Google Bets on Google

Google is putting electronic prediction markets to work in the workplace. (Noticed from my obsessive reading of the Google blog, though I also noticed it posted at MR; I'll just link there on the off-chance that you aren't reading MR daily. Silly, I know.) Particularly fascinating:

Being geeks, we naturally used information theory to measure the entropy of our probability distributions:

In this graph, we have weeks before market expiration on the X-axis, and entropy (in bits) on the Y-axis. We've included some reference entropies to help your intuition, and you can see that in addition to accurate predictions, the distributions become steadily more informative and decisive (lower entropy) over time.

Our search engine works well because it aggregates information dispersed across the web, and our internal predictive markets are based on the same principle: Googlers from across the company contribute knowledge and opinions which are aggregated into a forecast by the market. Sometimes, just feeling lucky isn't enough, and these tools can help.

Here's a quick link for background on information theory.

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This page contains a single entry by published on September 22, 2005 9:59 AM.

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