What you get when 1,000+ Googlers start betting

Posted Jan 7th 2008 3:03PM by Zack Miller
Filed under: Google (GOOG)

The New York Times has an interesting piece this morning -- "Google's Lunchtime Betting Game" is as much about so-called "prediction markets" as it is about Google (NASDAQ: GOOG), its culture, and its driving values.

Prediction markets are speculative markets created for the purpose of making decisions (see Wikipedia's page on predictive markets). The NYT article focuses on a specific project run by two outside economists, Justin Wolfers of the University of Pennsylvania and Eric W. Zitzewitz of Dartmouth College, and a Google economic analyst, Bo Cowgill.

The focus of the experiment is to study how information makes it way through companies. The study "used the betting patterns of employees and their demographic details to try to find common factors among people with similar opinions -- is it type of job or level within the corporate structure, being friends or sitting close to one another?"

Over 1,000 Google employees took part in the study, betting fake Google dollars (called Goobles) on certain outcomes ranging from "Will Google Open a Russian Office?" to "Will Apple release an Intel-based Mac?"

You can read the entire report here.

What was the major finding?

The strongest correlation in betting was found among people who sat very close to one another, trumping even friendship or other close social ties.

The authors claim that companies should give more credence to where and how knowledge workers interact in the workplace, or "microgeography." Since the study found that information traveled quickest among employees who were the closest together, the authors recommend packing knowledge workers in.

Are you packing in Google stock at $650?

Zack Miller the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author holds a long term stock position in GOOG.

Tags: featured, GOOG, Google, predictive markets, PredictiveMarkets, sociology