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Yesterday, Chris Masse of Midas Oracle pointed out that someone had asked a question regarding prediction markets on LinkedIn. (Link to question.) I posted an answer, and this is what I wrote:

[...] I’m a consultant in prediction markets. I work with companies to find where they have business problems that a prediction market could solve, and help them implement a solution. Getting a prediction market website up and running is technically fairly easy; getting it working correctly and providing good data and a good experience is much tougher. [...]

Unfortunately, Chris has potentially mis-interpreted what I’ve said. He wrote in a post today:

[...] what he said could be interpreted as meaning that the software vendors don’t provide the right kind of advice. It could be the case sometimes, but it’s a sure thing to say that the software vendors that are the market leaders, because they have seen so many business cases, do provide great insights.[...]

This is absolutely NOT what I was saying if you read my original answer on LinkedIn. The prediction market software vendors that provide consulting services are great resources because of their extensive experience. What I was trying to point out is that it’s easy to start a prediction market these days. There are a number of software solutions, and though many are proprietary, there are open-source packages, too. Getting a market running from the IT side is very straightforward.

The value I and other prediction market consultants bring to the table, whether associated with PM software companies or academia, is all of the supporting structure a market needs to run. I’d like to refer to my post on the book “Reinventing the Bazaar,” which explains some of these concepts. Despite the rhetoric, markets need a well-thought-out supporting structure in order to operate effectively, and this is true for prediction markets just as it is for Dutch auctions in flowers or the NYSE. Without it, a prediction market will likely be unsuccessful.

What I bring to the table in my consulting is a total focus on my client’s needs, since I’m not trying to sell them any given software solution. I do not offer prediction market software because there are simply too many good packages already out there, and it’s not my specialty. Instead, I work with my clients to develop their needs and determine how to best serve them.

I hope this explains my thoughts in more detail. Again, please contact me if you’re interested in discussing your prediction markets project.

This entry was posted on Friday, August 3rd, 2007 at 10:54 am and is filed under General.