Yahoo's new currency--the Yootle

David Pennock of Yahoo Research gave a presentation at the company's headquarters as part of an evening “confab” with a number of experts in the prediction market field. As part of a virtual environment called Yootopia, Pennock said the Yahoo has created a currency, called the "Yootle," for prediction markets or for buying favors from other people on the network. A Yootle research paper, "Group Decision Making with Yootles," complete with proof theorems, describes the currency as follows:

Yootles, just like with government currency, work because of mutual agreement. And just like with any currency, the whole economy is nothing but a score keeping system for favors owed. Participants simply owe or are owed yootles. All yootles transactions, debts, and balances are tracked in a ledger system. 

"You can use it to make group decisions," Pennock said. "We try to make it as easy as possible for users with a Web interface, email and an SMS interface. You can bid on where to go for dinner, and friends bid and then we run a decision auction that figures out where to go to dinner and the payments. You get compensated if you don't get the restaurant you want."

Pennock said that Yahoo Research is working on an entire Yootle economy with prediction markets inside, as well as other forms of auctions, group decision-making and friendly wagers. It's not hard to imagine Yootles and group decision making mechanisms baked into the Yahoo's virtual social network further down the road. When you have half a billion connected users as Yahoo does, making friendly wagers can be a compelling social application.