PingSutterDocs Presentation
Thursday, January 20th, 2005Presentation Slides (Powerpoint)
POST ARCHIVE
Archive for January, 2005
Fidelity Presentation
Thursday, January 20th, 2005Presentation Slides (Powerpoint)
A prediction market in action
Thursday, January 20th, 2005Here's a description of a futures market for ideas called The Foresight Exchange
A paper on aggregation method design for prediction markets
Thursday, January 20th, 2005Predicting the Future
Kay-Yut Chen, Leslie R. Fine and Bernardo A.
Huberman
HP Laboratories, Palo Alto, CA 94304, USA
Abstract. We present a novel methodology for predicting future outcomes
that uses small numbers of individuals participating in an imperfect
information market. By determining their risk attitudes and performing
a nonlinear aggregation of their predictions, we are able to assess the
probability of the future outcome of an uncertain event and compare it
to both the objective probability of its occurrence and the performance
of the market as a whole. Experiments show that this nonlinear
aggregation mechanism vastly outperforms both the imperfect market and
the best of the participants.We then extend the mechanism to prove
robust in the presence of public information.
So if we follow the recommendations of this paper, the mathematics of
which is beyond my level of comprehension, we should set up a two-stage
method:
Stage 1: Run an information market to extract risk attitudes
from the participants,as well as their ability at predicting a given outcome. Assign
a value for each participant's risk attitude (1 is risk neutral, >1 is risk
averse, <1 is risk loving).
Stage 2: Ask individuals to provide forecasts about an
uncertain event, and reward them according the accuracy of their forecasts.
Aggregate the individual forecasts to predict the outcome.
·
Use the risk attitude value discovered in Stage
1 in the aggregation method to account for how participants use their private information.
·
Identify public information within the group and
subtract it in the aggregation method so that when the same information
is used by multiple participants to make a prediction it doesn’t get counted multiple times.
Analysis by Art Hutchinson (link)
My take: While such accuracy may be essential for some
applications (e.g., forecasting demand for a well-established product),
it appears to require significant time and expertise to do right. (The
math is dense, to say the least.) An even more important implication -
especially for resilient strategic planning - is that it appears to
lack a dynamic component: a way for a group to continuously
seek, refine and assimilate new information about a complex and
changing market or competitive environment. Finally, it seems to rely
on a closed system, where 'good forecasters' are identified up-front on
an assumption that their forecasting ability is generic and not likely
to be found in otheres. Not enabling new, marginal participants with
correct (but possibly 'heretical') information to enter and influence
the process can be deadly. In other words, the approach, while clever
and useful for static applications, appears to lack precisely the
openness and adaptability essential for anticipating the emerging
likelihood and potential impact of discontinuous change, (i.e., sudden, unprecedented surprises). Being able to quickly see inflection points
developing in a measure of conventional wisdom is often more important
than achieving the last decimal point of forecast probability.
Creating a Prediction Market for an Elearning Program
Thursday, January 20th, 2005Here is a company that could help us design and run a prediction market:
Prediction markets deliver clear, accurate forecasts on almost any
issue for corporations and media organizations. Some use them to
predict sales, rank projects, monitor industry trends or customer
satisfaction, others to mine the collective mind of their audience.
Today, NewsFutures is the leading provider of prediction markets worldwide, with clients in the USA, Europe, and Japan. Our technology is robust, scalable, and user-friendly. With more than 40,000 markets under our belt, our experience is unmatched.
Decision Markets and E-Learning
Thursday, January 20th, 2005The
program we run for Merrill Lynch asks participants to come up with new products,
services and risk management strategies and then, as project teams, develop the
ideas into business plans for presentation to senior management. In the first
phase of the program, the exploration phase, participants talk to managers,
peers, clients, competitors, and others, as well as watching lectures by an MIT
professor in order to brainstorm ideas for projects. The participants then vet
those ideas by discussing them within the project team and with others likely to
have a need for the product or service. This process carries with it a number of
risks inherent in group decision making as described in The Wisdom of
Crowds:
program we run for Merrill Lynch asks participants to come up with new products,
services and risk management strategies and then, as project teams, develop the
ideas into business plans for presentation to senior management. In the first
phase of the program, the exploration phase, participants talk to managers,
peers, clients, competitors, and others, as well as watching lectures by an MIT
professor in order to brainstorm ideas for projects. The participants then vet
those ideas by discussing them within the project team and with others likely to
have a need for the product or service. This process carries with it a number of
risks inherent in group decision making as described in The Wisdom of
Crowds:
1. The
people being asked to critique the project idea are all likely to think the same
way
people being asked to critique the project idea are all likely to think the same
way
2.
Personal hierarchy within the organization may influence the decision more than
actual knowledge
Personal hierarchy within the organization may influence the decision more than
actual knowledge
3.
Early decision makers may influence later decision makers (potentially causing
ann information cascade)
Early decision makers may influence later decision makers (potentially causing
ann information cascade)
4.
Opinions of people who are assumed to be the experts on the particular topic of
the project will be valued much more highly than others even nthough others may
have relevant and valuable information or thoughts
Opinions of people who are assumed to be the experts on the particular topic of
the project will be valued much more highly than others even nthough others may
have relevant and valuable information or thoughts
This
process of evaluating possible projects may be well served by a decision market
in which a large group is asked to bet on which project ideas have a better
chance of succeeding than others. They will do this by buying and selling shares
in the project ideas. This market should begin as soon as project ideas are
floated and should continue throughout the program. It will provide feedback to
the participants as they develop their projects and will encourage more
thoughtful consideration of other teams' projects than we have had in the past.
It will truly make use of the collective intelligence of the entire class (and
possibly senior managers and others) rather than concentrating on just the
knowledge and information gathering abilities of the four- or five-member
project teams.
process of evaluating possible projects may be well served by a decision market
in which a large group is asked to bet on which project ideas have a better
chance of succeeding than others. They will do this by buying and selling shares
in the project ideas. This market should begin as soon as project ideas are
floated and should continue throughout the program. It will provide feedback to
the participants as they develop their projects and will encourage more
thoughtful consideration of other teams' projects than we have had in the past.
It will truly make use of the collective intelligence of the entire class (and
possibly senior managers and others) rather than concentrating on just the
knowledge and information gathering abilities of the four- or five-member
project teams.
Specific rules for the market should be kept simple.
Because people focus better on a decision when there are financial rewards
attached to it (and especially since we are dealing with participants who trade
for a living), participants should have to wager real money and receive a real
return. Participation should be anonymous and there should be a limit to how
much can be wagered. Participants should be asked to justify their bets as a way
to capture intelligence but not as a prerequisite for betting. No derivatives
will be allowed.
Because people focus better on a decision when there are financial rewards
attached to it (and especially since we are dealing with participants who trade
for a living), participants should have to wager real money and receive a real
return. Participation should be anonymous and there should be a limit to how
much can be wagered. Participants should be asked to justify their bets as a way
to capture intelligence but not as a prerequisite for betting. No derivatives
will be allowed.
MIT OpenCourseWare
Sunday, January 16th, 2005
MIT OpenCourseWare is a
large-scale, Web-based electronic publishing initiative that will
provide free access to MIT's course materials. The Otter Group
performed quality assurance testing on OCW course web sites.
Friday, January 14th, 2005
orignal posted to pingplanning by
Steve Bayle
The January issue of Business Week has an article that supports John Landry's assertion that blogs will be a major marketing tool in 2005:
Without a remarkable guerrilla marketing
campaign, Firefox adoption might not have leapt ahead so rapidly. The
campaign, called SpreadFirefox, is orchestrated by a handful of Mozilla
fans and carried out by 58,000 volunteers. The campaign has tapped into
Web logs, or blogs, to generate buzz. It not only set up its own blog (www.spreadfirefox.com)
to coordinate activities but also hooks up with others to expand its
reach. If a blogger says nice things about Firefox, for example, it's
rewarded with links to its site. The guerrilla campaign “is fanning the
flames,” says analyst Stacey Quandt of researcher Robert Frances Group
Inc.
