This guest post is by Daley Epstein, a contributing writer for SmartBrief. She is reporting live from South by Southwest in Austin this week.
“What is social broadcasting? It’s about sharing your local information with the big world,” said Huaxia Rui, a doctorate student at the McCombs School of Business at The University of Texas at Austin. When this concept is compounded, sharing has additional value.
Rui works with Liangfei Qiu, a University of Texas graduate student, to run an on-going research project that uses “the wisdom of crowds” to predict box office sales. The experiment uses Twitter to gather data in the form of a game. As participants log in with their Twitter username, they are given $1000 in virtual money and are asked to make bets on the box office.
This approach proves surprisingly effective — the margin of error in predictions is only 10%. The two explained that many business examples share the following characteristic: small bits and pieces of relevant information that exists in the opinions and intuitions of diverse individuals. Through a carefully designed prediction market, Rui and Qiu extracted meaningful predictions about the future success of movies and proved that Twitter can foresee some business trends.
Interested in wages your bets and becoming a part of the research? Click here to learn more about iBet, the Twitter Prediction Market game.