A Parimutuel-Like Mechanism for Information Aggregation: A Field Test Inside Intel

39 Pages Posted: 10 Dec 2015 Last revised: 20 Mar 2016

See all articles by Ben Gillen

Ben Gillen

Claremont Colleges, Claremont McKenna College, Robert Day School of Economics and Finance, Students; California Institute of Technology - Division of the Humanities and Social Sciences

Charles R. Plott

California Institute of Technology - Division of the Humanities and Social Sciences

Matthew Shum

California Institute of Technology

Date Written: November 8, 2015

Abstract

A new Information Aggregation Mechanism (IAM), developed via laboratory experimental methods, is implemented inside Intel Corporation in a long-running field test. The IAM, incorporating features of pari-mutuel betting, is uniquely designed to collect and quantize as probability distributions dispersed, subjectively held information. IAM participants’ incentives support timely information revelation and the emergence of consensus beliefs over future outcomes. Empirical tests demonstrate the robustness of experimental results and the IAM’s practical usefulness in addressing real-world problems. The IAM’s predictive distributions forecasting sales are very accurate, especially for short horizons and direct sales channels, often proving more accurate than Intel’s internal forecast.

Suggested Citation

Gillen, Ben and Plott, Charles R. and Shum, Matthew, A Parimutuel-Like Mechanism for Information Aggregation: A Field Test Inside Intel (November 8, 2015). Available at SSRN: https://ssrn.com/abstract=2700815 or http://dx.doi.org/10.2139/ssrn.2700815

Ben Gillen

Claremont Colleges, Claremont McKenna College, Robert Day School of Economics and Finance, Students ( email )

500 E. Ninth St.
Claremont, CA 91711-6420
United States

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
Pasadena, CA 91125
United States

Charles R. Plott

California Institute of Technology - Division of the Humanities and Social Sciences ( email )

1200 East California Blvd.
337 Baxter Hall
Pasadena, CA 91125
United States
626-395-4209 (Phone)

Matthew Shum (Contact Author)

California Institute of Technology ( email )

Pasadena, CA 91125
United States

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