Benefits of Prediction Markets in IT Project Management

Herbert Remidez from the University of Arkansas recently sent us the final draft of a paper he wrote about the results of some experiments he ran at Acxiom using Inkling Markets. From the abstract of the paper:

Developing obtainable, clear and measurable work expectations early in the project planning process is an important part of successful project management. Converting these expectations into project milestones and communicating openly about progress toward them is crucial to every project’s success. Optimistic estimation biases of IT workers, poor estimating techniques and group politics can hinder communication and decrease the chances of success. A prediction market is a tool that might help project managers overcome these obstacles.

And from the results:

• Participation in the market was very high (87%) with the average trader making 23.28 trades over the six weeks that the market was open.
  
• The market correctly predicted twenty four of the twenty six project milestones (92%).
  
• The introduction of the prediction market led to the project manager to clarify and revise an important project milestone before the project started.
  
• A survey at the end of the project suggested that the software was easy to learn and promoted discussion and cohesion in the group.
  
• The experience was positive for the group and management is exploring the potential use of prediction markets in other business units.
  
• The implementation of a prediction market in a setting where market participants had control over the outcome of the contracts contributed to concerns about insider trading.
  

You can see the entire paper on Scribd:

Using Prediction Markets to Support IT Project Management