
Using Prediction Markets to Track Information Flows:  Evidence from Google [pdf] - amasad
https://www.stat.berkeley.edu/users/aldous/157/Papers/GooglePredictionMarketPaper.pdf
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adam
Having now run prediction markets inside companies for over 10 years, we can
definitely backup the findings in the paper - especially the revelations of
bias among different types of employees. We usually ask people to participate
anonymously, and it's often the only outlet people have to express what they
truly think.

It's always a surreal experience to sit in a meeting with people and their
bosses and hear "we're on track, no issues, the new product launch is going to
be great, we're going to sell a ton, etc. etc." and then have a
private/informal meeting with the same people who will confide that the
project/product/strategy is completely fucked and everyone thinks that. :)

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tysonzni
How do you deal with the cultural challenge of convincing people there's value
and selfish benefits to having more transparency?

I've noticed that in large organizations certain information are held by a
small number of people who may be reluctant to share them for political
reasons. Another challenge with internal prediction markets is the possibility
that knowing the "probability" of an project-related outcome reduces morale
and hence creates a self-fulfilling prophecy that further reduces the chance
of success. Appreciate your insights.

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JohannesH
You might be right about the self-fulfilling prophecy. But this effect might
already be in effect, as people might already have a gut feeling, while nobody
cares (or knows) about it.

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Jach
A trivial instance of this would be release planning in software. After our
initial delivery plan my team gives a confidence measure, one release it was
quite low, which was an important signal since we could discuss why that was
and what we could cut to increase the confidence. Without that signal, we'd
have overcommitted, and suspecting as much but without common knowledge might
have even delivered less.

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amasad
Conclusion (emphasis is mine):

In the past few years, many companies have experimented with prediction
markets. In this paper, we analyze the largest such experiment we are aware
of. We find that prices in Google’s markets closely approximated event
probabilities, but did contain some biases, especially early in our sample.
The most interesting of these was an optimism bias, which was more pronounced
for subjects under the control of Google employees, such as would a project be
completed on time or would a particular office be opened. Optimism was more
present in the trading of newly hired employees, and was significantly more
pronounced on and immediately following days with Google stock price
appreciation. Our optimism results are interesting given the role that
optimism is often thought to play in motivation and the success of
entrepreneurial firms. They raise the possibility of a “stock
price‐optimism‐performance‐stock price” feedback that may be worthy of further
investigation.

We also examine how information and beliefs about prediction market topics
move around an organization. _We find a significant role for micro‐geography.
The trading of physically proximate employees is correlated, and only becomes
correlated after the employees begin to sit near each other, suggesting a
causal relationship. Work and social connections play a detectable but
significantly smaller role._

An important caveat to our results is that they tell us about information
flows about prediction market subjects, many of which are ancillary to
employees’ main jobs. This may explain why physical proximity matters so much
more than work relationships – if prediction market topics are lower‐priority
subjects on which to exchange information, then information exchange may
require the opportunities for low‐opportunity‐cost communication created by
physical proximity. Of course, introspection suggests that genuinely creative
ideas often arise from such low‐opportunity‐cost communication. Google’s
frequent office moves and emphasis on product innovation may provide an ideal
testing ground in which to better understand the creative process.

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tw1010
Interesting, so if you want to cultivate a diverse set of opinions and ideas
in your company, it's enough to place them on different floors – no need to
move them to different cities.

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iagovar
Is there anything public beyond betfair and predictit? Specially for the EU

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aristocles
Augur is my favorite shitcoin for this very reason.

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ericb
Why is it a "shitcoin"? Your comment is ...confusing.

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bfuller
shitcoin is just slang for any altcoin

