The Forecast Exchange is a tool that allows company shares to be bought and sold based on the predicted success or failure of projects, creating a form of crowd-sourced forecasting. It works by giving employees shares in various projects, which can then be traded like stock based on employees' confidence in the projects' outcomes. This quantifies popular opinion within a company and provides senior management with a real-time view of how employees collectively view key performance indicators and risks. The price of each share tracks the crowd's view of the likelihood of each project's success or failure.

1. THE FORECAST EXCHANGE
Decrease Risk and Increase Information Flow

2. What is the Forecast Exchange?
 The Forecast Exchange is a tool to decrease risk and
increase information flow in project oriented businesses.
 It is a project performance analysis tool where shares in
project success are bought and sold on a company stock
market.

3. What is the Forecast Exchange?
 The result is quantified crowd-sourced project intelligence
where the price of a stock reflects the likelihood of
success. It gives senior management a unique insight into
popular opinion.
 Think of it like a "real time" health check of KPIs

4. What is crowdsourcing?
Crowdsourcing, a modern business term coined in 2005,
is defined by Merriam-Webster as:
“The process of obtaining needed
services, ideas, or content
by soliciting contributions
from a large group of people.”

5. What are prediction markets?
 Prediction Markets are exchange-traded markets created
for the purpose of trading the outcome of events. The
market prices can indicate what the crowd thinks the
probability of the event is.
 A prediction market contract trades between 0 and 100%.
 It is a binary option that will expire at the price of 0 or
100%.

6. A stock market without money?
 A common belief among economists and the financial
community in general is that prediction markets based on
play money cannot possibly generate credible predictions.
However, the data collected so far disagrees.
 Analyzed data from existing prediction markets concluded
that market prices predicted actual outcomes and/or
outcome frequencies in the real world

7. Has it worked before?

8. Has it failed before?
As it turns out, people don’t like the
idea of trading stock in the
likelihood of terrorist attacks as
much as they like trading in the
success of hollywood actors.

9. Forecast Exchange 101
 A binary forecast is selected to be tracked.
 An example of such a forecast might be "Production of Widgets is
on schedule and will be delivered to the client by March 1st". Note
that the forecast will be either true (the Widgets will be delivered on
time) or false (they won't).
 Key to the theory behind the Forecast Exchange is that as many
people as possible have access to shares - it is based on the principle
that there exist a lot of informal networks and information sharing
within a company that standard analysis tools don't capture.

10. Forecast Exchange 101
 All employees are awarded a set number of shares in the Widget
forecast, which at the time of launch are worth $50 each. On March
1st the Widget forecast will be closed and the true value of the
stock will be awarded - $0 if the Widgets were not delivered and
$100 if they were.
 Just as on the real stock exchange, an employee can sell all their
shares and use the money to invest in other forecasts they feel more
confident about, or they can hedge within this forecast.

11. Forecast Exchange 101

12. Forecast Exchange 101
 As the closing date
approaches, the value of
the Widget forecast will
draw closer to one value
or another
 This is the moving
indicator in "real time" of
employee faith in the
forecast and percentage
likelihood of success.

13. Challenges
 In order to accurately reflect the trending value of a stock, trades
must be made frequently and at a relatively high volume. Employees
need to be rewarded for their active participation in the game.
 There is a (hopefully very small) risk that employees could take the
game too seriously and try to "manipulate" the market - actively
sabotaging a project to provoke a $0 value. Note: this is one of the
reasons the US Government’s terrorist market was – in retrospect – a
terrible idea!

14. Contact Celina (project manager) or Halvard (lead developer) at:
forecastexchange@gmail.com
More information?