A Case-Study to For Energy Sector Markets Prediction

Corporate decision making processes face inevitably the impact from ecosystem´s uncertainty and complexity. Given that, information availability in dimensions such as time, quality and diversity assumes critical importance to accurately support management teams. Growing interest in prediction markets can be justified by two main features. On one hand, the mechanism manages to stay continuously close to meaningful information. On the other, all bits of dispersed knowledge are aggregated via market, which economic theory has proven very effective. This paper attempts to assess prediction markets value contribution to energy sector decision making activities, evaluating the benefits and drawbacks that would result from its implementation to different management challenges encountered inside EDP, a leading Portuguese energy company. The research concludes that the Prediction Markets can add value when compared to other methods available in the management toolkit, bypassing the shortcomings from group methods like deliberation. The resulting findings also highlight the importance of context, top management nurturing as well as an adequate incentives engine as crucial to the success of its implementation.