture
execu;ve
sponsorship
 –  Make
accessible
to
all
 –  Customize
to
your
business
 –  Make
it
Part
of
your
Value
Prop
 14

  • 15. Integrate
Into
Enterprise
Processes
 Customer
 Challenge
 Ac;on
 Result
 • Facing
too
many
 • Deployed
internal
 • Increased
accuracy
 unknowns,
leaders
 market,
integrated
 from
market
has
 were
planning
for
all
 into
exis;ng
 streamlined
short
 possible
futures
 Enterprise
 and
mid‐term
 processes
and
 planning
 • Costly
and
;me‐ dashboards
 consuming
 • An;cipated
 • Appropriate
;me
 improvements
in
 horizons
matched
 metrics,
e.g.
cash
 Enterprise
 management,
 deadlines
 balance
sheet
 15

  • 16. Nurture
Execu%ve
Sponsorship
 Customer
 Challenge
 Ac;on
 Result
 • Market
introduced
 • Sought
exec
air
 • Balanced
top‐down
 by
self‐ini;a;ng
 cover,
not
mandate
 endorsement
with
 team,
not
C‐suite
 • Targeted
key
 bohoms‐up
culture
 • Fit
entrepreneurial
 leaders
as
early
 • Grassroots
growth
 culture
 adopters
 more
sustainable
 • S;ll
needed
to
drive
 • Champion
is
one
of
 • Consulta;ve
 awareness,
 top
users
 rela;onship
with
 par;cipa;on,
and
 • Opened
market
to
 key
leaders
paves
 execu;ve
usage
 everyone

 way
for
followers
 16

  • 17. Make
It
Accessible
To
All
 Customer
 Challenge
 Ac;on
 Result
 • Accelerate
the
 • Incorporated
 • Improved
overall
 process
of
 market
into
 ;me
to
market,
 priori;zing
ideas
 broader
innova;on
 speed
of
idea
 and
product
 plaqorm
 ac;on‐
by
100
days
 features
 • Deployed
market
 • 5‐10X
ROI
 • Engage
more
 globally
 • Tripled
 employees
in
 • Feed
ideas
to
every
 collabora;on
and
 innova;on
 business
unit
 cut
duplicate
ideas
 in
half
 17

  • 18. Customize
It
to
Your
Business
 Customer
 Challenge
 Ac;on
 Result
 • Looking
for
new
 • Market
well‐named
 • Made
it
familiar
 ways
to
engage
 and
branded
 and
instantly
 their
customer
base
 • Seamless
 accessible
to
target
 • Seeking
 integra;on
with
 group
 differen;a;on
from
 company
website
 • Drove
par;cipa;on
 the
significant
 • Develop
custom
 and
accelerated
 compe;;on
in
their
 interface
to
match
 engagement
 market

 user
community
 • Differen;ated
from
 compe;;on
 18

  • 19. Make
It
Part
of
Your
Value
Prop
 Client
 Challenge
 Ac;on
 Result
 • Customers
 • Recognized
market
 • Provide
clients
with

 represent
broad
 as
amplifier
of
 beher
data
via
 array
of
industry
 exis;ng
informa;on
 public
market
 stakeholders
 and
service
 • Enable
client
 • Universal
client
 offerings
 specific
experience

 need:
predic;ng
 • Integrated
market
 • Provide
superior

 behaviors
 into
all
aspects
of
 services
and
;mely
 • Tradi;onal
research
 how
they
create
 insights,
create
 &
forecas;ng
 value
and
conduct
 compe;;ve
 insufficient
given
 business
 advantage
 industry
changes
 19

  • 20. Enterprise
Do’s
and
Don’ts
of
Enterprise
 Markets
 Customer
 •  Don’t
 –  Run
a
30
day
pilot

 –  Use
a
similar
group
of
par;cipants
 –  Run
a
market
without
promo;ng
it
 –  Assume
leaders
will
act
on
insights
 20

  • 21. Discussion


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