Prediction Market for CFOs Launches

It's like a fantasy sports league that might actually matter. CFO Magazine has announced a partnership with Crowdcast, the enterprise prediction market software provider that we profiled last week, to launch a series of markets on issues of relevance to corporate CFOs.

The site will use a traditional leaderboard system, rather than real money, where winners can win prizes ranging from subscriptions to the Economist Magazine (CFO Magazine is part of the Economist Group) to Amazon gift cards to a ticket to the CFO Rising East Conference.

The initiative likely stemmed from the results of the quarterly Duke University/CFO Magazine Global Business Outlook Survey where "the ability to forecast results" consistently tops the list of CFOs' concerns. On the platform, CEOs can bet on economic indicators such as business inventory levels, the rate of inflation, oil prices, consumer spending, CFO turnover, and accounting rules convergence.

More accurate predictions on these economic indicators and regulatory decisions would no doubt be of great value to CFOs and the collective wisdom of this particular crowd would likely be impressive. But will CFOs want to share their wisdom with all of their competitors and collaborate in this way? Will the thrill of the competition be enough to spur participation (I doubt that an Economist subscription is much of an incentive to this crowd)?

Unfortunately, you need to be a CFO in order to be let onto the site, so outsiders can't see the market's penetration. Alas, we also can't see the results. [Update: Crowdcast has clarified that the site is open (clicking "other" occupation lets you in fully) and I'm now in] Unlike many prediction market platforms out there, this one is actually asking questions that matter -- and I would love to see what the world's corporate financial leaders's forecasts.

Upstart corporate prediction market success story

Corporate prediction market startup Crowdcast in the New York Times:

During a pilot period, five large companies, including Warner Brothers and General Motors, have been using Crowdcast to predict revenue, ship dates or new products from competitors. About 4,000 bets have been placed, and predictions have been about 50 percent more accurate than official forecasts, Ms. Fine said.

At a media company with a new product to ship, 1,200 employees predicted a ship date and sales figures that resulted in 61 percent less error than executives’ previous prediction, according to Crowdcast. A pharmaceutical company asked a panel of scientists and doctors to predict regulatory decisions and new drug sales using Crowdcast, and they were more accurate than the company’s original prediction 86 percent of the time.

Pretty impressive. Crowdcast has debuted a new type of collective forecasting mechanism that you can read about here.