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MORE INFORMATION IS NOT ALWAYS BETTER: An interesting discovery with implications for internal corporate prediction markets. The Economist reports:More information does not necessarily lead to better decisions. Michael Mauboussin of Legg Mason, a fund-management group, cites a study that gave horse-racing handicappers varying amounts of information when ranking horses. The more information they received, the more confident they became about their answers. But the success of their predictions was actually worse when given 40 pieces of information, than when given five. Last month, the Economist reported on algorithmic trading, a topic with big implications for internal prediction markets: "As the time taken to process computer-generated trades falls to thousandths of a second, algorithms are being created to react to news headlines faster than the eye can scan them."
Why stop with headlines and financial markets? I'd like to write a program that takes a stream of updates to Google's internal email lists, and internal blogs or wikis and converts them into bids on the internal prediction market.
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Disclaimer: Opinions expressed on this site are the author's and not necessarily his employer's.
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