Inkling Markets is a software platform for collecting predictions and opinions about current and future events and topics.
Yes, it started as a prediction market but grew to include aspects of social networks, polling, and collaboration tools as well.
"Prediction market" is just a fancy name for aggregating people's opinions to form a prediction of the likelihood of something occurring.
We said a prediction market is a way to aggregate people's opinions. The way you express your opinion is by buying stocks that represent possible answers to a question being posed. Let's say for example you want to ask a group of people: "Who will win the Super Bowl?" For such a question there would be Bears stock, Patriots stock, 49ers stock, etc. With some virtual cash we give you when you sign up, you can buy (and sell) shares in these answers to express your opinion on what you think is going to happen. In a prediction market, the stock price represents the likelihood of the answer being correct. So if the Bears stock is at $75, we say "there is a 75% chance the Bears will win the Super Bowl."
There are two key differences. First, a survey or poll is a snapshot in time. Prediction markets are run continuously over a period of days, weeks, and months so people can change their opinion at any time. Second, any question asked in a prediction market must have an objective and verifiable outcome. For example, you'll never see a question in a prediction market like: "Should we run this promotion?" Instead you may see a question like: "How much additional web traffic will this promotion generate?"
Inkling Markets uses fantasy currency which makes it perfectly legal to run publicly and within companies as a business tool. Prediction markets using real money are still considered gambling under U.S. law and are outlawed.
During the 2008 Democratic Presidential Primaries, many declared prediction markets "wrong" because they didn't "accurately predict" the outcome of the New Hampshire primary where Hillary Clinton defeated Barack Obama. But this is a misunderstanding of how prediction markets work. Because, as we said earlier, the price of a stock in a prediction market represents the likelihood of the answer being correct, a prediction market can never be "right" or "wrong." For example in our own prediction market on the New Hampshire primary in our public prediction site, Hillary Clinton's stock price was around $20 the night before the primary. That means participants were saying there was a 2 in 10 chance of Clinton winning, or if the race were run 10 times, Clinton would win twice. Given the narrowness of the victory, this seemed like a fairly accurate representation of the situation. Read more about the accuracy of prediction markets.
The key difference between a prediction market run inside a company and the financial markets are the company has access to all the data. They can see if bubbles are forming, they can better understand why someone may behave the way they do, and they can easily see who the outliers are in any given question being asked. All of this transparency means the company can see if there are signals that are being missed by the broader participant-base and react accordingly.
We have developed solutions around the four primary ways our clients use Inkling Markets:
The primary role of Inkling Markets is to fill information gaps using the collective intelligence of your workforce, business partners, and customers. Inkling Markets does not make decisions for you, it just gives you actionable and credible signals to base decisions on. For example if you are asking about a risk factor on a project and the likelihood it will occur is more than negligible, it makes sense as a manager to ask follow-up questions, raise the signal in status meetings, etc. This way the information is being incorporated in to existing business processes vs. new processes needing to be created to accommodate this information. Data from Inkling Markets can also be placed (automatically with our API) in existing project management tools, as the risk probability number, for example, or to show variance in "official" and "crowdsourced" forecasts for project milestones.
Depending on the solution you are using Inkling Markets for, making a business case is primarily based on resource utilization savings, cost avoidance due to schedule and budget overruns, and revenue generation from time to market efficiencies. Business cases have also been made in a similar fashion to how cases are made for security software. If you predict a risk is going to occur with a high degree of probability, then you take steps to mitigate it, you can make a cost savings argument according to what the cost of the risk occurring would have been.
Although we can work with you to do much of the "heavy lifting" to plan and launch the site, managers should still plan to spend about 1 day/week on the site during the first month of operations, and 2 hours/week subsequent to that.
Participation levels typically vary widely from 30 minutes per day to 10 minutes per week. If the perception internally is people are "wasting time" participating, it may not be an issue with the participants themselves but the questions being asked have no value.
We've found if questions have at least 15 participants who make one or more trades over the lifetime of the question, the outcome has a higher probability of being correct over many questions than a question with fewer participants. We would recommend reading Jed Christiansen's research on this topic.
New accounts receive $5,000 inkles to start but administrators can increase or decrease that starting amount if they wish.
$5,000 enables a new participant to make one large trade or many smaller trades, but does not allow someone to immediately have great influence on any individual question. This is important because for someone to exert great influence over a question, they must have exhibited the ability to predict accurately in previous questions.
There are two ways to make money in Inkling. Let's say a question is asked: "Who is going to win American Idol?" Stocks representing the various answers have prices associated with them. Remember, the price equates to the probability of the event occurring. If you buy "Chris" at $40, and Chris ends up winning American Idol, his stock will be "cashed out" at $100/share because the probability is now 100% he will win, which means you just made $60/share. You can also day-trade to make money. If you bought Chris at $40 and later that day his stock goes up to $50, you can close your position and make a $10/share profit. You lose money by the opposite happening. If Chris loses, his stock will be worth $0/share. If you owned shares of Chris at the end of the question, you would lose whatever amount you owned.
Yes, Inkling Markets has the ability for anyone to ask a question and manage it throughout its lifecycle. This capability can be shut off if desired so only a site administrator can ask a question.
Often times, especially when a question is first made available for trading, the prices will seem irrational. There is nothing wrong with this occurring, however. In fact, it's a perfectly natural event that usually results in the question adjusting itself over time. Why? Because a possible answer that is over-valued is a moneymaking opportunity for someone willing to "short" the answer (make a bet the stock price will go down.) The same theory holds true for an under-valued answer. Traders will see an under-valued answer as a buying opportunity and the price will rise more inline with what could be considered "rational."
An individual participant with a single account cannot manipulate the questions. If one person has multiple accounts, it is possible to "game" the questions by constantly buying and selling shares between accounts to pump up one account. In a corporate setting where people only have one email address (our typical method of authentication,) this is a non-issue. There is of course always the possibility of collusion among question participants, which would require checks outside Inkling's purview. Regardless, we deploy a rules engine that examines each participant that joins the site to detect signs of manipulation.
The real stock market works using an auction (called a Continuous Double Auction in market terminology.) When you buy shares of a stock, you are actually buying them from someone else. You never know who that is because there are so many trades happening, a computer handles it all. The price represents whatever the last trader was willing to pay for shares. In Inkling Markets, the price is set automatically according to the volume and sentiment in the question. For example, if someone buys 10 shares of an answer, we increase the price according to an algorithm. In essence, Inkling Markets is always the seller if you want to buy shares and the buyer if you want to sell shares. The algorithm we use is called the Market Scoring Rule, invented by Professor Robin Hanson at George Mason University.
Using a market scoring rule means there can be far fewer traders in a question because there does not have to be as much "liquidity" for the question to reach a conclusion. Using an algorithm also enabled Inkling to remove a lot of concepts related to stock markets that are difficult for people to understand, i.e. bid-ask spreads, etc. Because an algorithm is setting the price of the stock vs. the traders themselves, price jumps and drops are much more methodical. Where as in an auction, the price is whatever someone is willing to pay for a stock so the swings can be much more dramatic.
We offer Inkling Markets as "software as a service" which means we do all the technical heavy lifting. In fact, no technical resources need to be involved on the project. There is nothing installed at your datacenters and all users access our application through a browser (IE8+, Firefox, and Safari are all supported.)
Yes, in addition to hosting Inkling Markets ourselves, we have an on-premise version.
Data in Inkling Markets is logically separated in our database. In addition to following coding best practices, before each code release in to production, we undergo a rigorous automated testing process to ensure our security model has not been compromised by any code changes. All data can also be encrypted in the database upon request.
We protect all private client sites with a DigiCert Digital Certificate which are, by default, 256-bit encryption, the same as banks and other financial sites use.
We can change the look and feel of any site. Colors, fonts, backgrounds, etc. are all fair game. We have customized the features of Inkling Markets in the past to meet certain requirements, but all these customizations eventually make their way in to the application for everyone to use. We do not host separate versions of Inkling Markets for each client. If you require a heavy amount of customization, we have a REST API that can be used to re-create much of the functionality in our site.
Prediction interfaces, leaderboards, tickers, etc. can all be re-created using our API and placed in other web applications. Data can also be acquired through the API to be used in other applications.
All report data is available as a .csv file that can easily be imported in to Excel or any other data analytics software. Prediction data, price data, user data, and question data is all available in real-time for download.
Inkling Markets is fully SAML 2.0 compliant and can integrate with Single Sign-On tools such as Netegrity or Ping Identity. If the appropriate versions of these tools are not available or only a simple LDAP is in place, Inkling Markets also supports secure tokens that can be passed from another login and registration system.
We currently have close to 200,000 users across our public and client sites and have successfully processed millions of trades. Our largest site was for CNN during the 2008 Presidential Elections, launched on Super Tuesday. That evening we were processing dozens of trades and user registrations per second. Our system architecture has been scaled to more than meet peak demands with load balanced application servers and databases.
