Prediction Markets: A New Tool for Strategic Decision-Making
1 August 2010
By Dr. Gregory Hamm with former NERA Senior Vice President Dr. Adam Borison
Uncertainty is at the center of many of the most important strategic decisions made by private businesses and public agencies. Most decisions are both data-driven and judgment-driven. However, in the current environment, the really important decisions fall largely into the latter category. Both public and private decisions are driven by judgmental uncertainties such as the rate of climate change, the impact of globalization, the prospects for regional conflicts, the extent of environmental legislation, or the advancement of technology.
This article, published in the Summer 2010 issue of California Management Review, is designed to help improve the way that these important judgment-driven decisions are made. First, the authors briefly review current practice for assessing judgmental uncertainty in strategic decision-making. Then, they suggest how an emerging tool -- prediction markets -- can improve this practice and thereby improve the quality of decisions that affect us all.
"Prediction Markets: A New Tool for Strategic Decision Making" was published in California Management Review, Volume 52, Issue 4 - Summer 2010.
