Electronic prediction markets are platforms that allows users to give forecasts to various events. Prediction markets can be compared to stock or betting exchanges, the difference being that neither stock or moneys are exchanged, but predictions.

Companies like Tchibo or Nokia use traditional crowdsourcing, meaning that they survey their potential customers about new product ideas – we’ve all seen various competion ads, where you win when your idea was accepted by that particular company. But crowdsourcing can alse be used otherwise, for example to solve quantitative problems. Prediction markets collect the wisdom of a certain group and by recalculating that shared wisdom, it creates predictions.

This crowdsourcing method has its origin in the United States, but prediction markets are also being used more and more in Asia and Europe, to solve important topics, e.g. demand forecasting.

Maintaining predictions markets like CrowdWorx can be a lot lower than using traditional methods. The total costs can be even up to 90% lower in some cases! Moreover, an accuracy of the prediction increases, or in worst cases, stays on the same level. If you want to find out more visit the virtual CrowdWorx website and read the case studies of various companies that used this prediction market.

A study by McKinsey has shown that according to managers that use Web 2.0 within their company, prediction markets are one of the top Enterprise 2.0 tools that can help with important matters like S&OP, demand forecasting and new product potential.