If the CEO of a company needs accurate predictions of future sales figures, a sales manager gives one estimate, one salesman reports his sales, and an internal prediction market provides a third data point. Which of these pieces of information embodies the BEST incentives for accuracy?
A) that from the prediction market
B) that from the sales manager
C) that from the individual salesman
D) all provide the same information, therefore they have equal incentives

Question

Quizplus · Accepted Answer

The prediction market provides the best incentives for accuracy because it involves a large pool of diverse individuals who have a financial incentive to make accurate predictions. The sales manager may have biases or may be incentivized to present a more optimistic view, and the individual salesman may have a small sample size or may be incentivized to inflate their own performance. The prediction market, on the other hand, incentivizes individuals to make accurate predictions because their financial rewards depend on it.

If the CEO of a Company Needs Accurate Predictions of Future