Designing Online Information Aggregation and Prediction Markets for MBA Courses

Abstract

At our School of Management, novel Internet-based tools are employed in order to enrich the instruction of theoretical aspects of decision making with hands-on experience and expose the students to these unique tools. One example is the incorporation of online Information Markets that use the financial markets mechanism as an information aggregation and processing engine. In this case the underlying asset is a statement to be evaluated or an event to be forecasted. The resulting market price reflects the traders’ collective opinion as to the event's probability of occurring or the statement to be corrected. In class, three types of preconceived markets are implemented in order to expose the students to the versatility of the tool: prediction markets, information aggregation markets, and opinion markets. The hands-on activity was found to be essential for enhancing the understanding of this complex topic, and it added interest and excitement to the lessons. Furthermore, by surfacing opinions and attitudes of the students, this activity can assist in improving instruction processes and in-class dialogue. The development of an effective teaching environment required a substantial investment in time, but the direct monetary costs were relatively low.

Keywords: online simulations, information markets, prediction markets, wisdom of crowds, crowdsourcing, MBA course

JEL Classification: A23, C53