Google’s use of an Internal Prediction Market
https://www.networkworld.com/article/2284098/google-bets-on-value-of-prediction-markets.html
As learnt in class, prediction markets are known to forecast the outcome of elections (more accurately than polls). However, prediction markets can also be used by businesses. As stated in the article, “Google is using an internal prediction market to improve business decisions and learn how employees exchange information”. The system Google uses operates like a stock market, and lets employees bet on probable outcomes. For example, “will a project be finished on time?” or “how many users will Gmail have?”. Google employees bet with “Goobles” instead of real currency. This trading system lets the Google hierarchy discover its “employees’ uncensored opinions”. As stated in the article, “if you let people bet on things anonymously, they will tell you what they really believe, because they have money at stake”. This is beneficial because nobody knows who each other is and hence nobody has any incentive to “kiss up”. Google’s prediction market essentially gives managers insights that might impact business decisions and in which they might not have been able to obtain in any other way.
As we can see, Google uses a prediction market like how we learnt in class. In lecture and in Chapter 22: “Markets and Information” of Networks, Crowds, and Markets: Reasoning About a Highly Connected World By David Easley and Jon Kleinberg, we discuss “Prediction Markets”. Specifically, we learnt about how prediction markets work. We learnt that individuals trade claims to a one dollar return conditional on the occurrence of some event. For example, participants might trade claims to a one dollar return in the event that a Democrat wins the next U.S. Presidential election. This is very similar to how Google runs its prediction market. Instead of using real money they use “Goobles” and the trade claims are mainly based on internal questions related to Google. And just like what is normal observed, individuals are still trading with each other through the market. In both cases the prices reflect an averaging of the beliefs of the participants in the market.