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dc.contributor.authorTaroon Aggarwal
dc.contributor.authorRicardo Valerdi
dc.contributor.authorMatthew Potoski
dc.identifier.citationPublished--Unlimited Distribution
dc.descriptionCost Estimating / Grant-funded Research
dc.description.abstractThis paper discusses the applicability of prediction markets in Defense Acquisition projects, specifically in estimating their cost and schedule. Several temporal and political factors can sometimes limit the effectiveness of traditional methods of project tracking and cost estimation, which may be overcome by using prediction markets. A prediction market provides an environment for traders to buy and sell contracts whose values are tied to uncertain future events. Efficient prediction markets have been shown to outperform available polls and other forecasting mechanisms. There are various prediction markets based on different models and algorithms. Our focus is not to analyze these models, but to identify the design principles of implementing a proven prediction market model in a defense acquisition project. Some pilot studies have been carried out that provide insight into the behavior of the market participants. We found increased involvement of participants and greater interest in the projects to be major benefits. The areas that need to be considered in the design and implementation of markets are related to the participants (like, which traders to include), the information to be collected or the stocks, the marketplace to be used and the incentive structure to keep the participants motivated to trade.
dc.description.sponsorshipAcquisition Research Program
dc.languageEnglish (United States)
dc.publisherAcquisition Research Program
dc.relation.ispartofseriesPrediction Markets
dc.subjectPrediction Markets
dc.subjectCost Estimation
dc.subjectPrediction Market Model
dc.titleWhen More is Better-Design Principles for Prediction Markets in Defense Acquisition Cost Forecasting
dc.typeTechnical Report
Appears in Collections:Sponsored Acquisition Research & Technical Reports

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