Spring+2010+Section+09-SS+Week+13

Participation 1 Recap: “give them tools…stay in touch…turn them loose” -Obama/Biden campaign  MIT wins DARPA’s Network Challenge

//"The team divvied the $40,000 by giving $2,000 to the first person who sent them correct coordinates for each balloon, then $1,000 to whoever invited that person to participate, $500 to whoever invited that person, and so on. Leftover funds will go to charity."//

Even though there are only 6 members of the MIT Red Balloon Challenge Team and the prize of $40,000 could have given each $6,666.67 they used the prize money as motivation/incentive for others to assist them in their efforts. To the MIT team it wasn't about the money, but about winning the competition and gaining fame as "the group that solved the puzzle". Just like Cambrian House, by opening up the problem to a wider community the solution "appeared" in less than 10 hours. MIT leveraged croudsourcing to beat the government.


 * Predicting New Product Demand **
 * Survey Target Customers - be aware that many times customers may tell you what they think you //want// to hear
 * Ask a Pool of Experts​ - although be aware that they may have gotten their information from the same sources you did

Conventional wisdom leads us to experts when we are looking for advice on a variety of matters. However, often times experts are sharing essentially the same knowledge base, and as such can end to arrive at the same answer due to this bias. While this may seem desirable on the surface, it doesn't encompass the differing views that a large group of diverse participants can generate. In this way, the survey of a group of customers will often yield a more applicable answer to a given question.

=The Wisdom of Crowds= The book relates to diverse collections of independently-deciding individuals, rather than crowd psychology as traditionally understood. Its central thesis, that a diverse collection of independently-deciding individuals is likely to make certain types of decisions and predictions better than individuals or even experts, draws many parallels with statistical sampling. As an opening example, the crowd at a county fair accurately guessed the weight of an ox when individual guesses were averaged (the average was closer to the ox's true butchered weight than the estimates of most crowd members, and also closer than any of the separate estimates made by cattle experts).

Crowdsourcing can be looked at as an application of the wisdom of crowds concept, in which the knowledge and talents of a group of people is leveraged to create content and solve problems.

It can be broken down in to three categories: 1. creation (like Wikipedia & Cambrian House); 2. prediction (like Betfair & Pickspal); and 3. organization (like Google & Digg).

Predicting demand for new products poses special problems for forecasters. By definition, a new product has little or no demand history. As discussed in class, before iPhone was launched, it was difficult to gauge the customer reaction. Game changer products face the risk of gathering useless information in consumer panels, and launch products that don’t perform in the real market. People may happily tell you that they will be highly likely to buy your product when it’s launched, and then fail to make the purchase. In particular, we might expect prospects to overstate their intention to buy socially desirable products, like home-gym equipment, and understate their intentions for products deemed to be undesirable, like sugary foods.

Tapping Employee Ideas
 * What is the incentive? (although they may just be agreeing with the boss)
 * How do we recognize important information? (Whoever argues the most eloquently... the smoother and slicker the presentation, the more likely it is to be believed

What is a Prediction Market?

AKA info market or virtual market where users participate in making "bets" to predict an outcome or the probability of an event. They are speculative markets created for the purpose of making predictions, i.e., to speculate on possible outcomes of event that could potentially have economic value. These types of markets have a very accurate rate of prediction.
 * Examples...
 * Betfair
 * Intrade
 * Hollywood Stock Exchange
 * Iowa Electronic Market
 * Do they always work?
 * Requirements
 * Incentives for good use of information
 * Clear public indicator of price
 * Free Access
 * Set Up
 * Manipulation

__**A new method for predicting success of movies** **based on Twitter**__ -- Two social computing researchers from HP Labs say they have developed new computational methods using [|Twitter] feeds that can predict with as much as 97.3 percent accuracy how a movie will perform its first weekend of release..This far surpasses the traditional survey-based "tracking" reports that studios have long relied upon to forecast movie ticket sales, or the popular online site Hollywood Stock Exchange that lets users wager box office predictions with pretend money. Read the story at []

=**CASE STUDY: CAMBRIAN HOUSE**=

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Cambrian House builds internet-based products and services by relying entirely on its user community for all aspects of its innovation and new product development process. Users suggest ideas for new products and services and also participate in a monthly voting process to select the best ideas. The company is now considering the deployment of a prediction market to deepen user involvement and commitment in its innovation; however, it is not sure if it is an appropriate strategy for its community.





**Team O**