Tech Companies Draw on 'Wisdom of the Crowds'

An anonymous reader writes "News.com is carrying an article on a 'mini-conference' held at Yahoo's HQ this past Wednesday. The get-together put representatives from Google, Microsoft, Yahoo!, and HP together to talk about their experiments with predictive networks. The 'wisdom of the crowds' allows these companies to make use of the collective knowledge their employees hold to answer important questions for the company." From the article: "David Pennock, a principal research scientist at Yahoo Research, said the company has created a currency called a Yootle. It's described as a 'scorekeeping system for favors owed.' Pennock offered as an example a programmer offering to write a piece of code for a few Yootles. Or, when organizing a dinner outing, one employee could use an internal SMS tool to bid 2 Yootles for Italian and 4 Yootles for Mexican. 'If you don't get to go to the restaurant you want to, you get compensation' in Yootles, he said. Related to Yootles is Yahoo Research's experiment with a fantasy prediction market for technology called the Tech Buzz Game. It's a modified version of software licensed from NewsFutures in conjunction with O'Reilly Media and features topics like Atlantic hurricanes and portable media devices. Winners are those who predict how popular a topic will be on Yahoo Search. "

I think this has a name

[UbuntuDupe]

That sounds remarkably similar to the indifference vote [paulbirch.net] that Paul Birch likes to promote. You bid for your preferred option until the money you allocated toward it would make you indifferent, and if you don't get your way, you are paid that much (instead of paying that much). If you do get your way, you pay your bid. I makes you, in essence, indifferent to the outcome. His example:

Let's try a simple example. ... You and your friends want to go to a restaurant. But which one? The Peking Duck or the Spaghetti Italiano? Charles prefers Chinese, but you're a bit strapped for cash and Italian's cheaper. You bid 50p. Charles goes 60p. The girls join in. Amy is on a diet and bids 50p for the Duck, but Beth is always hungry and bids 70p for the Spaghetti; the score is now £1.20 for Italian, £1.10 for Chinese. Amy looks at Charles, who goes up 11p to 71p. You decide to bid another 2p. Charles shakes his head. Amy reluctantly adds another 2p for Chinese herself. The final bids are £1.22 for Italian, £1.23 for Chinese. So off you all trot to the Peking Duck. Amy and Charles fork out 52p and 71p respectively; Beth gets 70p and you get 52p. Amy and Charles get the fancier but less fattening fare they wanted; you get enough money to cover the higher prices, and Beth gets enough for a larger helping. The waitress gets the penny left over.

More info on prediction markets

[FleaPlus]

Prediction markets are a major interest of mine. I'm in a bit of a rush at the moment, so I'll have to make some more extensive comments later, but in the meantime here's some neat links on prediction markets:

* Tradesports, a real-money prediction market on political and news events. The 2008 president market [tradesports.com] currently gives a Democratic a 50% probability of winning the White House in 2008, Hillary Clinton a 55% probability of getting the Democratic nomination, and John McCain a 49% probability of getting the Republican nomination.

* Futarchy [gmu.edu], a system of government semi-seriously proposed by Robin Hanson which would use prediction markets as a means of government decision-making. People would vote on values, and use a prediction market to determine the optimal government policies to achieve those values, which would help get around some of the godawful stupid things democracies tend to do.

* Storage Markets [storagemarkets.com], a real-money (but limited access?) market on the computer storage industry

* The Policy Analysis Market [wikipedia.org], a proposed prediction market for policies in the Middle East. It was IMHO a great idea, and could have potentially prevented some of the stupid decisions which have been made in the Middle East. Unfortunately, the government ended the project after it was the media (including slashdot [slashdot.org]) had a knee-jerk reaction to it and demonized it. The funny thing is, after the project was cancelled and the media learned more about it, coverage of the project became much more positive.

Re:"Yootles?"

[EVil Lawyer]

It's like "util" -- the economics/philosophy term... but closer to "Yahoo". Get it?

Re:I think this has a name

[hibiki_r]

Unfortunately such a system can be 'gamed', like many board game players can tell you.

If you know someone really wants option X, but you don't care either way, you can bid against option X, hoping that person will outbid you. Then you'll get money while eating at a place you liked anyway. It's really not much different from pumping the value of your buddy's item on ebay, or proper playing on 'Princes of Florence'

Whuffie

[DoorFrame]

Sort of like Whuffie [wikipedia.org] from Down and Out in the Magic Kingdom [craphound.com] although that was based on general goodwill and esteem, not specific favors per se. Wiki's definition is probably better:

Whuffie is the ephemeral, reputation-based currency of Cory Doctorow's sci-fi novel, Down and Out in the Magic Kingdom. This future history book describes a post-scarcity economy: All the necessities (and most of the luxuries) of life are free for the taking. A person's current Whuffie is instantly viewable to anyone, as everybody has a brain-implant giving them an interface with the Net.