Here are my notes on the paper, Prediction Markets, by Justin
Wolfers and Eric Zitzewitz

Accuracy

Wolfers and Zitzewitz recently published Interpreting Prediction Market Prices as Probabilities that claims that “prediction market prices are usually close to the mean beliefs of traders” and concludes…

Limitations

Thin Markets

Possibilities for Arbitrage

Gaming the Market

Small Probablility Events

Criteria for Success

For a prediction market to work well
1. Contracts must be clear, easily understood, and easily adjudicated.
2. A motivation to trade must exist. Perhaps simply through the thrill of pitting one’s judgment against others
3. There must be some disagreement about likely outcomes. “Disagreement
is unlikely among fully rational traders with common priors. It is more
likely to occur when traders are overconfident in the quality of their
private information or in their ability to process public information
or when they have priors that are sufficiently different to allow them to agree to disagree.”
4. There must be useful intelligence to aggregate. Public information cannot be selective, inaccurate, or misleading.

Types of contracts
All contracts assume risk neutrality - that risk doesn't affect
investors' decisions becuase the amounts being wagered are small.

Winner-takes-all: contract pays
off if and only if a specific event occurs. The price on a
winner-take-all market represents the market’s expectation of the
probability that an event will occur.

Index: contract pays off an amount that varies based on a numeric
outcome, say, the percentage of  the popular vote or the number of
printers sold. The contract price represents the mean value that the
market assigns to the outcome.

“Spread” betting: traders bid on the cutoff that determines whether an
event occurs, like point-spread betting in football, where the bet is
either that one team will win by at least a certain number of points, or will not. The price of the bet is fixed,
but the size of the spread can adjust. When spread betting is combined
with an even-money bet (that is, winners double their money while
losers receive zero), the outcome can yield the market’s expectation of
the median outcome because this is only a fair bet if a payoff is as
likely to occur as not.

Families of winner-takes-all contracts can reveal the probability distribution of the
market’s expectations.

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On BuzzMachine there's an interesting discussion going on about “customer service in reverse”

In the continuing Dell discussion, Steve Rubel answers Steve Baker’s question about how companies should deal with lots of bloggers raising lots of customer service issues:

Steve,
over time I think you’re going to see blog search and Web search tools
integrated into CRM systems. This will give customer service the tools
they need to manage individual issues that bubble on blogs. However,
you are right. PR professionals will increasingly need to not only
serve as an organization’s mouthpiece (one of them at least), but also
its eyes and ears. The best PR pros have done this for years. Blogging
just makes it easier to keep our finger on the public pulse.
This is
how we operate at CooperKatz. We monitor the blogosphere for all of our
clients. If we spot a customer issue, we route it to the right party to
manage. Occasionally, we also reach out ourselves to begin the
dialogue.

Interesting… so imagine if rather
than having to go to companies for service — and waiting on hold and
waiting and waiting… — the companies came to us! What a concept.

Think
of that world-in-reverse: You post a need online, tagged with a
microformat (more on that later), and people find you and bid to solve
your problem or sell you their product, selling you with price and also
with testaments of trust.

That’s not the world in
reverse. That’s the world as it should be: The sellers come to the
customers, not the other way around. The customers becomes the
marketplace. I like that.

Now just
replace customer service issue with learning need. Wouldn’t
it be great if the explanations and solutions and training you needed
came to you when you asked for them?

Just-in-time learning or on-demand learning
is supposed to make this possible but these systems that place
information at the learner’s fingertips have one major drawback. The
people populating the systems with information and
training materials need to know in advance what the learner is
going to need.

Learning and communications departments
have the mandate to provide information to employees as quickly
and efficiently as possible but their processes are inherently
reactive. It takes time to recognize that a learning need exists and
then to recruit the appropriate subject matter expert to develop the
solution and then to deploy the “learning object” or “training module.”
There is a place for this kind of process of course, especially when it
comes to compliance issues. But there are many learning needs that
would be better served by a system that immediately taps into the
knowledge of the entire enterprise and aggregates solutions.

Such
a system, what we call an “emergent learning network” enables anyone
who might be able to help to respond. This is the way it frequently
works in the blogosphere. You publish a question on your blog (or as a
comment on someone else’s) and if it’s interesting enough and turns up
in the aggregator of someone who has an incentive to provide the
information you need or direct you to someone who can, then they will
respond.

Having just finished reading Freakonomics I am thinking about incentives. On places like Experts Exchange the
incentive is monetary but in most of the blogosphere the incentive is
in recognition (which of course can translate into money indirectly)
and this is the way it needs to be in the enterprise.

To be successful an emergent learning network needs—

• to integrate with, complement and extend the sources of information already available
• to integrate
  seamlessly with users’ existing work processes, ideally allowing users
  to adapt the input and output interfaces to suit their own needs
• to incorporate design and management of the network that encourages participation
• what else?

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Art Hutchinson alerted me to an open-source prediction market platform newly released by Foresight Technologies.

From the Foresight Technologies site

Idea Futures helped birth the prediction market industry when it was first developed over a decade ago.  The platform continues to power the web's first and longest-running prediction market, the Foresight Exchange…

Mike Linksvayer reports on two other options: Zocalo and FreeMarket 

Here is a comprehensive software list from Chris Masse

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This
review compares RSS Submit and RSS Feed Submit:

In terms of
generating traffic, what good is an RSS feed if no one can find it,
right? Part
of promoting your feeds and using them to generate traffic is of
course
submitting the feeds to appropriate search engines and directories,
quite a tedious process if you’re doing it by hand, given the
large
number of directories and engines out there.

While the guys
behind RSS Submit have been doing a great job
updating their software, they now have a new competitor, RSS Feed
Submit. Yeah, difficult to differentiate between the two,
given their almost identical names.

Anyway,
both solutions are actually quite simillar, with only small
differences
between them…

a] Both tools are desktop
software

b]
RSS Submit will submit your feeds to 78 engines and
directories, while RSS Feed Submit covers 75. Not much difference
here,
although it seems that RSS Submit might be doing a better job at
keeping their tool updated (I've been using them since April and
already received many updates that made the software easier to use and
added new engines and directories).

c]
Certain search engines and directories require more
information than can be provided through a fully automatical
submission
process. RSS Submit tackles this problem by first asking you to
fill-in
a longer form and then automatically taking you to each of the manual
submission sites, where it already pre-fills the forms and only asks
you to confirm manually. RSS Feed Submit makes this even easier, first
requesting that same information, but then doing all the work
automatically. The only question in my mind is the quality of
submissions and how they compare to eachother.

d]
Ease of use is a strong factor, and RSS Submit takes the
game here by allowing you to submit multiple feeds at the same time,
save them in the management interface and track how many times you
submitted each of them. RSS Feed Submit allows you to do one at a
time.

e]
As far as expanding the basic functionality of the tool,
RSS Feed Submit is the clear winner, as it allows you to add new
search
engines and directories by yourself, even easily tackling those that
would otherwise require a manual submission. A great user interface
for
adding new sites.

f] The final differentiating factor is
the price, with RSS
Submit starting at $44.95 for the Personal Edition, and RSS Feed
Submit
selling for $29.95.

And they both
provide a free trial version…

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