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Prediction
Markets

             And
CI


Tom
Davis
                             1
Telecom/Technology
CI
 
&
Prediction
Markets


                         2
10
Years
Wall
St.
 10
Years
Sprint


                    3
Prediction
Market
Is?



                        4
Ever
Traded?



               5
Conference
 Summary


             6
CI
Geek



          7
Text
Analyzer


           8
The
Buzz


       9
>5,000
Words



               10
Conference
 Summary


             11
Learn
 81


        12
Competitive
   77


              13
Intelligence
     97


               14
Strat*
  38


         15
Tactic*
   6


          16
Information
     37


              17
Understand
    31


             18
Analy*
  29


         19
Research
   27


           20
Collect*
   8


           21
Value
 19


        22
Innovation
    22


             23
Techniques
    21


             24
Not
As
Strong


         25
Communicat*
    14


              26
Predict*
   10


           27
Future*
  10


          28
People
  6


         29
Early
Warning
      14


                30
Conclude



           31
Wisdom
   0


         32
Crowds
   0


         33
Good
News



            34
Social
 14


         35
Social
Network*
       14


                  36
People
  6


         37
lg
    ia in
    ck
  or
 So      y
   w uzz
 t
eB
Ns
 I

             38
39
Themes



         40
<1>
Prediction
Markets

   Accelerating

                      41
<2>
Prediction
Markets
Are

    Perfect
For
CI

                          42
<3>
Market
Design
Key


                    43
<4>
Great
Prediction
Markets

            =
 Great
Social
Networks

                            44
Disclaimer



             45
46
47
Market
Design



                48
Tacit
Information


              49
50
“We
Know
More
Than
We
Can
Tell”


                    51
<introduction>



                 52
Prediction
Market
        Is?


                    53
“Information
Markets”



                        54
“Idea
Futures”



                 55
“Event
Futures”



                  56
Markets
Are
Designed


               57
Information
Aggregation


              58
What
Does
That
Mean?



                       59
Prediction
Markets



                     60
Convenient
Way



                 61
Ask
Organization



                   62
A
Question



             63
Get
A
Good
Answer


              64
65
1+1+1+...N
=
?


                 66
67
1.)
Independent



                  68
2.)
Diverse



              69
3.)Decentralized



                   70
Average
Guess
     3‐5%
 Actual
Beans

                71
72
More
Accurate



                73
1+1+1+...N
=
?


                 74
The
Wisdom
of
Crowds



                       75
76
77
78
New
York,
2007
                 79
1974
Nobel
Prize


              80
Famous
Economist


            81
Hayek
        82
Friedrich
von
Hayek
     1899
‐
1992
                      83
“Knowledge
Of
The

Particular
Circumstances

  Of
Time
And
Place”

                            84
Ability
Of
Prices
 To
Aggregate

  Knowledge

                    85
Tacit
Information


              86
87
“We
Know
More
Than
We
Can
Tell”


                    88
Fast
Forward



               89
Web
2.0



           90
91
Internet
         +
Prediction
Markets

                     92
Vendors



          93
</introduction>



                  94
Theme
#1



           95
<1>
Prediction
Markets

   Accelerating

                      96
ProQuest
Articles
200


150


100


 50


 0
  2003   2004   2005   2006   2007   2008

                                  ...
Global
Companies

Accelerating
Use


                    98
Source:   Cowgill, et al. Using Prediction Markets To Track Information Flows, Jan. 2008. (http://bpp.wharton.upenn.edu/jw...
Prof.
Andrew
McAfee

                      100
101
102
103
Uses?



        104
Financial
Forecasting



                        105
Project
Management



                     106
Market
Research



                  107
Real
Time
Competitive
Intelligence

               108
Examples?



            109
110
111
112
113
114
115
116
117
118
You
Prefer?
 You
Like?


              119
What
Is

Going
To
 Happen?

            120
Prediction
Markets

   Accelerating
        </1>

                      121
Theme
#2



           122
<2>
Prediction
Markets
Are

    Perfect
For
CI

                          123
?
    124
2
Kinds
Prediction
Markets


                     125
‐1‐
    Aggregate
Primarily
Internal
   Information

                     126
‐2‐
    Aggregate
Primarily
External
   Information

                     127
Internally
Focused
     Markets


                     128
debate:
 TMI


          129
“too
much
information”



                         130
131
CI
Outwardly
 Focused

            132
“Knowledge
Of
The

Particular
Circumstances

  Of
Time
And
Place”

                            133
Tacit
Information


              134
135
Normalize
Into
Price
Or
Probability


                       136
Common
CI
Uses



                 137
Forecast
Competitor

      Metrics


                       138
Industry
M&A
   Activity


               139
Forecast
Trade

Association
Metrics


                      140
Forecast
Patent
&
IP

      Activity


                        141
Forecast
Regulatory
      Actions


                      142
Raise
Awareness
Of

    Competition


                      143
ABCs
Why
Work?


            144
<A>
Accurate


           145
<A>
 Anonymous
=

Speak
True
Mind

                  146
<B>
Bias
Corrected
=
  Equal
Voice

                   147
<C>
Consensus
Building
=
 Credible,
Impartial

     Observer

                        148
<D>
Incentives
To
  Discover

                149
<E>
Expensive
=
  Metrics
   ROI

              150
<F>
Fast
Set‐Up


              151
<G>
Highly
Scalable
=
Many
Participants

                    152
Summarize



            153
Market
Design



                154
Tacit
Information



                    155
156
“We
Know
More
Than
We
Can
Tell”


                    157
Prediction
Markets
Are

    Perfect
For
CI
         </2>

                          158
Theme
#3



           159
<3>
Market
Design
Key


                    160
?
    161
You
Can
Design
Better
Markets


                 162
Lessons
Learned



                  163
Single
Regulator
                   164
165
166
167
168
169
Leverage
           170
171
Market
Failure


          172
Ex‐Meltdown



              173
Market
Mechanisms



                    174
175
176
Market
Failure


          177
Not
Hard



           178
Design
Right



               179
Concerns?



            180
<i>



      181
Self‐Fulfilling
 Prophecy


                  182
<ii>



       183
Manipulation



               184
<i>
Self‐Fulfilling
 Prophecy?

                  185
Market
  Reality




            186
Pro‐Cyclical
Feedback
Loop




                             187
Distorts
Outcome


           188
Mis‐application



                  189
No
Clear



           190
Event
  Or
Measure

          191
Outcome
Poorly
Defined
     </i>

                 192
<ii>
Market
Manipulation?



                        193
2
Varieties


            194
‐1‐
Price
Manipulation


                     195
‐2‐
Outcome
Manipulation


                       196
‐1‐
Price
Manipulation?


                      197
Distorted
Price
Action


               198
Price          Reality



        Time
                     199
Intentional
Losses
    To
Deceive


                     200
Not
Sustainable,
 Adds
Liquidity


                   201
Good
Design
   Price
Manipulation




                        202
‐2‐
Outcome
Manipulation?


                        203
Outcome
Changeable



                     204
Small
Group



              205
Traders
Or
Non‐Traders


              206
Price          Reality



        Time
                         207
E.g.



       208
Vice
President?
                  209
Good
Design
  Outcome
Manipulation




                         210
Summarize



            211
Self‐Fulfilling
Prophecies
A
Form
  Manipulation

                     212
Possible
To
Manipulate


              213
Adds
To
Liquidity


            214
Poor
Excuse



              215
All
Forecasting
Systems



                          216
Manipulable



              217
Error



        218
Bias



       219
220
Summarize



            221
Market
Mechanisms



                    222
223
224
Market
Failures



                  225
Not
Hard



           226
Design
Right



               227
Market
Design
Key
      </3>


                    228
Theme
#4



           229
<4>
Great
Prediction
Markets

            =
 Great
Social
Networks

                        230
‐1‐
Social
Media
=>
 Fresh
Activity

                  231
‐1‐
Prediction
Markets
=>
 Create
New
Markets

                        232
‐2‐
Social
Media
=>
      Ask
For
Engagement

                  233
‐2‐
Prediction
Markets
=>
       Traders
Suggest
New
Markets

                        234
‐3‐
Social
Media
=>
     KISS

                  235
‐3‐
Prediction
Markets
=>
         KISS

                        236
‐4‐
  Social
Media
=>
Know
Your
Audience

                     237
‐4‐
Prediction
Markets
=>
 Know
Your
Trading

     Community

                        238
‐5‐
   Social
Media
=>
What’s
Happening
Now

                       239
‐5‐
Prediction
Markets
=>
 Short
Term
Markets
 Hold
More
Interest

                        240
‐6‐
Social
Media
=>
 User
Interface
Makes
Or
Breaks

                  241
‐6‐
Prediction
Markets
=>
    User
Interface
  Increases
Trading

                        242
‐7‐
And
on
and
on...


                   243
The
Future?



              244
et
      rk
    a
M




              245
et
      rk Is
    a
M dy
     ea
  lr
A




              246
Great
Prediction
Markets

            =
 Great
Social
Networks
          </4>

                        247
Summarize



            248
249
250
Market
Design



                251
Tacit
Information


              252
253
“We
Know
More
Than
We
Can
Tell”


                    254
Ability
Of
Prices
 To
Aggregate

  Knowledge

                    255
256
Prediction
Markets

             And
CI

        With
thanks
to
Lawrence
Lessig
and
Dick
Hardt
For
Presentation
Inspiratio...
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Prediction Markets and Competitive Intelligence

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Prediction Markets and Competitive Intelligence

  1. 1. Prediction
Markets
 And
CI Tom
Davis 1
  2. 2. Telecom/Technology
CI 
&
Prediction
Markets 2
  3. 3. 10
Years
Wall
St. 10
Years
Sprint 3
  4. 4. Prediction
Market
Is? 4
  5. 5. Ever
Traded? 5
  6. 6. Conference Summary 6
  7. 7. CI
Geek 7
  8. 8. Text Analyzer 8
  9. 9. The Buzz 9
  10. 10. >5,000
Words 10
  11. 11. Conference Summary 11
  12. 12. Learn 81 12
  13. 13. Competitive 77 13
  14. 14. Intelligence 97 14
  15. 15. Strat* 38 15
  16. 16. Tactic* 6 16
  17. 17. Information 37 17
  18. 18. Understand 31 18
  19. 19. Analy* 29 19
  20. 20. Research 27 20
  21. 21. Collect* 8 21
  22. 22. Value 19 22
  23. 23. Innovation 22 23
  24. 24. Techniques 21 24
  25. 25. Not
As Strong 25
  26. 26. Communicat* 14 26
  27. 27. Predict* 10 27
  28. 28. Future* 10 28
  29. 29. People 6 29
  30. 30. Early
Warning 14 30
  31. 31. Conclude 31
  32. 32. Wisdom 0 32
  33. 33. Crowds 0 33
  34. 34. Good
News 34
  35. 35. Social 14 35
  36. 36. Social
Network* 14 36
  37. 37. People 6 37
  38. 38. lg ia in ck or So y w uzz t eB Ns I 38
  39. 39. 39
  40. 40. Themes 40
  41. 41. <1> Prediction
Markets
 Accelerating 41
  42. 42. <2> Prediction
Markets
Are
 Perfect
For
CI 42
  43. 43. <3> Market
Design
Key 43
  44. 44. <4> Great
Prediction
Markets
 = Great
Social
Networks 44
  45. 45. Disclaimer 45
  46. 46. 46
  47. 47. 47
  48. 48. Market
Design 48
  49. 49. Tacit Information 49
  50. 50. 50
  51. 51. “We
Know
More Than
We
Can
Tell” 51
  52. 52. <introduction> 52
  53. 53. Prediction
Market Is? 53
  54. 54. “Information
Markets” 54
  55. 55. “Idea
Futures” 55
  56. 56. “Event
Futures” 56
  57. 57. Markets Are
Designed 57
  58. 58. Information Aggregation 58
  59. 59. What
Does
That
Mean? 59
  60. 60. Prediction
Markets 60
  61. 61. Convenient
Way 61
  62. 62. Ask
Organization 62
  63. 63. A
Question 63
  64. 64. Get
A Good
Answer 64
  65. 65. 65
  66. 66. 1+1+1+...N
=
? 66
  67. 67. 67
  68. 68. 1.)
Independent 68
  69. 69. 2.)
Diverse 69
  70. 70. 3.)Decentralized 70
  71. 71. Average
Guess 3‐5% Actual
Beans 71
  72. 72. 72
  73. 73. More
Accurate 73
  74. 74. 1+1+1+...N
=
? 74
  75. 75. The
Wisdom
of
Crowds 75
  76. 76. 76
  77. 77. 77
  78. 78. 78
  79. 79. New
York,
2007 79
  80. 80. 1974 Nobel
Prize 80
  81. 81. Famous Economist 81
  82. 82. Hayek 82
  83. 83. Friedrich
von
Hayek 1899
‐
1992 83
  84. 84. “Knowledge
Of
The
 Particular
Circumstances
 Of
Time
And
Place” 84
  85. 85. Ability
Of
Prices To
Aggregate
 Knowledge 85
  86. 86. Tacit Information 86
  87. 87. 87
  88. 88. “We
Know
More Than
We
Can
Tell” 88
  89. 89. Fast
Forward 89
  90. 90. Web
2.0
 90
  91. 91. 91
  92. 92. Internet + Prediction
Markets 92
  93. 93. Vendors 93
  94. 94. </introduction> 94
  95. 95. Theme
#1 95
  96. 96. <1> Prediction
Markets
 Accelerating 96
  97. 97. ProQuest
Articles 200 150 100 50 0 2003 2004 2005 2006 2007 2008 97
  98. 98. Global
Companies
 Accelerating
Use 98
  99. 99. Source: Cowgill, et al. Using Prediction Markets To Track Information Flows, Jan. 2008. (http://bpp.wharton.upenn.edu/jwolfers/index.shtml) 99
  100. 100. Prof.
Andrew
McAfee 100
  101. 101. 101
  102. 102. 102
  103. 103. 103
  104. 104. Uses? 104
  105. 105. Financial
Forecasting 105
  106. 106. Project
Management 106
  107. 107. Market
Research 107
  108. 108. Real
Time Competitive Intelligence 108
  109. 109. Examples? 109
  110. 110. 110
  111. 111. 111
  112. 112. 112
  113. 113. 113
  114. 114. 114
  115. 115. 115
  116. 116. 116
  117. 117. 117
  118. 118. 118
  119. 119. You
Prefer? You
Like? 119
  120. 120. What
Is 
Going
To Happen? 120
  121. 121. Prediction
Markets
 Accelerating </1> 121
  122. 122. Theme
#2 122
  123. 123. <2> Prediction
Markets
Are
 Perfect
For
CI 123
  124. 124. ? 124
  125. 125. 2
Kinds Prediction
Markets 125
  126. 126. ‐1‐ Aggregate Primarily
Internal Information 126
  127. 127. ‐2‐ Aggregate Primarily
External Information 127
  128. 128. Internally
Focused Markets 128
  129. 129. debate: TMI 129
  130. 130. “too
much
information” 130
  131. 131. 131
  132. 132. CI Outwardly Focused 132
  133. 133. “Knowledge
Of
The
 Particular
Circumstances
 Of
Time
And
Place” 133
  134. 134. Tacit Information 134
  135. 135. 135
  136. 136. Normalize
Into Price
Or
Probability 136
  137. 137. Common
CI
Uses 137
  138. 138. Forecast
Competitor
 Metrics 138
  139. 139. Industry
M&A Activity 139
  140. 140. Forecast
Trade
 Association
Metrics 140
  141. 141. Forecast
Patent
&
IP
 Activity 141
  142. 142. Forecast
Regulatory Actions 142
  143. 143. Raise
Awareness
Of
 Competition 143
  144. 144. ABCs Why
Work? 144
  145. 145. <A> Accurate 145
  146. 146. <A> Anonymous
=
 Speak
True
Mind 146
  147. 147. <B> Bias
Corrected
= Equal
Voice 147
  148. 148. <C> Consensus
Building
= Credible,
Impartial
 Observer 148
  149. 149. <D> Incentives
To Discover 149
  150. 150. <E> Expensive
= Metrics ROI 150
  151. 151. <F> Fast
Set‐Up 151
  152. 152. <G> Highly
Scalable
= Many
Participants 152
  153. 153. Summarize 153
  154. 154. Market
Design 154
  155. 155. Tacit
Information 155
  156. 156. 156
  157. 157. “We
Know
More Than
We
Can
Tell” 157
  158. 158. Prediction
Markets
Are
 Perfect
For
CI </2> 158
  159. 159. Theme
#3 159
  160. 160. <3> Market
Design
Key 160
  161. 161. ? 161
  162. 162. You
Can
Design Better
Markets 162
  163. 163. Lessons
Learned 163
  164. 164. Single
Regulator 164
  165. 165. 165
  166. 166. 166
  167. 167. 167
  168. 168. 168
  169. 169. 169
  170. 170. Leverage 170
  171. 171. 171
  172. 172. Market Failure 172
  173. 173. Ex‐Meltdown 173
  174. 174. Market
Mechanisms 174
  175. 175. 175
  176. 176. 176
  177. 177. Market Failure 177
  178. 178. Not
Hard 178
  179. 179. Design
Right 179
  180. 180. Concerns? 180
  181. 181. <i> 181
  182. 182. Self‐Fulfilling Prophecy 182
  183. 183. <ii> 183
  184. 184. Manipulation 184
  185. 185. <i> Self‐Fulfilling Prophecy? 185
  186. 186. Market Reality 186
  187. 187. Pro‐Cyclical
Feedback
Loop 187
  188. 188. Distorts Outcome 188
  189. 189. Mis‐application 189
  190. 190. No
Clear 190
  191. 191. Event Or Measure 191
  192. 192. Outcome Poorly
Defined </i> 192
  193. 193. <ii> Market
Manipulation?
 193
  194. 194. 2 Varieties 194
  195. 195. ‐1‐ Price
Manipulation 195
  196. 196. ‐2‐ Outcome
Manipulation 196
  197. 197. ‐1‐ Price
Manipulation? 197
  198. 198. Distorted Price
Action 198
  199. 199. Price Reality Time 199
  200. 200. Intentional
Losses To
Deceive 200
  201. 201. Not
Sustainable, Adds
Liquidity 201
  202. 202. Good
Design Price
Manipulation 202
  203. 203. ‐2‐ Outcome
Manipulation? 203
  204. 204. Outcome
Changeable 204
  205. 205. Small
Group 205
  206. 206. Traders
Or Non‐Traders 206
  207. 207. Price Reality Time 207
  208. 208. E.g. 208
  209. 209. Vice
President? 209
  210. 210. Good
Design Outcome
Manipulation 210
  211. 211. Summarize 211
  212. 212. Self‐Fulfilling Prophecies
A
Form Manipulation 212
  213. 213. Possible
To Manipulate 213
  214. 214. Adds
To Liquidity 214
  215. 215. Poor
Excuse 215
  216. 216. All
Forecasting
Systems 216
  217. 217. Manipulable 217
  218. 218. Error 218
  219. 219. Bias 219
  220. 220. 220
  221. 221. Summarize 221
  222. 222. Market
Mechanisms 222
  223. 223. 223
  224. 224. 224
  225. 225. Market
Failures 225
  226. 226. Not
Hard 226
  227. 227. Design
Right 227
  228. 228. Market
Design
Key </3> 228
  229. 229. Theme
#4 229
  230. 230. <4> Great
Prediction
Markets
 = Great
Social
Networks 230
  231. 231. ‐1‐ Social
Media
=> Fresh
Activity 231
  232. 232. ‐1‐ Prediction
Markets
=> Create
New
Markets 232
  233. 233. ‐2‐ Social
Media
=> Ask For
Engagement 233
  234. 234. ‐2‐ Prediction
Markets
=> Traders Suggest
New
Markets 234
  235. 235. ‐3‐ Social
Media
=> KISS 235
  236. 236. ‐3‐ Prediction
Markets
=> KISS 236
  237. 237. ‐4‐ Social
Media
=> Know
Your
Audience 237
  238. 238. ‐4‐ Prediction
Markets
=> Know
Your
Trading
 Community 238
  239. 239. ‐5‐ Social
Media
=> What’s
Happening
Now 239
  240. 240. ‐5‐ Prediction
Markets
=> Short
Term
Markets Hold
More
Interest 240
  241. 241. ‐6‐ Social
Media
=> User
Interface Makes
Or
Breaks 241
  242. 242. ‐6‐ Prediction
Markets
=> User
Interface Increases
Trading 242
  243. 243. ‐7‐ And
on
and
on... 243
  244. 244. The
Future? 244
  245. 245. et rk a M 245
  246. 246. et rk Is a M dy ea lr A 246
  247. 247. Great
Prediction
Markets
 = Great
Social
Networks </4> 247
  248. 248. Summarize 248
  249. 249. 249
  250. 250. 250
  251. 251. Market
Design 251
  252. 252. Tacit Information 252
  253. 253. 253
  254. 254. “We
Know
More Than
We
Can
Tell” 254
  255. 255. Ability
Of
Prices To
Aggregate
 Knowledge 255
  256. 256. 256
  257. 257. Prediction
Markets
 And
CI With
thanks
to
Lawrence
Lessig
and
Dick
Hardt
For
Presentation
Inspiration Tom
Davis 257

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