Herself’s Artificial Intelligence

Poindexter made prediction markets common knowledge when he created his market to predict terror attacks. Prediction markets work like stock exchanges. Lots of people buy stock in what is expected to do well, and sell off what is expected to do poorly. They have been used to predict political and sports event results among other things.But as those of you know who watch the stock market, mob intelligence is often more like lemming behavior than pooled intelligence. That said, many well known, successful companies have been successfully using predictive markets to decide what new products to bring forth; HP, Corning, Intel, MS, Google, WSJ and more.These markets do best when there is actual money or some other incentive to gain or lose.Online examples include:Iowa Electronic MarketsUS News Futures

See also:
Mob Intelligence

More information:
The Prediction Company
The Fizz-dom of Crowds
Google’s Lunchtime Betting Game
Putting crowd wisdom to work, Google
Here’s an Idea: Let Everyone Have Ideas, NYT
Oddhead Blog: Prediction Markets, Gambling, Electronic Commerce, Artificial Intelligence
Predictify

Papers:
Prediction Markets, Journal of Economic Research ( pdf )
Google Prediction Market Paper ( pdf)