Notes from the London Prediction Market conference, part 2
October 18th, 2007There were a lot of presentations at the London Prediction Market summit at the end of last week. You can find Part 1 of my notes here. My notes for the next speakers are detailed here:
** Will Speck – FT.com **
The FT.com partnered with InTrade to create a realistic market. One of the things they found with their market is that there needs to be a balance between both long term incentives and short term incentives. They had prizes for both, but different behaviours could be driven by a focus on one or the other. The participants on their site (FTPredict) saw the game as “trading,” and not “predicting.” This brings an important distinction when it comes to talking with users, and something marketers should be aware of.
Will saw that prediction market data could be a good tool for the FT audience. FTPredict was seen as a compelling, content-based marketing tool for the Financial Times. There was quite a bit of interest in the project, and they will be doing more contests in the future. While it’s US-only right now because of the legal work required for the contest rules, that could potentially change in the future.
** Emile Servan-Schreiber – Newsfutures **
Emile’s lecture was focused on Newsfuture’s competitive forecasting software. It’s something that Newsfutures has found quite popular among certain corporate clients recently. While not a prediction market by definition, it is related and serves the needs of some of their particular clients better than a CDA model.
He stepped through the Competitive Forecasting model, which lets users enter a high-low spread of where they believe a metric will occur. (ie, sales of widget X between 10000 and 11500). To win points, the forecast must capture the final value. The smaller your spread (more precision), the more points you can win. However, if your spread doesn’t contain the value, the users will lose more points with a smaller spread. Finally, it rewards early users by accumulating points constantly over time.
Competitive forecasting has been popular for variables where there are few participants, are busy/high-level users, people are not familiar with trading, or have few training opportunities.
Finally, Emile finished his presentation by talking about bet2give.com. It’s been pretty successful so far, but Emile mentioned that building a trading base has been a challenge, as their typical play-money traders aren’t interested. That said, they’ve been getting a completely new trader base interested in the site, and have seen some good growth since introducing the site.
** Henry Berg – Microsoft **
Henry Berg leads the Information Markets Group at Microsoft. It was started in 2006, and right now is about 4 people. Their focus is in prediction markets, estimate contests, and other types of information markets.
The original prediction market effort at Microsoft was led by Todd Proebsting in Microsoft Research. This led to the development of the Information Forecasting Exchange, which was in place from 2003 through 2006. Todd is now an advisor to the Information Markets Group.
Henry showed off the tool that Microsoft has built, and is calling PredictionPoint. Their goal was to lower barriers to participation. To do this, they moved to a betting paradigm, as most people are more comfortable with betting. Their user interface lets participants explore bets without typing and without finalising a trade.
In addition to prediction markets, they have what Microsoft calls “Estimate contests.” These are similar to HP’s BRAIN algorithm, but based on a quadratic scoring rule.
Microsoft is actively expanding their efforts in this space, and have run a few dozen markets in the past year or so. A little unusually, their markets are always a bundle of securities (typically 2-8 contracts) that are tied together. Instead of trading on the value of a metric, they trade on which band the metric will fall. (ie, less than 10k, 10-11k, 11-12k, 12-13k, more than 13k) [Chris Hibbert has talked about bands, scaled claims, etc. and this concept here.]
The demo was very interesting, and I hope they eventually talk a little more about the results they’ve seen from their markets.
** Jesper Muller-Krogstrup & Oliver Pedersen – Nosco **
Nosco was started about 18 months ago, and I first met them at the Vienna Prediction Market Summit last year. Jesper and Oliver are clearly polished presenters and experienced in prediction markets.
Nosco provides both a prediction market software package and consulting services around that package. They have built three specific products around prediction markets:
- A news exchange
- An idea exchange
- An information exchange (traditional prediction market)
The News Exchange system has been used by TV2, a television station in Denmark. As stories are written, contracts are immediately created. In this case, the predictions are attached to the stories and pushed out as content alongside the story. They reported that though it was a bit of a struggle to interact with writers at first, it did improve. The system has 21,000 users and over 2,000 markets.
The Idea Exchange system is being used by Danske Bank, and kicked off quite recently. The bank’s goal is to catalog employee innovation, with the goal of eventually accumulating 1 million+ ideas. While currently in trial stages, they have already exceeded initial targets.
Finally, they also have their Information Exchange, which is Nosco’s standard prediction market. In their experience, they found three main drivers in the public markets:
- competition structure (it’s more fun to compete with friends)
- simplicity
- update & feedback (short time to market)
They also found that it’s easier to attract people with one BIG prize, instead of a series of smaller prizes, as a BIG prize simply generates more publicity.
When talking with people in Denmark, Nosco specifically avoids discussing “prediction markets.” Terminology, particularly in a country such as theirs, is very important. A “prediction market” isn’t a buzzword, and people often form mistaken impressions of what they’re doing because of the two words alone.
It’s also clear that Nosco has a very talented graphic designer and web designer on their team. Their screenshots, their graphics, and their presentation were all very polished and tied together nicely. It was a very informative presentation!
————-
That’s the end of part 2, and only a few more speakers remain to discuss. Again, it was a very valuable conference, and I will be posting the last of my notes tomorrow. Comments, questions, corrections? Please comment below or click here to e-mail me.
