Mercury's Blog

First of all, welcome to the new subscribers of this blog.  If you aren’t a subscriber, it’s very easy to do.  (You can use any RSS reader you like, even Firefox or Safari; just click here.)  Please feel free to comment, or alternately e-mail me with questions you’d like to keep private.

I’ve been thinking about prediction markets recently in terms of their usability.  Alex Kirkland has done some interesting work and research in this space, and I’d recommend his blog if you’re interested in more in-depth analysis.  For a prediction market to be successful, it should be both easy to trade, and easy for traders to do complex operations.  These are two ends of the same scale, and unfortunately, there’s little between them.

Kathy Sierra at Creating Passionate Users talks a lot about user experiences.  One of the things that I’ve picked up from her work is that it’s easy to make something simple for users, and it’s easy to make something powerful for users.  The hard (but key) part is to develop a solution that is easy for beginners to understand and get started with, while also allowing them to gradually discover more and more powerful features and turn them into expert users.  Currently, the prediction market industry does both ends of that spectrum well, but the middle is ill-defined.

Why do I bring this up on a blog that’s focused on using prediction markets in modern business?  Well, it’s because user interface design of prediction markets is really important.  Most people when confronted by the user interface of something like Iowa Electronic Markets (IEM) will simply not trade at all; a reaction like this will certainly hurt the quality of your markets.  However, the market potential and power behind something like the IEM is strong, and your company may want those aspects in its prediction markets solution.  In that case, you’ll simply need to train your employees to use a more complex system, (and likely hold some “fun” markets for them to get used to the ideas and terminology of trading).

Alternately, Inkling is a very easy interface to understand, and this may be your overriding concern.  You likely will need little or no training for employees to use it and understand the concepts.  However, for those employees that can understand the concepts of the trading “book” and limit orders, an interface like Inkling’s may be too basic.  Since most trades and prices are set by a minority of highly active traders, this could prove difficult as they aren’t able to effectively use their more advanced skills.

So where does that leave your organisation?  Well, as always, for a market to be well-designed and therefore useful, it needs to match your company’s culture well.  Is most of your potential trading population too busy to learn trading skills or too scared by complexity?  Or is most of your potential trading population very competitive and math/finance oriented?  Where your organisation falls on that spectrum helps dictate your needs when in comes to choosing a software vendor, but also in the training you may need to make prediction markets successful.

Any of the major software packages could work for any organisation; but good design and user interface is an important element to consider when creating your prediction markets.  You don’t want your employees to not even try the markets because they look complex and don’t understand them, but neither do you want advanced, market-moving traders to get frustrated at getting held back by too-basic interfaces and technology.

This entry was posted on Friday, January 26th, 2007 at 12:57 am and is filed under Design, General.