© 2015 mitch & morgan inc. all rights reserved 1 mitch & morgan prediction markets the...

© 2015 MITCH & MORGAN INC. ALL RIGHTS RESERVED1

MITCH & MORGAN PREDICTION MARKETST H E S C I E N C E B E H I N D T U R K E Y S , TA X I D R I V E R S A N D

P R E D I C T I O N M A R K E T S

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WHAT IT DOESWHATPrediction markets allow you to identify business-critical events, anticipate most likely outcomes and mitigate credit, market and operational risks and thus drive return on investment.

“OUR VALUE PROPOSITION”



VALUE ADDING PREDICTION SCHEMA

Identify events & predict KPIs

Anticipate slippage in business metrics

Mitigate operational, market, and credit risks

The three main value drivers of prediction markets are identification, anticipation and mitigation of events and associated risks



MARKET EXPERTS100+ bitcoin investors

participate in the market topredict the bitcoin prices

for the next three month

PRICESThe users with the most

accurate predictionsreceive bitcoins at the

end of each cycle

VOTESAll users place votesweekly and all data

is aggregated againstthe intended timeline, here:

quarterly

BITCOIN PRICESIn order to take hardware

investments that are remunerated in bitcoins – at least in part – investorswant to know where the

prices will be in the future

BITCOIN USE CASE: HOW TO TIME HARDWARE INVESTMENTS



OPEN VOTES100 bitcoin investors place weekly

votes which are then aggregated to a 12 week average as investors’

hardware investments largely depend on the expected bitcoin prices

PREDICTION PROGRESSIONAll weekly predictions show the vote development over time, charts can be grouped against any timeline

BOTTOM-LINE IMPACT: BITCOIN USE CASE

Bitcoin Price at 3/22/15

Prediction Vs. Actual Value:

100,5 Vs. 99



EKOMI USE CASE: HOW OCCUPANCY RATE OPTIMIZATION INCREASED ROI

$98kRevenue added through managing occupancy rates in

correct languages and SLAs effectively

#1Question: How many

reviews in what language & SLA will

we need to manage?

$261KAnnual losses

through under-fulfilled occupancy rates in the

feedback managm. dptmt

116Votes to predict the

KPI “incoming reviews”

By anticipating KPIs prior to dead-lines, necessary steps

can be undertaken to mitigate adverse outcomes and the

associated risks. You can get back on track early enough -

even exceeding expectations



BOTTOM-LINE IMPACT: EKOMI USE CASE

12. Jan, 9:55Prediction: 291.695 30th Jan,

291.20012th Jan,

291.695

A rating agency case: With a VARIANCE OF 0,17% of predicted vs. actual values, the PREDICTION ACCURACY was 99,83%

PREDICTED VALUEOn January, 12th the market participants predicted 291.695 incoming ratings for the end of the month.

ACTUAL VALUEThe end-result on January, 30th was 291.200 incoming ratings against the predicted 291.695 ratings.



THE EKOMI CASE: PAYROLL SAVINGS

INCOMING REVIEW STREAMS• Prediction of incoming review streams per month &

quarter• Break-down by positive/negative reviews, time

zones/countries, languages, SLAs, feature requests

WORKFORCE SCHEDULE• Scheduling customer feedback managers in

respective languages and time zones with feature-related skill-levels

• Safeguard to stay compliant with Service Level Agreements

MAXIMUM OCCUPANCY RATE• Optimal occupancy in terms of review language, time

zone, SLA and feature requirements• High payroll savings due to maximum efficient

occupancy

P r e d i c t i n g i n c o m i n g r e v i e w s t r e a m a l l o w s f o r m a x i m u m o c c u p a n c y r a t e p l a n n i n g



VARIANCEWith a variance to median of 90% the variance of the prediction against the

actual value amounts only to1,52%, which is highly accurate considering

the small sample size of only 19 participants.

PREDICTION Vs. ACTUAL VALUEWith a predicted value of 100,5 scheduled BW applications against the actual number of 99 application run the prediction accuracy is 98,48%.

BOTTOM-LINE IMPACT: BASF USE CASE

1,52%

Number of BW Applications? According to the normal distribution, it becomes evident that private information holders outweighed incorrect forecasts through precise votes with high stakes in the market. Total votes resulted in a most accurate prediction against the median.

Prediction Vs. Actual Value:

100,5 Vs. 99



THE BASF CASE: APPLICATION MANAGEMENT

BW APPLICATIONS• Prediction of anticipated number of run BW applications per

week• Accurate prediction of total weekly BW applications run

helped optimizing server management

SCHEDULING DOWNTIME AND MAINTAINENCE• Depending on the anticipated number of applications run,

BASF adapted downtime and maintenance schedules• Maintenance sessions were postponed when large projects

with significant application processing required 100% uptime

MAXIMIZING UPTIME• Being able to plan server occupancy, it allowed BASF to

ensure application uptime for important projects • By minimizing downtime BASF generated significant cost savings in terms of saving time and thus increase production efficiency

P l a n n i n g d a t a w a r e h o u s e s e r v e r o c c u p a n c y a n d s c h e d u l e m a i n t e n a n c e s e s s i o n s



HEDGING BUSINESS RISKS – AN EXAMPLE

E.g. are we going to hit

our Real Revenue Growth target?

1. Binary: Yes/No

Real Revenue Growth (COGS)

2. Range: % of

fulfillment

Real Revenue Growth (COGS)

3. Multivariate: Asking why

Decrease in pricing

Increase in costs

Decrease in costs

Increase in pricing

A typical cadence would be to ask the market, 1. whethera KPI target will be hit or missed, then 2. asking for an anticipated fulfillment rate & proceed to 3. multivariateoptions of as to why the metrics will be under-fulfilled or outperformed.



A FINANCE EXAMPLE: PREDICTING CLAIMS FOR NEW PRODUCTS

IDENTIFY PROSPECT & CONSULTANCY RISKS • Financial consultants know the risks that stem from newly

created products• Identify the potential risks through asking your staff that

handles those products every day in customer meetings

PLAN PROVISIONS AND UPDATE PROSPECTS• Every new product carries certain risks• Prediction markets allow you to plan provisions and identify

potential risks stemming from product prospects and consultancy

MITIGATE RISKS FROM LIABILITIES• By identifying prospect risks and the potential number of

claims, issuers can plan and mitigate associated risks by understanding them earlier and acting on the insights the market provides

• Information that is not available anywhere else

P r e d i c t i n g p o t e n t i a l c l a i m s , s e t t l e m e n t s a n d l i a b i l i t i e s f r o m n e w p r o d u c t s


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HOW IT WORKSHOW

Prediction markets generate information that is not available anywhere else by leveraging collective social intelligence. People engage in your market to anticipate most likely outcomes of business events and receive incentives depending on their prediction accuracy.

“YOUR STOCK MARKET FOR INFORMATION”



INGREDIENTS OF A PREDICTION MARKETIn order to present private information in a market people need to be

• anonymous, • require incentives and • a format of delivery.

Prediction markets provide all of the above. The market generates signals based on peoples’ predictions. You receive insights that are not available anywhere else.

OUR PREDICTION MARKETS HAVE A SUCCESS RECIPE



3 STEPS TO YOUR OWN PREDICTION MARKET

1.Market Setup

2. Participant Selection

3. Engagement

& Insights

After an initial workshop you are good to go within one and a half hours and no implementation!

• Designing scale & scope: the market mechanics

• Defining question sets

• Build incentive structures

• Deploy engagement model

• Identify private information holders

• Invitiation to participate

• Market engagement• Signal generation

and payout structure

• Flaging of critical signals

• Aggregation of insights

• Central access in dashboard

• User engagement in communication center



WHAT THE DIFFERENT PARTS LOOK LIKE

A stock market for information that delivers

most accurate insights

People hold private

information and present it when given the right

format of delivery

The market retrieves the

private information

through a trading mechanism

The early warning system flags all business-critical

predictions in the central dashboard

All insights are aggregated and can be drilled down in the

communication center

Put your money where your

mouth is

One dashboard for allinsights at your

fingertips

Anonymous insights, yet you

commuicate with the people

PREDICTION MARKET

VOTES, BETS or TRADES

EARLY WARNING SYSTEM

COMMUNICATION CENTER

EOPLE ARKET ASHBOARD NSIGHTSP M D I



INCENTIVE STRUCTURES IN PREDICTION MARKETS

Proper incentive schemes ensure maximum engagement. the most accurate predictions receive the highest payout

AWARDS

PRIZES

SPIFs

PAYROLL

USER ENGAGEMENT

Integration into payroll structures with cash payouts

Monetary incentive schemes based on bonus agreements

Ranging from brand new cars to theater tickets

With recognition, accolades and company-wide awards

Global rankings determine the winners based on the accuracy of their predictions


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THE PRODUCTMitch & Morgan gives you an executive level prediction market solution that is easy-to-use, highly scalable, cost effective, instantly set up, integrates seamlessly with your existing data and leverages information that you do not get from anywhere else.

“No gimmicks, just insights”



OUR APPROACH TO A MARKET ROLL-OUTWe design the story around your prediction market for your organization ad deploy it for you.

We define the kick-off storyline aligned with

your philosophy, values and programs.

01 THE STORY

Participants are privileged to be invited – you trust them to hold

valuable private information. We ensure maximum user

engagement in order to generate the most accurate results in your

prediction market.

02 THE STRATEGY

The central dashboard enables you to evaluate results at all times and address business-critical events and forecasts in real-time.

03 THE RESULTS



4. Insights AggregationAggregation of all information, the insights are bundled in one dashboard.

3. User EngagementThe right incentives drive maximum participant engagement.

2. Market SetupDesign of the mechanics & tying existing successful programs.

FOUR STEPS TO YOUR PREDICTION MARKET

1. Expert WorkshopSelect users, define incentive structures and engagement models.

Our Process WorksAcross our existing success cases we achieve +90% prediction accuracy with all KPIs, even with small sample sizes, meaning only a small number of users were invited & voted in the market.

And we make it work for youWe design all market mechanics, provide best practices, adapt engagement models, define incentive structures and tie them in to your existing company plans & programs.



s

1.5

hours after the initial kick-off we go live with your prediction market – you start generating insights right away



Place Vote, Bet Or Trade

You chose the terminology – we

use it

Range & WagerHigher stakes

in the market & precise forecasts result in higher

potential payouts

PREDICTION TRENDThe market moves as users are voting on events and pivot when forecasts are most accurate

How much revenue are we going to hit?

Posting questions to the market

Every question can target and engage

different user groups

107%

Place Bet

-149 – 182%

USER INTERFACE “VOTE” - black

Current PredictionPredictions come in form of:

• Ranges• Binary options (y/n)• Multiple choices



OUTLIERSSignificant outliers are

flagged as signals by the early warning system

and application owners are notified in real-time in

the central dashboardRANGE & WAGERDepending on the stake in the market and how precise the prediction is, the potential payout is adjusted accordingly

107% (23,01%) users:171 votes:226 KEY STATSAll key statistics for every question are publicly available, in detail stats are only visible to the application owner in the central dashboard

What percentage of forecasts will we achieve?

QUESTIONSIn every question set there is one key question and several follow-on questions that drill down on critical events and risks

USER INTERFACE “VOTE” - white

OVERVIEWUsers only have limited

access to public tabs: My Assessments, Ranking &

Rewards, and Open Votes.

The application owner can access all votes, rankings, the central

dashboard and communication center

My Assessments



RANKINGSThe users with the most

accurate predictions rank highest and usually

receive the incentives

PRIZESM&M implements incentive structure according to your company's programs and bonus schemes

USER INTERFACE “RANKING” - white



MITCH & MORGANPREDICTION MARKETSA easy-to-use, one stop solution that is

scalable, cost effective, fast to set up and generates insights for you that are

not available anywhere else.

Integrates with your existing data

Easily set up – plug’n’play

Cloud-based



OUR SOLUTION AT A GLANCEEXISTING DATAWe seamlessly integrate with your existing data, information is exchanged via API

RETURN ON INVESTGenerating ROI requires metrics. We forecast KPIs to increase fulfillment and decrease risks.

TOTAL COSTSAfter defining scale and scope it is straight forward: a retainer and a user-based fee

IMPLEMENTATIONWe are fully cloud-based and do not require any installation, unless you want our solution operated on your servers

SCALABILITYWe are fully scalable from 100 to 10.000 users – for larger project we simply add resources

Prediction Markets



Talk to us now!

MITCH & MORGANContact

E: [email protected]

W: www.mitch-morgan.com

P (US): +1 424 666 3284

P (DE): +49 30 2000 444 219

mailto:[email protected]



http://www.mitch-morgan.com/

http://www.mitch-morgan.com/


© 2015 mitch & morgan inc. all rights reserved 1 mitch & morgan prediction markets the...

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