We live in a consumerist, market-driven world, where everything has a price. There is a lot of interest in frictionless markets, price-determination, etc. I think that many of these studies naively focus on the purely economic view ("rational actors") and miss the social and systems aspects. More on this soon.

Latest auction research

According to the Economist, new research shows that online auctions may not be the perfect pricing mechanism after all. Apparently, adding a picture ups the final bid price.
Duh! Classical economists have an irrational belief in people's rationality!

Auctions as social research

The Iowa Electronic Markets are real-money futures markets in which contract payoffs depend on economic and political events such as elections. Participants use real money, so the idea is that people will put their mouth where their money is. But they failed to predict the presidential election.

Idea Futures: "Our policy-makers and media rely too much on the "expert" advice of a self-interested insider's club of pundits and big-shot academics. These pundits are rewarded too much for telling good stories, and for supporting each other, rather than for being "right". Instead, let us create betting markets on most controversial questions, and treat the current market odds as our best expert consensus. The real experts (maybe you), would then be rewarded for their contributions, while clueless pundits would learn to stay away."

In-house futures markets for business forecasting

A problem in many businesses is that sales goals and other forecasts tend to be too optimistic.

There was an interesting article in the Economist a while back, which mentioned a project by Charles Plott's at HP that used internal futures markets to predict sales figures. Apparently the figures were more accurate than the over-optimistic projections generated by sales managers. More on this when I dig up the details. Meanwhile he gets a mention in this wrapup in Wired.

Experimental Economics

Al Roth's game theory and experimental economics page.