is a fantasy stock market that predicts outcomes based on the free market. It works like this: users create questions and potential outcomes (“Will it rain tomorrow?”, “At which major technology conference will Bill Gates shed his human skin and reveal his angelic beauty high above Mount Rainier?”) and other users buy and sell shares based on their belief that a particular outcome is true.
This was best exhibited in the market for Apple’s announcement last week (Full disclosure: I really wanted to tie this in to the announcement but I was at CTIA at Ramada La Chupacabra in LA with no Internet access). As you can see from this graph, the various outcomes eventually approached 100 – dollars or percentage points – and those who bought “stock” in those outcomes got a percentage of the total.
What does this have to do with gadgetry? Well, the invisible hand of the market tends towards and most “rational” outcome, right? Markets are based on imperfect information and humans and machines try to make that info perfect. As more and more people bought stocks, they were using their best judgement and perhaps a little inside information to name their prices. Therefore, as we can see by the rising bars, someone knew something about Apple – the Core 2 Duo outcome hovered at 50% and the rest zoomed up as the announcements hit the streets.
Therefore, markets like Inkling can tell us quite a bit about the potential outcomes of special product releases. That, however, is just the beginning.
Say, for example, you’re making a widget. The widget should be under budget and on deadline, so you pose a question to a market of your co-workers “Will we complete our widget on time and under budget?” You offer four outcomes and have them anonymously buy shares in each of these outcomes. The resulting graphs will plot the most likely outcome because everyone – from marketing to the tech guys – will have a say. The tech guys will say everything will be over and the marketing guys will say everything will be under and the programmers will say it will take quite a while but it will come in under budget and that they could use a few more types of candy in the break room. The mix will give you a fairly strong indicator of what you’re up against.
We’re going to be checking with Inkling on multiple topics and we’ll probably create a few markets now and again to gauge the general feeling on various things. Clearly, the market size is a bit small over at Inkling right now, but I believe it’s an interesting and valid decision-making tool and a great way to find out who will manage the Cubs in ’07.