Prediction Markets and Educational Gaming

Image representing iPhone as depicted in Crunc...
Image via CrunchBase

A prediction market is a speculative market “created for the purpose of making predictions”, according to Wikipedia. OK, that definition doesn’t exactly spell out the concept very well, so here’s my understanding of this term: a prediction market provides its users with a means of betting or speculating on the outcome of predictions regarding future events, such as who will win a presidential election or exactly when humans will first set foot on Mars. It’s a bit like opening up the future to the “wisdom of crowds” (see James Surowiecki’s book on this topic), allowing a large group of people to collectively speculate on the likely outcome of a future event, even “intangibles” such as the popularity of a novel or film yet to be released. The act of speculation can add a monetary value to the event, allowing it to be further traded, just like any other commodity.

In a learning and teaching context, prediction markets have been used to speculate on the uptake of communication technologies in tertiary institutions. Bryan Alexander, a contributor to the Educause Review recently wrote an article about research into predictive markets in Higher education. As research director for the US National Institute for Technology and Liberal Education (NITLE), Bryan reported on a web-based gaming approach that explored “propositions” on future events beginning in 2008. One example proposition asked about smartphone platforms and their presence on campuses. Gamers were asked to predict

“Which smartphone or smartphone platform will be the most popular for campus-supported teaching and learning projects by May 2009: iPhone, Android, Blackberry, Palm Pre?”.

NITLE is a non-profit community-based initiative located at Southwestern University in Austin, Texas that is dedicated to helping “educational organizations use technology effectively to strengthen undergraduate education”. According to its homepage NITLE allows participants to “use a market system to learn about emergent practices for higher education”. All participants are initially given $5000 virtual dollars to use for buying shares in one part of a proposition, or to start a market of their own. In the example quoted above, for example, the iPhone attracted a share price of $50.95 (which equates to a probability of 50.95% that it would be the market leader) by the time the proposition closed in May, 2009.

While this level of educational gaming using share-trading seems a natural for any US-based institution, the list of participating institutions and universities is impressive, including Yale, Vassar, Georgetown University, Chicago University and Brandeis.

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7 Responses to “Prediction Markets and Educational Gaming”

  1. 1 Bryan Alexander September 10, 2009 at 5:48 am

    Thank you for the links and thoughtful comments, Tom.

  2. 3 Bryan Alexander September 10, 2009 at 11:31 am

    You’re very kind, Tom. Can you say more about your interest in futurism (or future studies) and higher education?

    • 4 tickerr September 10, 2009 at 3:09 pm

      You can click on the “About T3” tab to read my comments on the focus of the blog. My personal research interests are listed under the next tab, “My current research interests”, although I should really update these to include social networks in education and emerging technologies driving Web 2.0 applications in general. As far as my interest in futurism and future studies is concerned, it’s very much tied into my work as an educational developer at Macquarie University. I spend part of my time exploring emerging technologies and the application of same to tertiary learning environments, so I’m naturally interested in innovative approaches such as the NITLE programs. In fact, anything that promotes a new view of educational delivery or the non-intuitive application of paradigms such as gaming theory to education is likely to attract my interest. Then again, this may all just be my way of coping with the sense of being overwhelmed by the exponential acceleration of technology in the education field, and in the world in general, who knows?

  3. 5 Bryan Alexander September 13, 2009 at 12:04 pm

    Then I’m glad to e-meet you. Sounds like we have some stuff in common.

    The main NITLE blog, Liberal Education Today, should have some fodder for your work. And more of it, over the next few months.

    Is this your main blog? My RSS reader stands ready.

    • 6 tickerr September 29, 2009 at 6:07 pm

      I’ll be putting NITL’s blog on RSS asap. At the moment T3 is pretty much it for me, although it may spawn some focussed EdTech blog(s) in the near future.

  4. 7 Bryan Alexander September 30, 2009 at 10:05 am

    Thanks. And keep an eye out – we’re launching two more blogs over the course of October!

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