PREDICTION MARKETS

Assignment Two: Case Study Analysis

Assignment Two: Case Study Analysis

Introduction

The foundation stone of Google was laid down back in 1998 by two of the PhD students at Stanford University, Larry Page and Sergey Brin. As a matter of fact, this was the time when many of the search engines were listed based on the key words they inculcated. However, the owners of such kind of websites soon realized as in how these search engines operate and found it a venture to be benefitted from. The founders of this giant search engines soon learned an other way round. Rather than making the search engine to find the accurate phrases or word first, they make key words linked to other elements. Hence, this provided multiplier effect, because if a particular phrase is linked to other sources, they have the potential to redirect a particular search in a certain direction. This algorithm paved the way for Google to flourish (Coles et. al., 2007, pp. 1-21).

Predictive markets or information markets are kind of speculative markets, whose central theme hovers around the notion of prediction. In such kinds of market, people who buy at low and sell at exorbitant, gets reward in terms of improving the market prediction. However, those who buy high and sell low are punished due the element of lowering the overall market prediction. The entry of Google into such a market has both pros and cons. However, the pros seem to surpass that of cons mainly due to the availability of resources, particularly those of access and penetration into the market.

Literature Review

Bo Cowgill, one of the students of public policy at Stanford University joined Google in the year 2003. However, he was the first who worked in the support of the overall organization. In fact, he was impressed by the performance of the prediction markets which have been prevailing over the period of time particularly with the accuracy of providing results. One of the main inspirations for such predictions was his reading of the book The Wisdom Crowds. This book, however; put more emphasis over the notion of collective intelligence than any other performance by an individual. The main example in this particular book was that of Iowa Electronic Markets, which compelled the Cowgill at most. This particular book had the most fascinating examples of collective intelligence and discussed the performance of Iowa Electronic Markets, by and large. IEM, as a matter of fact, was established in the year 1988. The main stance behind such markets was to forecast the winners of political elections in the United States of America. In addition to that, the results exhibited by IEM were than that of others in most of the regards (Coles et. al., 2007, pp. 1-21.

Google had already the expertise in similar kind of work since it had adopted a new approach of searching, which other search engines were lacking. Hence, in order to materialize such a strong base, whose potential as well as online availability was vital for ...