Corporate Prediction Markets: Evidence from Google, Ford, and Firm X

• 成果类型: Article
• 署名作者: Cowgill, Bo; Zitzewitz, Eric
• 署名单位: University of California System; University of California Berkeley; Dartmouth College
• 刊物名称: REVIEW OF ECONOMIC STUDIES
• ISSN/ISSBN: 0034-6527
• DOI: 10.1093/restud/rdv014
• 发表日期: 2015
• 页码: 1309-1341
• 关键词: stock markets; manipulation; INFORMATION; overconfidence; aggregation; probability; employees; ECONOMY; RISK; WAR

摘要

Despite the popularity of prediction, markets among economists, businesses, and policymakers have been slow to adopt them in decision-making. Most studies of prediction markets outside the lab are from public markets with large trading populations. Corporate prediction markets face additional issues, such as thinness, weak incentives, limited entry, and the potential for traders with biases or ulterior motives-raising questions about how well these markets will perform. We examine data from prediction markets run by Google, Ford Motor Company, and an anonymous basic materials conglomerate (Firm X). Despite theoretically adverse conditions, we find these markets are relatively efficient, and improve upon the forecasts of experts at all three firms by as much as a 25% reduction in mean-squared error. The most notable inefficiency is an optimism bias in the markets at Google. The inefficiencies that do exist generally become smaller over time. More experienced traders and those with higher past performance trade against the identified inefficiencies, suggesting that the markets' efficiency improves because traders gain experience and less skilled traders exit the market.