Web / Enterprise 2.0 and Prediction Markets

On Friday I was discussing a new web / blogsite idea with its potential editor, and I mentioned the potential application of Prediction Markets, such as Celebdaq, as a way of forecasting events. She hadn't heard of them, and I wondered how many other "Social Media" aficionadoes had.

Prediction Markets work like stock markets, in that one buys and sells stocks, except that the stocks aren't companies but can be other things - celebrities' reputations (for Celebdaq), or the likelihood of terrorist attacks, as in the very interesting but cancelled DARPA project:

DARPA’s Future Markets Applied to Prediction (FutureMAP) program tested whether prediction markets, markets in which people bet on the likelihood of future events, could be used to improve upon existing approaches to preparing strategic intelligence. The program was cancelled in the summer of 2003 under a barrage of congressional criticism. Senators Ron Wyden and Byron Dorgan accused the Pentagon of wasting

Prediction markets have proven themselves to be fairly accurate, so are a useful tool in any knowledge system, but if Congress didn't "get it", you can bet most Enterprises won't either. Which is a pity of course, as it is simply a fairly non-pervertible way of harnessing the Wisdom of Crowds to help predict those hard to forecast things.

I was reminded today while I was noodling over functions I would stick in a Vendor Relationship Management (VRM) system, and then it also occurred to me that any Enterprise 2.0 related systems would have the facility to do this, and the joy of it (in corporate worlds where heirarchy is a bigger influence than we like to admit) is that it is anonymous.

In fact, I also think it would be a useful approach to any Web 2.0 crowdsourcing model.

A thought - maybe even a prediction market for Web 2.0 startups...say hello to Buzzdaq

Anyway, if anyone is interested there is a rather useful paper here.