Predictive Markets & Experimental Results

1. Predictive Markets & the Wisdom of Crowds Experiments A Market Research Project by BrainJuicer ® Produced December 2005 The Mind Reading Agency

2. Extraordinary delusions and the Madness of Crowds, Charles MacKay (1841)

3. The Wisdom of Crowds – How the Many Can Be Smarter than the Few, James Surowiecki (2004)

5. Galton’s surprise findings. Collective Guess = 1197 lbs Actual Weight = 1198 lbs

6. How did the market know? Rockwell – Down 3% Lockheed – Down 3% Martin Marietta – Down 3% Morton Thiokol – Down 12%

7. Qu. Is there a more efficient alternative?

8. IEM - The original decision market X 596 Polls (1988 - 2000)  ¾

9. French – Referendum Non 53.6% Oui 46.4% Non 54.9% Oui 45.1% 29 th May – Betting BetFair 30 th May - Result (70% turn out) Non 51.0% Oui 49.0% 28 th May – Polls IPSOS

12. The Experiments Monadic Tests of 3, 10, 15 & 20 ideas, with matched targeted samples of 100 Predictive Markets of 3, 10, 15 & 20 ideas, with diverse ‘crowds’ of 500

13. Predictive Market 1 - UK  A diverse crowd will be as accurate as a targeted sample  A ‘Predictive Market’ will be as accurate as a monadic test  Answering for the market as accurate as answering for oneself Respondent Base Sizes: Monadic = 100 per cell / Predictive Market *No Betting = 507 *** 16 43 J 45 49 I *** 35 54 H *** 28 64 G *** 28 64 F 67 67 UK Norms (top 2 box) 70 74 E 86 78 D 80 81 C + 76 83 B 85 85 A Significant Differences Predictive Market 2* With diverse group of 500 people - *no betting (Top 2 Box Purchase Intent) Monadic Test with matched samples of 100 in the target market (Top 2 Box Purchase Intent) New Product Concepts Top Two Box Purchase Intention Results – Predictive Market 2* Respondent Base Sizes: Monadic = 100 per cell / Predictive Market *No Betting = 507 *** 16 43 J 45 49 I *** 35 54 H *** 28 64 G *** 28 64 F 67 67 UK Norms (top 2 box) 70 74 E 86 78 D 80 81 C + 76 83 B 85 85 A Significant Differences Predictive Market 2* With diverse group of 500 people - *no betting (Top 2 Box Purchase Intent) Monadic Test with matched samples of 100 in the target market (Top 2 Box Purchase Intent) New Product Concepts Top Two Box Purchase Intention Results – Predictive Market 2*