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Examining Trader Behavior in Idea Markets: An Implementation of GE's Imagination Markets

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  • Brian Spears
  • Christina LaComb
  • John Interrante
  • Janet Barnett
  • Deniz Senturk-Dogonaksoy
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    Abstract

    We present the outcome of an idea market run for one of GE Energy's sub-businesses in July and August of 2006. GE Energy used this market to elicit and rank-order technology and product ideas from across the sub-business. In this experiment, we examine the behavior of traders that have submitted the ideas on the market and their influence on the market's outcome. An idea's submitter is clearly motivated to have his idea valued highly by the market, both by the funding given to the top idea as well as smaller prizes given to the top three ideas. In general, founders tended to buy their suggested ideas at prices above the volume-weighted-average-price (VWAP) in significant volumes. We discuss the implications and mitigation strategies. A survey of market participants yielded mixed results regarding the market's effectiveness at ranking ideas but very positive results regarding the quality of ideas proposed.

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    Bibliographic Info

    Article provided by University of Buckingham Press in its journal Journal of Prediction Markets.

    Volume (Year): 3 (2009)
    Issue (Month): 1 (April)
    Pages: 17-39

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    Handle: RePEc:buc:jpredm:v:3:y:2009:i:1:p:17-39

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    Web: http://www.predictionmarketjournal.com/index_files/Page418.htm

    Related research

    Keywords: IDEA MARKET; PREDICTION MARKET; IDEA GENERATION; BRAINSTORMING; GROUP SUPPORT SYSTEM;

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    Cited by:
    1. Riekhof, Hans-Christian & Riekhof, Marie-Catherine & Brinkhoff, Stefan, 2012. "Predictive Markets: Ein vielversprechender Weg zur Verbesserung der Prognosequalität im Unternehmen?," PFH Forschungspapiere/Research Papers 2012/07, PFH Private University of Applied Sciences, Göttingen.
    2. Edoardo Gaffeo, 2013. "Using information markets in grantmaking. An assessment of the issues involved and an application to Italian banking foundations," DEM Discussion Papers 2013/08, Department of Economics and Management.

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