Quality Market: Design and Field Study of Prediction Market for Software Quality Control

Given the increasing competition in the software industry and the critical consequences of software errors, it has become important for companies to achieve high levels of software quality. Generating early forecasts of potential quality problems can have significant benefits to quality improvement. In our research, we utilized a novel approach, called prediction markets, for generating early forecasts of confidence in software quality for an ongoing project in a firm. Analogous to financial market, in a quality market, a security was defined that represented the quality requirement to be predicted. Participants traded on the security to provide their predictions. The market equilibrium price represented the probability of occurrence of the quality being measured. The results suggest that forecasts generated using the prediction markets are closer to the actual project outcomes than polls. We suggest that a suitably designed prediction market may have a useful role in software development domain.