Is it a good idea to encourage ALL employees to trade in these markets? Should insiders and/or highly uninformed people be allowed to trade? Do they help or hurt the market?
Yes, I think it’s a good idea to encourage all employees to trade in prediction markets for a variety of reasons. First, it can provide companies with valuable statistical data from a large population, helping them to make better business and forecasting decisions. This in turn can be use for marketing purposes and finding new and upcoming trends. Another important reason is this information can be free. Companies spend thousands, if not millions of dollars researching marketing trends, and companies can use this tool to cut these costs. Also, the company will save the end customer money through the cost savings. Finally, this strategy fits very well with the Google’s philosophy of democracy works best. The more people are involved, the more accurate these markets will become. Furthermore, I think insiders and highly uninformed people should be allowed to trade as well, because it not only simulates the real world but also informs everyone. If the insiders did not participate, then there would be information gap between the insiders and the public. By not freely releasing information, they will hurt the market by creating arbitrage opportunities and inefficiencies. The bottom line is that prediction markets are still a prediction and have some margin of error. Therefore, people and companies will need to know and understand these risks before jumping in with both feet.
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