This is a case study I had worked on as a first year MIM student at University of Maryland (College Park), while studying INFM612 (Management of Information Programs and Services), taught by Dr. Ping Wang - a wonderful Professor.

1. Prediction Markets @
Case Study 3
Name: Pujita Tipnis UID: <deleted>
Google ™

2. Reason: Prediction markets work so well
Works on collective intelligence of diverse crowd
Correctly aggregated crowd’s judgment = Accurate results
Use of play money eliminates individual bias and increases liquidity
Decentralized market (works better than a centralized one)
More accurate than polls, surveys, etc.
Method adopted -
Motivation to participate -
Reputation building
Rewards and recognition
Financial / non-financial incentives
Anonymous platform to express opinions
Low barriers to entry
Increase knowledge and awareness of issues and risk1
Socialize and build relations
Facilitate better corporate decision making

3. Reason: Prediction markets work so well @ Google
Collective intelligence of crowd
Use of Goobles eliminates individual bias
Anonymous venue to voice opinion
Facilitates reputation building
Decentralized market ensures diverse crowd and views
Rewards (lottery, gifts, etc.) and recognitions boost participation and morale
Non-financial incentives (T-shirts etc.) enhance traders’ performance
+
+
= Google Prediction Markets
+
Crowd
RewardsPlay money Trade
+
+
Express opinion
Build reputation
Goodies
+
… contd.

4. Reason: Prediction markets work so well @ Google
Non-monetary rewards eliminate counter-productive behavior
Cut through office politics, pretense and puffery and get right to
performance2
Low barriers to entry
Intuitive and easy to use
Enhances relationship building through knowledge sharing
Introduces element of fun at workplace
Participate in shaping corporate objective
Allows arbitrage to expedite liquidity
Helps increase awareness of issues & risks
Markets are quarterly – they get more accurate with time

5. 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

6. Prediction Markets for Decision Making
Shaping corporate objectives
Project 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:

7. References
1 The Noisy Channel (Daniel
Tunkelang)http://thenoisychannel.com/2010/06/09/why-cant-we-just-use-
prediction-markets
2 Augur (official website) http://www.augur.net/
3 Patrakaar2b (Blog)http://patrakaar2b.blogspot.com/2011/03/do-prediction-
markets-work.html
4,5,6,7,8 Prediction Markets: How they work and how well they work (Vincent
Jacobs)http://vincentjacobs.com/thesis/Vincent%20Jacobs%20(2009).%20Predictio
n%20Markets%20-
%20How%20They%20Work%20and%20How%20Well%20They%20Work.pdf
9,10,11 Prediction Markets
(Wikipedia)https://en.wikipedia.org/wiki/Prediction_market#cite_note-ga-1

8. Images
Cover Page Image: http://www.clipartbest.com/cliparts/9i4/o4X/9i4o4XE5T.png
Google corner tile: http://www.userlogos.org/files/logos/maximus09/Google.png
Graph 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.png
Crowd: https://openclipart.org/image/2400px/svg_to_png/215499/users.png
Play money: http://i.istockimg.com/file_thumbview_approve/17875803/3/stock-illustration-
17875803-one-dollar-bill-cartoon.jpg
Opinion: http://www.okcseminari.rs/pluginfile.php/4900/course/summary/naslovana_01.gif
Trade dice: http://www.cliparthut.com/clip-arts/12/royalty-free-stock-photos-pair-of-red-and-
green-dice-with-buy-sell--12087.jpg
Reputation: http://cdn.xl.thumbs.canstockphoto.com/canstock23439216.jpg
Rewards: http://arshinfo.com/images/EmployeeRecognitionRewards.png
T-shirt: http://clipartmountain.com/tshirt2.gif
Google bullet: http://iconbug.com/data/d5/256/4087b168d40a74aff2a55f8685259ea7.png
Right bullet: https://az623841.vo.msecnd.net/public-
container/images$8a1957082b1d40df828647a7c91a0203/ok.png

9. Thank You !