Tuesday, April 22, 2008

Example Prediction Market for IT Projects

A colleague of mine forwarded me this great research paper on an example internal prediction market for an IT project. The research is not fully complete, but there were a few interesting nuggets that support the usage of internal markets for accurate predictions This is the topic that Bo Cowgill from Google will be presenting at DIG next month.

The research paper highlights 4 key needs for an accurate prediction market
  1. Ability to aggregate information and knowledge from individuals
  2. Incentives to encourage active participation
  3. Feedback to participants based on market prices
  4. Anonymous trading

The results from the case study were quite positive. Acxiom Corporation was the test case and used the Inkling Markets software to host the market to predict 26 milestone events of an internal IT project. Two results jumped out at me. The market was 92% accurate on the milestone events (24 for 26) and had an 87% participation rate (33 participants). There was also a higher perceived level of collaboration as a project team, which had positive impact on the outcome.

The authors of the paper are Herbert Remidez, Jr. Ph.D. and Curtis Joslin from the University of Arkansas. Looking forward to seeing further output from the research.

1 comment:

Anonymous said...

Another interesting prediction market that I recently ran across is one that shows the expectations around the housing crisis and when it will potentially abate -- http://www.icaprlfixing.com

The data can be manipulated to graphically show when investors in this market think house prices will again appreciate and the level of the maximum depreciation and when they expect that to occur. Even more interesting is to see how the expectations have changed over time (at least since the beginning of this market back in 3Q07). Fascinating stuff (at least to geeks like us!)