Preference Markets: Organizing Securities Markets for Opinion Surveys with Infinite Scalability

Abstract

Preference markets address the need for scalable, fast and engaging market research. The Web 2.0 paradigm, in which users contribute numerous ideas that may lead to new products, requires new methods of filtering those ideas for their marketability, and preference markets offer just such a mechanism. For faster new product development decisions, we implement a flexible prioritization methodology for product features and concepts, one that scales up in the number of testable alternatives, limited only by the number of participants. Preferences are measured by trading stocks whose prices are based upon share of choice of new products and features. We develop a conceptual model of scalable preference markets, and test it experimentally. We find that benefits of the methodology include speed (less than one hour per trading experiment), scalability (question capacity grows linearly in the number of traders), flexibility (features and concepts can be tested simultaneously), and respondent enthusiasm for the method.