Prediction markets are only effective if a lot of people participate. What are the best ways to encourage more traders and trading within internal company prediction markets?
What motivates people? Autonomy, Mastery, and Purpose, as some have proposed? The stockmarket allows a degree of autonomy, as each person can purchase stocks, bonds, derivatives, etc. as he or she pleases. Many people think they have a “knack” for making good investments or they have a “system.” The purpose of the stock market, however, is very limited: making money. On-line prediction markets, such as InTrade offer money as an incentive for participating in their prediction market. Sports betting is interesting in that people who are addicted to gambling on sports often get themselves into financial ruin. So is it the sports that is the motivator, the chance to win big, or is it the activity itself that drives these people?
Some predications made in support of Fantasy Football leagues are incredibly accurate. One site, before the season even started, predicted Atlanta Falcons running back Michael Turner would finish the 2010 season with 1,373 rushing yards and 11 touchdowns. In fact, by the end of the NFL regular season Turner posted 1,371 yards on the ground, and he [scored touchdowns] 12 times. link
A Time Magazine article stated money does buy happiness – up to around $75,000 a year. So maybe for people earning less than that money is a good incentive to participate in prediction markets. For people earning more than that amount, other incentives such as autonomy, mastery, and purpose may be more appealing.
