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Examining Trader Behavior in Idea Markets: An Implementation of GE's Imagination Markets

Author

Listed:
  • Brian Spears
  • Christina LaComb
  • John Interrante
  • Janet Barnett
  • Deniz Senturk-Dogonaksoy

Abstract

We present the outcome of an idea market run for one of GE Energy's sub-businesses in July and August of 2006. GE Energy used this market to elicit and rank-order technology and product ideas from across the sub-business. In this experiment, we examine the behavior of traders that have submitted the ideas on the market and their influence on the market's outcome. An idea's submitter is clearly motivated to have his idea valued highly by the market, both by the funding given to the top idea as well as smaller prizes given to the top three ideas. In general, founders tended to buy their suggested ideas at prices above the volume-weighted-average-price (VWAP) in significant volumes. We discuss the implications and mitigation strategies. A survey of market participants yielded mixed results regarding the market's effectiveness at ranking ideas but very positive results regarding the quality of ideas proposed.

Suggested Citation

  • Brian Spears & Christina LaComb & John Interrante & Janet Barnett & Deniz Senturk-Dogonaksoy, 2009. "Examining Trader Behavior in Idea Markets: An Implementation of GE's Imagination Markets," Journal of Prediction Markets, University of Buckingham Press, vol. 3(1), pages 17-39, April.
    • Handle: RePEc:buc:jpredm:v:3:y:2009:i:1:p:17-39
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    Citations

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    Cited by:

    1. Dirk Bergemann & Marco Ottaviani, 2021. "Information Markets and Nonmarkets," Cowles Foundation Discussion Papers 2296, Cowles Foundation for Research in Economics, Yale University.
    2. Snowberg, Erik & Wolfers, Justin & Zitzewitz, Eric, 2013. "Prediction Markets for Economic Forecasting," Handbook of Economic Forecasting, in: G. Elliott & C. Granger & A. Timmermann (ed.), Handbook of Economic Forecasting, edition 1, volume 2, chapter 0, pages 657-687, Elsevier.
    3. Edoardo Gaffeo, 2013. "Using information markets in grantmaking. An assessment of the issues involved and an application to Italian banking foundations," DEM Discussion Papers 2013/08, Department of Economics and Management.
    4. Simon Kloker & Tim Straub & Christof Weinhardt, 2019. "Moderators for Partition Dependence in Prediction Markets," Group Decision and Negotiation, Springer, vol. 28(4), pages 723-756, August.
    5. Bigsten, Arne, 2016. "The Development of Development Economics," Working Papers in Economics 653, University of Gothenburg, Department of Economics, revised Mar 2017.
    6. Ivo Blohm & Christoph Riedl & Johann Füller & Jan Marco Leimeister, 2016. "Rate or Trade? Identifying Winning Ideas in Open Idea Sourcing," Information Systems Research, INFORMS, vol. 27(1), pages 27-48, March.
    7. Enrico Colombatto & Valerio Tavormina, 2015. "Does altruism justify privileges?," ICER Working Papers 01-2015, ICER - International Centre for Economic Research.
    8. Matthew DeHaven & Hannah Firestone & Chris Webster, 2024. "Minute-by-Minute: Financial Markets' Reaction to the 2020 U.S. Election," Papers 2407.03527, arXiv.org.
    9. Riekhof, Hans-Christian & Riekhof, Marie-Catherine & Brinkhoff, Stefan, 2012. "Predictive Markets: Ein vielversprechender Weg zur Verbesserung der Prognosequalität im Unternehmen?," PFH Forschungspapiere/Research Papers 2012/07, PFH Private University of Applied Sciences, Göttingen.
    10. Marc Fleurbaey, 2012. "Economics is not what you think: A defense of the economic approach to taxation," Working Papers halshs-00698575, HAL.

    More about this item

    Keywords

    IDEA MARKET; PREDICTION MARKET; IDEA GENERATION; BRAINSTORMING; GROUP SUPPORT SYSTEM;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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