Saturday, December 16, 2006
Your Customer Service As A Predictive Market?
Courtesy of Read/WriteWeb a number of high profile companies ran experiments to see how they could get better decision making by using the principles of "internal predictive markets". In this way, decisions get made under "market forces" and not hierarchy, or the manual, or just plain old this is how we don things around here: This is what they found. 1. Prediction Markets are a great mechanism to extract knowledge already present within the organization and to make better predictions 2. These markets highlight both the collective wisdom which no one person knows individually, and common knowledge which no one is willing to talk about openly 3. They work properly only when they have an adequate number of knowledgeable participants who work individually 4. Participants must have reasonable incentives (financial or social) to make their efforts worthwhile 5. If the group is large enough, the ratio of experts vs amateurs does not have much impact; often, the real experts are unexpected 6. The results of a Prediction Market are probabilities; they must be confirmed through other, external, means Written by Nitin Karandikar from The Software Abstractions Blog.