Is it a good idea to encourage all employees to trade in these markets? Should insiders and/or highly uninformed people be allowed to trade? Do they help or hurt the market?

Today, organizations are exploring and taking advantage of different social networks such as blogs, wikis, collaborative filtering, and now, predictions markets. Prediction market is another technology that could be helpful to an organization in many ways. It can help generate predictions that efficiently aggregate many employees’ information and augment existing forecasting methods and provide insight into how organizations process information and how the same one flows within the organization

For predictions markets to work, even spread of information across the organization is recommended.
In markets where highly informed employees or insiders are allowed to trade some problems might occur:
• Employees from areas not related to the subject on the trading market will lose on average, and their incentives and motivation to trade will be reduced. Thus, the number of trades in the market will be hurt.
• Insiders or highly informed traders may also reveal highly protected information to the markets. They can also attempt to mislead the market about the outcomes in order to gain personal profit.

To avoid this problem and make the market work better, the organizations using prediction markets can try to evenly spread information across the organization, reducing the insider’s advantage. The organization could also do what happens in the stock market and prohibit insiders or group of employees highly informed about the subject in the market to trade in that specific market.

On the other hand, highly uniformed employees or employees who do not take the time to research and make and informed trade, sooner or later, will stop trading in the markets because they will have high probabilities to loose all what they have, and this will be an strong incentive for them to stop participating.