Prediction markets on crowdsourcing platforms: Potential gains for corporate governance and current case studies

Crowdsourcing platforms can enhance an organisation’s management decisions and governance, by harnessing the ‘wisdom of the crowds’. Prediction markets go one step further: to also provide an iterative summary signal of the crowd estimate back to participants. Evidence is accumulating that prediction markets can perform better than opinion experts, management consultants and surveys under specific conditions. Multinational and other companies are currently using prediction markets predominantly for improved information delivery, and adopting reward structures to induce informed participation by employees. This is an abridged and revised version of a paper presented at the 2016 Melbourne Money and Finance Conference.

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Information Markets: A Tool for Effective Decision Making
First Published in 2006

Society’s economic, corporate, and public policy decisions are often times influenced by the advice and discretion of experts. The decisions making process involves making predictions about the underlying uncertainty that surrounds the social issue at hand. Differences in research methods, facts, beliefs, and values bring about the variety and differences in opinion amongst a group of experts or decision makers. For the non-expert who is often times presented with a plethora of expert opinion, deciding who to believe or weighing all the opinion may not be an easy process. Economists believe that financial markets do a good job in aggregating information in part because they provide the participants with strong…

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Collective intelligence – How does it emerge?
First Published on June 2015

While collective intelligence is not a new phenomenon, the internet and digital media have greatly extended the possibilities of remote collective collaboration. The joint effect of a networked public, digital platform and open organisations are allowing knowledge to emerge from truly novel forms of social interaction. However, not all collective digital projects are successful in engaging people and generating significant outcomes. It is therefore important to understand what are the mechanisms that underlie co–operative processes of knowledge exchange and development. This paper discusses some of the prerequisites for collective intelligence: the cognitive predisposition that allows humans…

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