I attended the Yahoo conference, Prediction Markets: Tapping the Wisdom of Crowds last Wednesday with Collective Intellect founder, John DiVirgilio at Yahoo! Headquarters in Sunnyvale, CA. It was raining but the purple walls, candy and popcorn in Yahoo! headquarters brightened up the day.

The event served as a public “how to” session on prediction markets moderated by James Surowiecki, New Yorker columnist and best-selling author of The Wisdom of Crowds. James opened with how the event was reminiscent of the glory days, where in “The Valley” different people from different companies got together to exchange ideas.

Great things always seem to happen when a diverse group of minds get together and share ideas, and that’s exactly why Yahoo started the confab series. Speakers included Robin Hanson from George Mason University, Eric Zitwewitz from Stanford, Bo Cowgill from Google, Leslie Fine from HP, David Pennock from Yahoo! and Todd Proebsting from Microsoft.

Bo Cowgill from Google spoke about the prediction market, “ Prophit” within Google that he created. He has found that social and reputational rewards work better in prediction markets and that ultimately a ranking is an extremely motivating factor. Bo concluded with a story about his project at Google, players in his prediction market were more concerned about their ranking and tee shirts than the large cash prizes awarded.

At Collective Intellect, we identify “Mavens” within the blogosphere and deliver blogosphere anomalies to our customers, mostly traders, portfolio managers and enterprise companies. We have gotten feedback from those Mavens, they seem to like being called a Maven. Social rank and recognition seems to be a motivating factor.

With Yahoo! we are working on a project to rank stock pickers with a karma rating system and post that ranking on the Yahoo Finance boards. I personally think that this will clean up the Yahoo Finance boards, discouraging the people who post garbage just to cause arguments and encouraging people to post good ideas and thoughts. Yahoo employees seemed to agree and were excited about the enhancements to the finance boards that we are working on. We will be rolling out a series of components based on member-generated content and blogosphere anomalies on the Yahoo Finance pages in the next year including an investor sentiment graph, historical sentiment graph, blogosphere anomalies and the stock picking karma rating system.

Tags: Analyzing Consumer Generated Media, Social Media Analytics //