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Google's Prediction Market

Posted by CmdrTaco on from the i-predict-nothing dept.

Googling Yourself writes "Employees at Google are encouraged to place bets on Google's prediction market — an exchange that tries to forecast events based on the money wagered on a particular outcome. Employees have made wagers with play money (Goobles, as in rubles) on questions like: will Google open a Russia office? will Apple release an Intel-based Mac? how many users will Gmail have at the end of the quarter? One tangible benefit to the company is that the market allows Google to track how information disseminates in the company. A paper called "Using Prediction Markets to Track Information Flows: Evidence From Google" discusses information flows in the company based on the prediction market data and contains many other interesting observations of Google culture. (pdf)"

15 of 94 comments (clear)

  1. Worldwide for free: inkling by stomv · · Score: 4, Informative

    This exists for everyone with funny money called inkles at Inkling Markets

    --
    Support a few technologists in Washington.
    1. Re:Worldwide for free: inkling by sholden · · Score: 4, Informative

      And with non-funny money at: https://www.intrade.com/

  2. My Bet by Nom+du+Keyboard · · Score: 4, Funny

    will Apple release an Intel-based Mac?

    I'm betting yes. So when do my stock options arrive?

    --
    "It's the height of ridiculousness to say for those 9 lines you get hundreds of millions."
  3. Like Popular Science by doombob · · Score: 3, Informative

    I wonder what you would learn from the PopSci Prediction Exchange (PPX)? I've been playing around with it a little bit, but it seems to act more like a commodities market than an actual stock exchange.

  4. Employee Games the system by ryanguill · · Score: 4, Interesting

    Google, however, is no ordinary company. As detailed in a footnote, one Google employee, looking to be a profitable trader, wrote the code for an extremely prolific trading robot. As a result, he "was participating in about half of all trades" and made a profit (in Goobles).


    I wonder if he got fired or got a raise?
    1. Re:Employee Games the system by steveha · · Score: 3, Funny

      I wonder if he got fired or got a raise?

      Maybe he just got a commendation for original thinking.

      steveha

      --
      lf(1): it's like ls(1) but sorts filenames by extension, tersely
  5. I wonder by GroeFaZ · · Score: 4, Funny

    Will this post be moderated +5, Funny?

    --
    The grass is always greener on the other side of the light cone.
  6. Information, not crystal ball by michaelmalak · · Score: 4, Insightful
    Prediction markets reflect information that is known; they are not perfect crystal balls. They also fall victim to groupthink.

    The best example is that the prediction markets predicted Hillary would win the Democratic nomination by a wide margin. Now the consensus is that it will be Obama by a wide margin.

    1. Re:Information, not crystal ball by UbuntuDupe · · Score: 4, Interesting

      Prediction markets reflect information that is known; they are not perfect crystal balls. They also fall victim to groupthink. Very true, but the question is, compared to what? Prediction markets force people to be honest -- there's real money at stake, and a cost to your arrogance. (Well, not at Google, but at other markets.) It's harder to be a know-it-all when you have to back up your claims with your own money.

      The best example is that the prediction markets predicted Hillary would win the Democratic nomination by a wide margin. Now the consensus is that it will be Obama by a wide margin. I'd classify that as a feature rather than a flaw. Changes in odds are useful information too and allow us to avoid hindsight bias. It keeps us from saying, "Well everyone knew Obama would win." You can look at the history of the bets and say, "No, they didn't -- the general consensus was that he had no chance." Furthermore, "Hey, if you really knew it all along, why weren't you swiping up those underpriced Obama bets?"

      One thing I'm interested in seeing is how Candidate/Party X's chance of winning correlates with critical financial metrics like long-term interest rates and oil prices. That is, do traders revise their estimates as a party's chance of winning goes up? Intrade recently started "shock future" bets where you can bet on the changes in such variables on election day (although I think to avoid the noise you should instead look at the long-term correlation rather than one day, which has noise from other factors).

      For all their flaws, prediction markets truly fascinate me.
      --
      Apology to Ubuntu forum.
    2. Re:Information, not crystal ball by DragonWriter · · Score: 3, Insightful

      Prediction markets force people to be honest -- there's real money at stake, and a cost to your arrogance.


      They don't "force people to be honest". Prediction markets — if they are positioned to influence the events they are used to "predict", like political futures markets are — are simply a form of advertising (or, viewed another way, campaign donations). Sure, they cost real money, so does buying TV ads. But, (1) they aren't regulated, the way political advertising and donations are, and (2) they are also negative cost if they succeed, unlike regular ads or campaign donations.

      People expend real money on campaign donations and political advertising all the time without any concern for "honesty". To think that political futures markets would somehow, by using "real money", force people to be honest is absurd. Any system where action can influence the perception of political reality will be gamed by those interested in influencing that perception—especially since the perception influences the reality here—and if you make it so that the limiting factor on the degree of influence is the ability to spend money then, like most aspects of the political system, the results will be skewed by the interests of those most able to burn money to acheive their political ends.
    3. Re:Information, not crystal ball by sheldon · · Score: 3, Insightful

      Did you notice the stock market dropped after Obama did well in Iowa? He's running on a more populist campaign, it happens most election years.


      Did you notice the day after Obama did well in Iowa, there was a sudden storm front that hit the west coast?

      He's running a Godless campaign, it happens most election years.

      [hint: The market tanks because of a jobs report that came out from the labor dept]
  7. Someone at Google has been reading John Brunner... by RealGene · · Score: 3, Insightful

    ..who had this as a significant plot element in his novel, The Shockwave Rider
    --Gene

    --
    Mission: To provide products that consume time and energy as entertainingly as permitted by the laws of thermodynamics.
  8. Wikipedia article on prediction markets by Thelasko · · Score: 5, Informative

    Wikipedia has a pretty good article on the topic that I read a few months ago. Be forewarned Websense views some of these prediction market sites as gambling. So, I wouldn't view them at work. Specifically Intrade.

    --
    One of our competitors trademarked the term "hypothesis". From now on, we will call them "boneheaded ideas".
  9. Re:I'm suddenly skeptical by sholden · · Score: 3, Interesting

    You might be trying to ferret out the wisdom of crowds. Lots of other people are just gambling, and another entity is interested in collecting transaction fees...

  10. Re:I'm suddenly skeptical by Spy+Hunter · · Score: 3, Interesting

    I don't need Intrade to tell me what's happening at the polls; I can get that from the news. [...] we're basically counting on Intrade to let the wisdom of crowds ferret out all of that before the polls
    The thing you have to understand about prediction markets is they don't represent a magical source of extra information. Prediction markets work only based on information that is already publicly available. They simply combine and weigh that information better than any other method of making predictions, and that is still a valuable service.

    When the markets predict John McCain winning the nomination, they are not simply reacting to recent NH poll numbers; nothing a market does is "simple". The market is weighing *all* the available evidence to come to the conclusion that John McCain has the best overall chance to win the nomination. When you look at the market's prediction, you can be reasonably sure that single source reflects all the information you would likely be able to gather yourself if you dedicated all your time to researching the elections.

    The campaign contains relatively few surprises.
    Well put your money where your mouth is, bub. If you know better than the market, you stand to make money on it. The truth is, the volatility of these election markets reflects the *actual* uncertainty in *everyone*'s predictions about this primary, which is further a reflection of the actual volatility of public opinion itself. There *have* been surprises. Six months ago nobody expected Giuliani to do this poorly; nobody saw Huckabee's gains among evangelicals; etc etc. To pretend otherwise is silly; if you knew these things ahead of time you would be sitting pretty with a great position in the markets right now.
    --
    main(c,r){for(r=32;r;) printf(++c>31?c=!r--,"\n":c<r?" ":~c&r?" `":" #");}