Archive for 'Applications - Business'
News You Can Use
Regarding many topics, private information seems unlikely to be a significant concern, and few players will have sufficient financial incentives to seek to manipulate prediction markets anyway. In those cases, the media might consider publishing forecasts from prediction markets or perhaps sponsoring prediction markets. Media organizations, after all, have a long tradition of being involved […]
Internal Markets
So far I have primarily focused on markets with which businesses might aggregate information held by outsiders, although insiders might trade on such markets as well. Markets in which outsiders can participate may be particularly important as a means of combating optimism bias. If one reason for this bias is that optimism can be contagious […]
Third-Party Assurance Markets
Assuming that problems such as manipulation and sabotage can be overcome, internal and external prediction markets might be useful for predicting future developments and thus influencing decisions that a corporation faces. A separate use of prediction markets might be to aggregate information from within the business and convey it to outsiders. For example, a business […]
Employee Evaluation Markets
Prediction markets might be used to forecast not only the success of particular projects but also the success of components of a firm, such as employees. Organizations typically rate employees only at set intervals, for example, in quarterly reviews, and the performance ratings are typically private. Although this may aid morale, public ratings could inspire […]
Predicting Decisions
Deliberative prediction markets substitute for the deliberation performed by committees by providing incentives for the production and release of information. Such markets do not by themselves produce decisions (though we will see beginning in Chapter 5 how prediction markets can be designed to make decisions), but they can do much of the work of decision […]
Reverse Auctions
Selection of a natural monopolist is only one possible application of using a prediction market as a means of evaluating different bids in a reverse auction. In a typical reverse auction, a potential buyer of a good or service solicits bids, seeking to pay as little money as possible for the good or service. The […]
Improving the Hollywood Stock Exchange
To see how conditional prediction markets might be used by corporations, consider again the Hollywood Stock Exchange (see Chapter 1), which has been shown to be a relatively accurate predictor of the success of movies at the box office. The exchange allows purchase of stocks representing individual movies well before the movies’ release, indeed, in […]
Replacing or Improving Shareholder Voting
The primary means by which shareholders today can influence a corporation is through occasional votes. For example, shareholders have the right to vote on directors, and shareholders have the right to issue proposals. These powers, however, are generally quite limited, at least in the United States. For example, shareholders generally do not have the power […]
Selection, Dismissal, and Compensation of CEOs
Even if prediction markets are efficient, they cannot easily be used for all decisions. Consider, for example, one of the most significant decisions that a corporation faces, the selection of its CEO. The need for secrecy probably makes self-deciding prediction markets to pick a CEO infeasible, unless they are limited to a small group of […]
An Improved Wikipedia
Although such a text-authoring market does not yet exist, there is another approach to creating collaborative texts that is thriving. A wiki is a page on the Internet that anyone can edit, and the most fully developed wiki is the Wikipedia,6 an on-line encyclopedia created entirely from voluntary contributions. It might appear that the project […]