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Management Information Systems

A Case Analysis Report On

Prediction Markets at Google
Dated: 14th March 2011

Submitted by Group 1 | Subgroup 2 Vignesh P - PGP27370 Piyusa P Das - PGP27371 Viresh Singh - PGP27394

services and devices. But others see challenges and barriers that must be addressed before their organizations can realize the new technologies’ full potential. Enhanced productivity: Enabling employees to do more—and do it more efficiently—has always been a fundamental business goal. Opinions. eBay etc. and more open sharing of information.0 while others are struggling to understand what Web 2.0 and enterprise 2. R&D could be transformed by Web 2. Because of these potential benefits. Web 2. Amazon.0 is how it converts Inputs (User Generated Content.0? Web 2. What is web 2. Targeting such connections could lead to increased knowledge sharing between highly skilled workers.0 makes accessible the collective intelligence of many. MySpace.0 has been used more as a marketing term than a computer-science-based term. and Web services are all seen as components of Web 2. The heart of Web 2.0 is the term given to describe a second generation of the World Wide Web that is focused on the ability for people to collaborate and share information online. on a more basic level. improving both the quantity and the quality of work. translating to a huge competitive advantage in the form of increased innovation. Over time Web 2. By tapping into the collective wisdom of the group. Syndication) to Emergent Outcomes that are of value to the entire community. engendering new possibilities for creation and discovery throughout the enterprise. particularly the development of security policies specifically tailored to Web 2. Blogs.0 includes open communication with an emphasis on Web-based communities of users. through a series of Mechanisms (Technologies. productivity and agility. Enterprise 2. Web 2.0” adaptation could offer benefits in several important areas: Fostering collaboration: Many Web 2.0 basically refers to the transition from static HTML Web pages to a more dynamic Web that is more organized and is based on serving Web applications to users. Innovation: The openness of Web 2.0 technologies connect people in ways that make it easier to collaborate.0 holds out the prospect of breaking down the research and development (R&D) silo and allowing a broader range of collaborators to participate. Collaborative Filtering.0 are Twitter. Enterprise 2.0 is the term for the technologies and business practices which makes use of web of inter-connected applications.0 into something more inclusive and eclectic. some companies are moving quickly to embrace Web 2. Some examples of Web 2. They see security risks and governance issues as paramount. refining the information available to them.0. Face book. Structures.0 even has to do with their businesses. Recombination. Traditionally a secretive function.0 has the potential to create network effects that leverage the productive power of the group. . Applications). some are unsure how to measure the benefits of Web 2. this type of collaboration could lead to better decisions and aid in problem solving. Other improved functionality of Web 2. wikis.0.0. Enterprise 2.1.

A combination of financial and non. and their incentives and motivation to trade will be reduced. all employees must be allowed to trade in prediction markets because they actually help the company and the market. it is good idea to encourage all employees to trade in prediction markets.g. however they will increase the number of participants. Thus. . because all trades are anonymous. the number of trades in the market will be hurt. Sometimes. It should not only be based on winning. sooner or later employees will lose interest. providing suggestions for improving the trading platform etc) in the trading process.g cash rewards) or soft ones(e.financial incentives help together in bringing motivation and zeal to work in a concern. However when insiders and/or highly uniformed people allowed to trade.2. I told you so) are better motivators for employees than cash rewards. Though cash awards seems a good method for encouraging employees to participate in internal trading markets . Hence to obtain better result from the prediction market. Hence companies have to be innovative while designing the reward programs. Therefore. it should be based on participation and enthusiasm shown by employee (by way of designing apps. the organizations using prediction markets can try to evenly spread information across the organization. cash rewards will not be much helpful for encouraging employees for trading. Although insiders or highly uninformed people may not have all the information to trade. therefore prediction markets within internal company is a good way to gain new perspective and ideas about new product and services from different people. The organization could also do what happens in the stock market and prohibit insiders or group of employees highly informed about the subject in the market to trade in that specific market. there may be some problems like employees from non-related subject areas on the trading market may lose on average. reducing the insider’s advantage.g t-shirts or bragging rights)? Innovative ideas for new products and services can come from anywhere within an organization. the social and cultural issues which may have prevented an employee from sharing information are also. Trading should be a fun activity and come as a challenge for them which they are intrinsically motivated to take. Also insiders or highly informed traders may attempt to mislead the market about the outcomes in order to gain personal profit. Soft incentives like t-shirts and bragging rights ( e. What are the best ways to encourage traders and trading within internal company prediction markets? Are you more in favour of using hard incentives (e. As this is not a full time activity for the employee and not related to performance related measures. Is it a good idea to encourage all employees to trade in these markets? Should insiders and/or highly uniformed people be allowed to trade? Do they help the market or Hurt it? As more the number of employees better is the prediction in the trading market. The higher the number the better it is for the company to get an aggregate view. 3. kept aside.

and obviously providing a platform for employees to have fun. How useful are corporate prediction markets? If they prove to be accurate and decisive. The biggest use and the most important use of the corporate decision markets would be knowledge sharing and this can be used as a feedback mechanism to fine tune their current processes and would also help in generating new ideas. If the Prediction markets are accurate and effective then the managers can replace the existing forecasting techniques with the prediction markets. Managers can make use of the prediction markets only to an extent like any other prediction technique but the final decision should not be solely on the prediction market’s result. The effectiveness of the prediction markets also depends on how well is it designed and how many people take part in the trading. probability of the success of an event accurately than the conventional methods like polls. some of the related information might be confidential within the organization. 5. and making decisions in the face of an uncertain future . create awareness about the various projects in the pipeline among its employees which will in a way help in finding new ideas or improve the existing ideas. Prediction markets can be used to reconfirm the intuitions about the success of projects. . winners of various awards. This can be used like a feedback mechanism to fine tune a company’s decisions and help in improving the probability of the success of the decisions taken. then they can be used to predict the outcomes of various events like election results.4. If the prediction markets are used by media houses. Corporate strategy is all about collecting information from many different sources. What kind of decisions are prediction markets useful for? The main purpose of prediction markets is forecasting and finding the most likely outcome for a given event. It has various uses depending on the place of its use. As of now Corporate prediction markets may not be able to provide all the information as freely as one would expect to all its participants. for example if the prediction market is used within a company like in the case of Google. it can be used to find out the worthiness of its various initiatives. The effectiveness also vary for each event as it heavily depends on the design of each event and when the market is created and how long the market is open. private and future can it perform efficiently & accurately all the time and every time. this would ensure that the decision making is still with the managers and they would still be accountable for all decisions taken irrespective of the predictions. how can they be put to use more effectively A market is effective if all the information is freely available to all its participants and only when a market is able to reflect all the information from the past. so all these small but important things should be taken care of before we make any big investment into the prediction markets. being considered. evaluating the probabilities of potential sources.

that they are responsible for. may well come in to the picture. Hence. they might start feeling that they have started to lose control over the things they manage and there is a high possibility they may even start to feel that they are being dictated by some of their sub-ordinates or employees who don’t even know fully about their business. which are unconsidered before. boasted by these prediction markets. Considering the huge rates of success. These predictions are useful in re confirming an intuition of the outcome or to estimate the expected value of outcome. managers should ideally be willing to welcome prediction markets in to their organizations. it will be very difficult to stop them from entering in to organizations without valid reasons. Will most managers welcome prediction markets within their companies? Why or Why not? Prediction markets have their own underlying assumptions. managers should most willingly welcome prediction markets in to their organizations. to edge his peers in the competition.6. Prediction markets also encourage its participants to gather more information about the outcome and project’s prospective. . even in case of the projects. advantages and also disadvantages. There will always be resistance to change and it would also be expected from the managers. many criteria. In such case. The predictions may be correct but managers have to make sure the projects are implemented as well as they should be and here comes the role of the managers to take the right decisions every time as the things evolve and progress from one point to another. Managers should have a clear cut understanding in the functioning of these markets to decide. whether or not to consider these predictions in taking decisions. Thus.