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Software Quality Market: Design and Field Study of a Prediction Market

20 Pages Posted: 27 Feb 2012 Last revised: 5 May 2012

Easwar A. Nyshadham

Nova Southeastern University

Janaki Krishnamurthy

Nova Southeastern University

Date Written: February 26, 2012

Abstract

Given the increasing competition in the software industry and the critical consequences of software errors, it has become important to develop methods for early forecasting of software quality. This research utilized a novel forecasting approach based on recent work in using prediction markets, which has proved useful in a variety of situations. In a prediction market for software quality, individual estimates from diverse project stakeholders such as project managers, developers, testers, and users were collected at various points in time during the project. Stakeholders reveal their estimates by trading in software quality contracts in a market designed for the task.

Data were collected using a prediction market and a survey from a live software project at three different stages of completion (requirements, initial release and final release phases). Analyses of the data suggests that i) forecasts from the prediction market differ from forecasts from surveys and ii) prediction market forecasts are more accurate predictors of eventual quality than surveys. Thus, prediction markets can serve as an additional mechanism for aggregating stakeholder beliefs about software quality.

Keywords: software quality, prediction market, poll, field study, field experiments, financial markets, information and internet services, computer s

JEL Classification: C93, D53, L86

Suggested Citation

Nyshadham, Easwar A. and Krishnamurthy, Janaki, Software Quality Market: Design and Field Study of a Prediction Market (February 26, 2012). Available at SSRN: https://ssrn.com/abstract=2011374 or http://dx.doi.org/10.2139/ssrn.2011374

Easwar A. Nyshadham

Nova Southeastern University ( email )

3301 College Avenue
Ft. Lauderdale, FL 33314
United States

HOME PAGE: http://scis.nova.edu/~easwar

Janaki Krishnamurthy (Contact Author)

Nova Southeastern University ( email )

3301 College Avenue
Ft. Lauderdale, FL 33314
United States

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