What is Yahoo! Brewing in its Lab? - Predict the Future of Technology
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Some folks like fantasy football leagues; Yahoo! has a fantasy stock market in beta. You don’t buy and sell fantasy shares of companies here – or at least, that’s not all you buy and sell. You can buy and sell stock in hurricanes, software distributions, gadgets, web services, and more. It’s called the Tech Buzz Game, and it’s a joint venture between Yahoo! Research and O’Reilly Media.
The game’s submarkets pit certain rival technologies, each represented by a stock, against each other. For instance, seven stocks currently make up the Browser Wars market, including Internet Explorer, Firefox, and Opera, among others. Players have access to the “buzz” around each technology. “Buzz” is measured, as you might expect, by the number of Yahoo! visitors who use the search engine to find information on that item. It’s probably more accurate to call this a “futures market” than a “stock market.”
The game gives a light-hearted example of a player being bullish on podcasting, and buying shares of the PODCAST stock. Britney Spears then announces that her next single will be available only via podcast. Curious young fans flood Yahoo! with searches about podcasting. The player’s stock shoots up.
What is the point of the game, however? It’s not played with real money, after all. Well, there are two goals. First, O’Reilly wanted to study the power of prediction markets to forecast high-tech trends. This has been done before in a rather different way, and for entertainment rather than research purposes; you may recall the website F**kedCompany, whose users predicted how much longer various technology companies would last, based on news they heard (in some cases from disgruntled workers within the companies themselves). If such markets proved to be accurate predictors, the results could be used in a variety of ways, from advising companies about what technologies to deploy (and avoid deploying) to helping a publisher decide what topics and authors to pursue.
Yahoo!, in the meantime, wanted to field test the dynamic pari-mutuel market, which is a trading mechanism created by Yahoo! Research and designed to price and allocate shares. The paper it is based on speaks of it as a “mechanism for risk allocation and information allocation.” Despite having something of the appearance of a stock market, it doesn’t quite work that way. “Since the mechanism is pari-mutual (i.e., redistributive), it is guaranteed to pay out exactly the amount of money taken in.” Since companies are capable of creating new value as well as losing value, the actual stock market is not a zero-sum game. On the other hand, the fact that The Buzz Game is zero-sum probably makes it easier to distinguish predictions.
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