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?
I think it ultimately is a good idea to encourage all employees to trade in the prediction markets. The data seems to indicate that the larger the pool of participants, the greater accuracy. By encouraging all employees to trade in the markets, you are probably creating a market that has more inside information than a normal stock market may have. Of course there will be people with inside information, and there will be people who make unintellegent decisions as well, but I think that with a large enough base of users, these two groups will cancel each other out. So, I beleive that all employees should be encouraged to trade since the sway of the “informed” and “misinformed” should cancel out. Having said that, I think that these types of markets could only work in certain types of businesses.
