Spend any time on the internet and you may get Rickrolled, a little trick where you click on a link that you think will take you to something meaningful and instead get a cloying 1987 pop music video. This silliness is a form of internet meme, or an idea that spreads rapidly from person to person with no clear motive or source.
We began wondering how such group consciousness takes off after being Rickrolled on the consulting blog of Mark Pesce, a genius who has forecasted changes in human intelligence resulting from our internetworked behavior. (In a clever twist, above, Mark fakes with Rick Astley, then shows photos of ALL the people he is connected to online, including us!) Mark notes that 11 million years of evolution have given humans big brains, but the “software” that allows us to use our tools typically lags generations behind the “hardware.” For instance, we had the intellect to develop civilizations for thousands of generations … so why are roads and public water and printing presses such recent inventions?
Mark makes this point because today we are witnessing a new form of tools, a hyperconnectivity that puts cell phone networks in the hands of more than 3 billion people. Each day the business and tech press writes about “breakthroughs” in technology, marginal increases in tool use such as Facebook or the iPhone or Twitter, but the real innovation of our new networks is yet to be discovered — and may take generations.
The trippiest idea may be that vast groups of people merge into a higher form of collective intelligence, a hive mind that can predict future outcomes. We riffed on this a bit today in BusinessWeek, and think it has applications for both human governance and — at a tactical level — predicting marketing outcomes. Companies such as Google and Yahoo have run prediction markets to ask employees to place bets on which new products will succeed. Microsoft has asked its employees to bet when software will be ready for testing, or even when bugs will be found and fixed.
Prediction markets work because groups of people, when they bet for personal gain, make tiny judgments that average out to clear foresight about the future. Ask 100 people how many marbles are in a jar, and the average of all guesses will be close to reality. Collective bets could predict future scenarios. Will the bailout bill fix the economy? Will your next marketing initiative succeed or fail? Rather than using focus groups or executive judgment, the best source may be to ask an entire marketplace. You’ll either get a new form of brilliant intelligence, or a link to a silly Rick Astley video.
Prediction markets do have a major logic flaw, as noted by our Twitter colleague Bud Gibson. If such markets really can predict the future, observers will note this … and then try to change the future itself. If McCain’s camp sees Obama’s odds of success are pulling ahead, does this mean McCain is more likely to make aggressive moves to try to regain his momentum? The most interesting thing about future predictions is that if we can really do it, we might not like the future we see.
If you are interested in prediction markets, here are a few worth exploring:
Hollywood Stock Exchange — which movies will succeed at the box office?
Iowa Electronic Markets — real-money futures on who will win the U.S. presidency. Don’t miss the latest McCain vs. Obama “winner take all” prediction graph or detailed price chart.
Intrade — predictions on elections, current events, science and technology.
The Popular Science Predictions Exchange — bets on when technology gadgets will do this or that.
The now-defunct Policy Analysis Market, an attempt by the U.S. government to use group market intelligence to predict when bad things might happen around the world. The concept was quashed following controversy over allowing people to bet on when terrorism might strike or world leaders would be assassinated.