While it's proven to be pretty good at predicting the payroll for Angelina Jolie on the Hollywood Stock Exchange, predictive markets are starting to generate some interesting buzz on the business side. Business 2.0 recently did an article on the Best Kept Secrets of the Best Companies and one of the pieces was on MSFT using it to predict release dates and #'s of bugs. Google has apparently been working on predictive markets as well, and will probably give the world something worth using. And the success of The Wisdom of Crowds has given the concept credibility.


It's worth it to read the Wikipedia entry, but as a quick background, prediction markets are essentially the equivalent of stock markets used for making predictions on outcomes. The theory is that people who buy at a low price are rewarded when that outcome goes up in value (i.e. is more likely), and that the collective wisdom is one of the most accurate methods of prediction.


We haven't spent much time looking into the applications, but I gather it would serve a lot of our clients really well -- faster, more accurate and more viral than surveys, predictive markets fit nicely into the community structure. Customers could invest in features that would make it into products, or even on how successful a product will be. Employees could invest in potential hires, growth plans, product features and more. As long as everyone shares the same goal, but has independent ideas on that goal, it would seem to be a no-brainer.


I'm obviously not an expert, but am interested to learn more from our customers about the use cases for their companies. I realize there are some companies out there with applications for managing these interactions, but we have never been asked about it, so I'm guessing that the company that makes it a) intuitive and b) viral, will be the clear winner.