PredictionMarketsAndCI
TomDavis1
Telecom/TechnologyCI&PredictionMarkets
2
10YearsWallSt.10YearsSprint
3
PredictionMarketIs?
4
EverTraded?
5
ConferenceSummary
6
CIGeek
7
TextAnalyzer
8
TheBuzz
9
>5,000Words
10
ConferenceSummary
11
Learn81
12
Competitive77
13
Intelligence97
14
Strat*38
15
Tactic*6
16
Information37
17
Understand31
18
Analy*29
19
Research27
20
Collect*8
21
Value19
22
Innovation22
23
Techniques21
24
NotAsStrong
25
Communicat*14
26
Predict*10
27
Future*10
28
People6
29
EarlyWarning14
30
Conclude
31
Wisdom0
32
Crowds0
33
GoodNews
34
Social14
35
SocialNetwork*14
36
People6
37
Social
Networkin
g
Is Buzzy
38
39
Themes
40
<1>PredictionMarkets
Accelerating
41
<2>PredictionMarketsAre
PerfectForCI
42
<3>MarketDesignKey
43
<4>GreatPredictionMarkets
=GreatSocialNetworks
44
Disclaimer
45
46
47
MarketDesign
48
TacitInformation
49
50
“WeKnowMoreThanWeCanTell”
51
<introduction>
52
PredictionMarketIs?
53
“InformationMarkets”
54
“IdeaFutures”
55
“EventFutures”
56
MarketsAreDesigned
57
InformationAggregation
58
WhatDoesThatMean?
59
PredictionMarkets
60
ConvenientWay
61
AskOrganization
62
AQuestion
63
GetAGoodAnswer
64
65
1+1+1+...N=?
66
67
1.)Independent
68
2.)Diverse
69
3.)Decentralized
70
AverageGuess3‐5%
ActualBeans
71
72
MoreAccurate
73
1+1+1+...N=?
74
TheWisdomofCrowds
75
76
77
78
NewYork,2007
79
1974NobelPrize
80
FamousEconomist
81
Hayek82
FriedrichvonHayek1899‐1992
83
“KnowledgeOfTheParticularCircumstances
OfTimeAndPlace”
84
AbilityOfPricesToAggregateKnowledge
85
TacitInformation
86
87
“WeKnowMoreThanWeCanTell”
88
FastForward
89
Web2.0
90
91
Internet+
PredictionMarkets
92
Vendors
93
</introduction>
94
Theme#1
95
<1>PredictionMarkets
Accelerating
96
0
50
100
150
200
2003 2004 2005 2006 2007 2008
ProQuestArticles
97
GlobalCompaniesAcceleratingUse
98
Source: Cowgill, et al. Using Prediction Markets To Track Information Flows, Jan. 2008. (http://bpp.wharton.upenn.edu/jwolfers/index.shtml)
99
Prof.AndrewMcAfee
100
101
102
103
Uses?
104
FinancialForecasting
105
ProjectManagement
106
MarketResearch
107
RealTimeCompetitiveIntelligence
108
Examples?
109
110
111
112
113
114
115
116
117
118
YouPrefer?YouLike?
119
WhatIsGoingToHappen?
120
PredictionMarketsAccelerating
</1>
121
Theme#2
122
<2>PredictionMarketsAre
PerfectForCI
123
?
124
2KindsPredictionMarkets
125
‐1‐Aggregate
PrimarilyInternalInformation
126
‐2‐Aggregate
PrimarilyExternalInformation
127
InternallyFocusedMarkets
128
debate:TMI
129
“toomuchinformation”
130
131
CIOutwardlyFocused
132
“KnowledgeOfTheParticularCircumstances
OfTimeAndPlace”
133
TacitInformation
134
135
NormalizeIntoPriceOrProbability
136
CommonCIUses
137
ForecastCompetitorMetrics
138
IndustryM&AActivity
139
ForecastTradeAssociationMetrics
140
ForecastPatent&IPActivity
141
ForecastRegulatoryActions
142
RaiseAwarenessOfCompetition
143
ABCsWhyWork?
144
<A>Accurate
145
<A>Anonymous=
SpeakTrueMind
146
<B>BiasCorrected=
EqualVoice
147
<C>ConsensusBuilding=Credible,Impartial
Observer
148
<D>IncentivesTo
Discover
149
<E>Expensive=MetricsROI
150
<F>FastSet‐Up
151
<G>HighlyScalable=ManyParticipants
152
Summarize
153
MarketDesign
154
TacitInformation
155
156
“WeKnowMoreThanWeCanTell”
157
PredictionMarketsArePerfectForCI
</2>
158
Theme#3
159
<3>MarketDesignKey
160
?
161
YouCanDesignBetterMarkets
162
LessonsLearned
163
SingleRegulator164
165
166
167
168
169
Leverage170
171
MarketFailure
172
Ex‐Meltdown
173
MarketMechanisms
174
175
176
MarketFailure
177
NotHard
178
DesignRight
179
Concerns?
180
<i>
181
Self‐FulfillingProphecy
182
<ii>
183
Manipulation
184
<i>Self‐FulfillingProphecy?
185
MarketReality
186
Pro‐CyclicalFeedbackLoop
187
DistortsOutcome
188
Mis‐application
189
NoClear
190
EventOr
Measure
191
OutcomePoorlyDefined
</i>
192
<ii>MarketManipulation?
193
2Varieties
194
‐1‐PriceManipulation
195
‐2‐OutcomeManipulation
196
‐1‐PriceManipulation?
197
DistortedPriceAction
198
Price Reality
Time199
IntentionalLossesToDeceive
200
NotSustainable,AddsLiquidity
201
GoodDesignPriceManipulation
202
‐2‐OutcomeManipulation?
203
OutcomeChangeable
204
SmallGroup
205
TradersOrNon‐Traders
206
Price Reality
Time207
E.g.
208
VicePresident?209
GoodDesignOutcomeManipulation
210
Summarize
211
Self‐FulfillingPropheciesAForm
Manipulation
212
PossibleToManipulate
213
AddsToLiquidity
214
PoorExcuse
215
AllForecastingSystems
216
Manipulable
217
Error
218
Bias
219
220
Summarize
221
MarketMechanisms
222
223
224
MarketFailures
225
NotHard
226
DesignRight
227
MarketDesignKey</3>
228
Theme#4
229
<4>GreatPredictionMarkets
=GreatSocialNetworks
230
‐1‐SocialMedia=>FreshActivity
231
‐1‐PredictionMarkets=>CreateNewMarkets
232
‐2‐SocialMedia=>
AskForEngagement
233
‐2‐PredictionMarkets=>
TradersSuggestNewMarkets
234
‐3‐SocialMedia=>
KISS
235
‐3‐PredictionMarkets=>
KISS
236
‐4‐SocialMedia=>
KnowYourAudience
237
‐4‐PredictionMarkets=>KnowYourTrading
Community
238
‐5‐SocialMedia=>
What’sHappeningNow
239
‐5‐PredictionMarkets=>ShortTermMarketsHoldMoreInterest
240
‐6‐SocialMedia=>UserInterface
MakesOrBreaks
241
‐6‐PredictionMarkets=>
UserInterfaceIncreasesTrading
242
‐7‐Andonandon...
243
TheFuture?
244
Market
245
Market
Already Is
246
GreatPredictionMarkets=
GreatSocialNetworks</4>
247
Summarize
248
249
250
MarketDesign
251
TacitInformation
252
253
“WeKnowMoreThanWeCanTell”
254
AbilityOfPricesToAggregateKnowledge
255
256
PredictionMarketsAndCI
TomDavis
WiththankstoLawrenceLessigandDickHardtForPresentationInspiration
257
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