Comments on: The most bizarre sentence I’ve read today http://gondwanaland.com/mlog/2007/04/21/firm-morale/ My opinions only. I do not represent any organization in this publication. Sun, 23 Nov 2008 16:50:51 +0000 http://wordpress.org/?v=2.6.2 By: Yaron http://gondwanaland.com/mlog/2007/04/21/firm-morale/#comment-95629 Yaron Mon, 23 Apr 2007 22:26:43 +0000 http://gondwanaland.com/mlog/2007/04/21/firm-morale/#comment-95629 Well, I don't know either of these people. But Cowen's statement is silly, with or without that gratuitous finance reference. The idea that prediction markets are shunned because they would lead to a breakdown of morale, or loss of respect for one's bosses, or whatever you want to call it, is conspiratorial thinking and sounds like the writing of someone who's spent very little time in an actual corporation. If markets could really help improve corporate decision-making, you'd see them getting implemented more; even if Cowen's conspiracy theory was right and employers feared them, workers could be setting them up as skunkworks projects, a la how internal blogs got their start. I haven't seen any evidence of that happening, and I think I'd be in a position to see it. I think the reason that they haven't been used more for corporate decision-making is, basically that... they're not that useful for corporate decision-making. There just aren't that many predictive questions you can ask to help in deciding on a course of action. The most obvious question, "will project X succeed?", is not as appropriate as it sounds: to start getting meaningful numbers on it, you have to already start project X, which means it's in a sense too late to make your decision. And, of course, you run the risk of creating negative incentives. There are more pedestrian questions you can ask: how much a revenue will a competitor's product make? Will certain needed components from another vendor be delivered on time? But these are relatively mundane, and they're not really going to revolutionize the decision-making process. As time goes on, I become more convinced that decisions and predictions are two things that usually should remain separate; even the phrase "decision market" is one I tend to avoid. Well, I don’t know either of these people. But Cowen’s statement is silly, with or without that gratuitous finance reference. The idea that prediction markets are shunned because they would lead to a breakdown of morale, or loss of respect for one’s bosses, or whatever you want to call it, is conspiratorial thinking and sounds like the writing of someone who’s spent very little time in an actual corporation. If markets could really help improve corporate decision-making, you’d see them getting implemented more; even if Cowen’s conspiracy theory was right and employers feared them, workers could be setting them up as skunkworks projects, a la how internal blogs got their start. I haven’t seen any evidence of that happening, and I think I’d be in a position to see it.

I think the reason that they haven’t been used more for corporate decision-making is, basically that… they’re not that useful for corporate decision-making. There just aren’t that many predictive questions you can ask to help in deciding on a course of action. The most obvious question, “will project X succeed?”, is not as appropriate as it sounds: to start getting meaningful numbers on it, you have to already start project X, which means it’s in a sense too late to make your decision. And, of course, you run the risk of creating negative incentives.

There are more pedestrian questions you can ask: how much a revenue will a competitor’s product make? Will certain needed components from another vendor be delivered on time? But these are relatively mundane, and they’re not really going to revolutionize the decision-making process.

As time goes on, I become more convinced that decisions and predictions are two things that usually should remain separate; even the phrase “decision market” is one I tend to avoid.

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