EXAMINING TRADER BEHAVIOR IN IDEA MARKETS
An implementation of GE’s Imagination Markets

Brian Spears
GE Hitachi Nuclear Energy

Christina LaComb
John Interrante
Janet Barnett
Deniz Senturk-Dogonaksoy
GE Global Research Center

ABSTRACT
We present the outcome of an idea market run for one of GE Energy’s sub-businesses in July and August of 2006. GE Energy used this market to elicit and rank-order technology and product ideas from across the sub-business. In this experiment, we examine the behavior of traders that have submitted the ideas on the market and their influence on the market’s outcome. An idea’s submitter is clearly motivated to have his idea valued highly by the market, both by the funding given to the top idea as well as smaller prizes given to the top three ideas. In general, founders tended to buy their suggested ideas at prices above the volume-weighted-average price (VWAP) in significant volumes. We discuss the implications and mitigation strategies. A survey of market participants yielded mixed results regarding the market’s effectiveness at ranking ideas but very positive results regarding the quality of ideas proposed. 

Click here to read the full paper.

The Journal of Prediction Markets (2009) 3,1 17-39

Consensus Point releases enhancements to the leading Forecast, Strategy and Project
Prediction Market allowing Executives to Accelerate Decisions

Nashville, TN (August 22, 2009) – Consensus Point LLC, a leading provider of prediction market software and services, announces the release of the 6th generation platform of the Foresight On-Demand software as a service (SaaS) Solution.  Based on customer feedback, Release 6 includes many new features to improve the administration and user interfaces, such as additional reports, group and category capabilities, enhanced idea and prediction descriptors, graphic images, and rich text editing.  These enhancements increase the breadth of early warning and leading indicators to improve forecasts, strategic decisions, and critical initiatives. 

Brian Jaedike, manager of prediction markets at Best Buy who participated in requirements and quality assurance testing, said “Version 6 of the Admin tool saves me time and allows me even more flexibility to add and edit stocks and traders.  The participants like the user experience and professional interface of the main site because it makes them feel they are part of an actual exchange.” 

“Our customers now have the most advanced interfaces to efficiently and effectively use and manage their prediction market with the release of the sixth generation of our Foresight Solution”, commented Brad Wilson, VP, Services and Customer Support, Consensus Point.  “Our comprehensive and proven solution, including the Consensus Point Foresight software, services and support, allow organizations to rapidly launch and realize the significant benefits of an idea or prediction market.”

About Consensus Point

Consensus Point, a Nashville, Tennessee company, is the leading provider of enterprise prediction and idea markets serving corporations and government.  With over 15 years of experience providing prediction markets, Consensus Point offers a comprehensive collective intelligence solution, including Software as a Service (SaaS) with on-demand or on-site licenses, consulting services, and support. The company helps customers increase innovation, reduce the risk of uncertainty, improve revenue insight through accurate forecasts of products and services, and manage projects with a dynamic pulse into future completion dates and budgets.

Thesis on the effectiveness of Prediction Markets as a forecasting tool 

by Kai Trepte and Rajaram Narayanaswamy
Graduate students in the Engineering Systems Division at the Massachusetts Institute of Technology

Graduate students in the Engineering Systems Division at the Massachusetts Institute of Technology studied 20 Prediction Markets at General Mills, powered by Consensus Point, in order to determine the accuracy of Prediction Markets as a forecasting tool in a corporate setting.  According to the study, “Our findings clearly show that Prediction Markets are capable of developing very accurate forecasts, effectively aggregate information from multiple participants and may be able to provide improvement for long-range forecasting.”

Click here to read the full thesis.