Google uses Prediction Markets internally for Strategic Insight
Art Hutchinson reports that Google blogged their use of prediction markets. Here are some excerpts from Google’s blog:
The markets were designed to forecast product launch dates, new office openings, and many other things of strategic importance to Google. So far, more than a thousand Googlers have bid on 146 events in 43 different subject areas (no payment is required to play).
We designed the market so that the price of an event should, in theory, reflect a consensus probability that the event will occur…the average price, which is how often outcomes in that group should actually happen according to market prices…[and] how often they did happen…they're pretty close. So our prices really do represent probabilities - very exciting!
Our search engine works well because it aggregates information dispersed across the web, and our internal predictive markets are based on the same principle: Googlers from across the company contribute knowledge and opinions which are aggregated into a forecast by the market.
Art predicts that Google will start offering prediction markets as a service.
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