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Release: March 15, 2002

Company formed at TIC to commercialize prediction markets technology

Four University of Iowa professors who are associated with Iowa Electronic Markets (IEM) have formed Market Technology Systems LLC (MarTek) to commercialize prediction market technology.

Through the company located at the UI's Technology Innovation Center (TIC) on the Oakdale Campus, the professors will operate prediction markets for businesses and governmental agencies. At its meeting March 13-14, the Board of Regents, State of Iowa approved the lease at 131 TIC for Market Technology Systems.

MarTek was founded by Joyce Berg, Forrest Nelson, George Neumann and Tom Rietz, who are professors in the UI Tippie College of Business. The concept of prediction markets, which will be promoted by MarTek, came out of research in the college’s Iowa Electronic Markets project. The IEM began in 1988 as a research and educational tool, enabling students to trade "shares" of political candidates or parties, with the payoff depending on the election results. These markets have been used to predict the outcome of other uncertain events, such as variations in stock prices or the interest rate target set by the Federal Open Markets Committee. The markets have been highly accurate in predicting outcomes, such as the winners of several presidential races. The IEM will continue to be operated by the Tippie College of Business.

"If markets can be used to predict elections, they can be used to predict other events, too," said Nelson. "Every business firm and governmental agency faces uncertainties about future events, uncertainties that hinder their decision processes. Our clients can use transaction prices from these markets as indicators of various outcomes and be in a better position to make decisions."

In coordination with Neoteric Technologies Inc. of Huntsville, Ala., the group plans to develop markets for the Department of Defense and related agencies to predict the outcome of events such as when development of ships, aircraft or other pieces of military equipment might be completed. Markets could also be set up to predict outcomes of political events with defense implications, such as elections in volatile regions or when a peace accord between Israel and Palestine might be signed.

In the private sector, MarTek and Neotek will seek clients who might want to predict the development of a new product, the success of contract negotiations, or completion of a development project on deadline.

With the addition of MarTek, the TIC will have 13 tenant companies. Some 20 TIC "graduate" firms have expanded their business after leaving the incubator. More than 60 technology companies have been accepted as TIC tenants since the incubator was established in 1984.

To contact MarTek, call Forrest Nelson at (319) 354 7286.For additional information about the TIC incubator, contact Tom Bauer, associate director, at (319) 335-4067.