IDEAS home Printed from https://ideas.repec.org/a/eee/bushor/v59y2016i1p85-94.html
   My bibliography  Save this article

Harnessing the wisdom of crowds: Decision spaces for prediction markets

Author

Listed:
  • Buckley, Patrick

Abstract

The increased metabolism of business in the modern world has served to heighten both the frequency and the difficulty of organizational decision making. Practitioners and academics are constantly looking for decision-making mechanisms that can be used to address these challenges. One recently emerged mechanism is prediction markets: a group decision-making tool that uses a market mechanism to rapidly aggregate information held by large, diverse groups of participants. Prediction markets have a number of benefits and have been demonstrably successful in a number of contexts; however, it is important to recognize that they are suited to some types of decisions and contexts but not to others. This article examines the benefits of prediction markets and develops a framework that can be used to identify in which situations prediction markets can be profitably deployed within organizations. It also provides a roadmap for practitioners to use to guide their own organizational deployment of prediction markets.

Suggested Citation

  • Buckley, Patrick, 2016. "Harnessing the wisdom of crowds: Decision spaces for prediction markets," Business Horizons, Elsevier, vol. 59(1), pages 85-94.
  • Handle: RePEc:eee:bushor:v:59:y:2016:i:1:p:85-94
    DOI: 10.1016/j.bushor.2015.09.003
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0007681315001172
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Koleman Strumpf, 2009. "Introduction to Special Issue on Corporate Applications of Prediction Markets," Journal of Prediction Markets, University of Buckingham Press, vol. 3(1), pages 1, April.
    2. ., 2005. "Utility Management and Leadership Challenges," Chapters, in: Public Utilities, chapter 6, Edward Elgar Publishing.
    3. David Rajakovich & Vladimir Vladimirov, 2009. "Prediction Markets as a Medical Forecasting Tool: Demand for Hospital Services," Journal of Prediction Markets, University of Buckingham Press, vol. 3(2), pages 78-106, August.
    4. Thomas S. Gruca & Joyce E. Berg, 2007. "Public Information Bias and Prediction Market Accuracy," Journal of Prediction Markets, University of Buckingham Press, vol. 1(3), pages 219-231, December.
    5. Martin Waitz & Andreas Mild, 2009. "Improving Forecasting Accuracy in Corporate Prediction Markets - A Case Study in the Austrian Mobile Communication Industry," Journal of Prediction Markets, University of Buckingham Press, vol. 3(3), pages 49-62, December.
    6. Justin Wolfers & Eric Zitzewitz, 2004. "Prediction Markets," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 107-126, Spring.
    7. Roll, Richard, 1984. "Orange Juice and Weather," American Economic Review, American Economic Association, vol. 74(5), pages 861-880, December.
    8. Burton G. Malkiel, 2005. "Reflections on the Efficient Market Hypothesis: 30 Years Later," The Financial Review, Eastern Finance Association, vol. 40(1), pages 1-9, February.
    9. Burton G. Malkiel, 2003. "The Efficient Market Hypothesis and Its Critics," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 59-82, Winter.
    10. Caitlin Hall, 2010. "Prediction Markets: Issues and Applications," Journal of Prediction Markets, University of Buckingham Press, vol. 4(1), pages 27-58, May.
    11. John Garvey & Patrick Buckley, 2010. "Implementing control mutuality using prediction markets: a new mechanism for risk communication," Journal of Risk Research, Taylor & Francis Journals, vol. 13(7), pages 951-960, October.
    12. Hitt, Michael A., 2005. "Spotlight on strategic management," Business Horizons, Elsevier, vol. 48(5), pages 371-377.
    13. Robin Hanson, 2007. "Logarithmic Market Scoring Rules for Modular Combinatorial Information Aggregation," Journal of Prediction Markets, University of Buckingham Press, vol. 1(1), pages 3-15, February.
    14. Katarína Kálovcová & Andreas Ortmann, 2009. "Understanding the Plott-Wit-Yang Paradox," Journal of Prediction Markets, University of Buckingham Press, vol. 3(3), pages 33-44, December.
    15. repec:pri:cepsud:91malkiel is not listed on IDEAS
    16. anonymous, 2005. "New guidelines promote sound credit risk management," Financial Update, Federal Reserve Bank of Atlanta, issue q3.
    17. Georgios Tziralis & Ilias Tatsiopoulos, 2007. "Prediction Markets: An Extended Literature Review," Journal of Prediction Markets, University of Buckingham Press, vol. 1(1), pages 75-91, February.
    18. Jed D. Christiansen, 2007. "Prediction Markets: Practical Experiments in Small Markets and Behaviours Observed," Journal of Prediction Markets, University of Buckingham Press, vol. 1(1), pages 17-41, February.
    19. Andreas Graefe & Christof Weinhardt, 2008. "Long-Term Forecasting with Prediction Markets - A Field Experiment on Applicability and Expert Confidence," Journal of Prediction Markets, University of Buckingham Press, vol. 2(2), pages 71-91, September.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:bushor:v:59:y:2016:i:1:p:85-94. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/bushor .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.