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