Session+_4+-+Forecasting+Part+2

Session+_4+-+Forecasting+Part+2 - Analysis of Emerging...

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Analysis of Emerging echnologies Technologies Forecasting September 1, 2010 1
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General Framework for the Course Identify the echnology Consider the Technology and e System in Make Predictions / entify Technology the System in Which it Operates Identify Opportunities Scanning and orecasting Forecasting Invention Information Implications 4
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Google Beat http://www.youtube.com/watch?v=GNxXVWag7fc&feature Google has multiple products that provide a window into the collective onsciousness and interests of the public Now they’re giving it to us a video consciousness and interests of the public. Now they re giving it to us a video.
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In-Class Exercise Using the handouts, make a 5-year forecast of the future of smart phone functionality.
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Prediction Markets Common for predicting discrete outcomes: Will <x> happen? The price reflects the probability of the event occurring. If you believe the event will occur, you can buy for 77 . If you are right when the event occurs, you will make 100 – 77= 23 . If you are wrong, you will ake 7= 7) ou can also sell at any time E g if you bought at 0 make 0 77= (77) . You can also sell at any time. E.g., if you bought at 30 , you can sell now at 77 and make 77– 30 = 47 .
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Price Determination Prices determined by a continuous double auction, ala, the New York Stock Exchange. In the simplest terms… If you want to buy, you register a bid that represents what you want to pay. If you want to sell, you register an ask that represents what you want to sell for. These are stored in an order book and matched. Bid Ask Market order: $0.45 $0.44 $0.44 $0.46 Order clears at whichever price was registered first. there are a lot of $0 40 Don’t have to specify a price. Just buy (sell) the lowest ighest) ask (bid) $0.43 0 46 $0.47 0 43 If there are a lot of $0.40 asks, then all bids are fulfilled, and the price to buy will become cheaper. (highest) ask (bid) price. $0.46 $0.44 Same price bids are order chronologically $0.43 $0.46
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Issuing Shares and Payoffs This applies only to prediction markets in which real money is traded.
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Session+_4+-+Forecasting+Part+2 - Analysis of Emerging...

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