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I just want to start off any discussion of this with an accurate understanding of Surowiecki's catchphrase. "The wisdom of crowds" doesn't refer to a general t

I just want to start off any discussion of this with an accurate understanding of Surowiecki's catchphrase. "The wisdom of crowds" doesn't refer to a general tendency for large groups of people to be right about anything, under any circumstances. It refers to the fact that crowds with market-like dynamics tend to be surprisingly good at ascertaining information accurately. It suggests that the whole converging-on-the-right-price aspect of markets might be a specific instance of a more general phenomenon. For instance, gamblers are also quite good at assessing probabilities, and when country fairs hold competitions to see who can guess the weight of a cow, the guesses tend to cluster around the correct answer. Obviously, as with anything related to economics, there are a ton of caveats, and people who don't understand the phrase's intent have misused it wildly.

baddox 12y ago
> For instance, gamblers are also quite good at assessing probabilities, and when country fairs hold competitions to see who can guess the weight of a cow, the guesses tend to cluster around the correct answer. Does each guess submission cost money? If so, then that's a pretty standard market. People who know more about cow weights are more likely to spend money because they have more to gain. Of course, even with free tickets, it could just be that people at rural fairs know a reasonable amount about cow weights.
- warfangle 12y ago
  I've seen the example as "guess the number of jellybeans in the jar," as well.
- ghaff 12y ago
  Under the right circumstances, prediction markets can work surprisingly well even when no money is involved and even when not all the participants are expert. Of course, there needs to be some expertise/information in the group. Random picks aren't going to converge on the right answer.
ghaff 12y ago
Good points. Under the right circumstances, the "wisdom of crowds" can be really compelling. A couple of years back, I ran the data from an Oscar contest that had run over the course of about 30 years and the consensus pick each year was soundly the long-term winner. [1] However, it's an approach that doesn't seem to have been hugely generalizable. [1] http://bitmason.blogspot.com/2012/04/crowdsourcing-prediction-and-other-data.html http://bitmason.blogspot.com/2012/04/crowdsourcing-predictio...
deleted 12y ago
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circlefavshape 12y ago
> when country fairs hold competitions to see who can guess > the weight of a cow, the guesses tend to cluster around the > correct answer Do they really? I've seen this a bunch of times, but never seen a citation ... and even if it's true, it strikes me that guesses at the weight of a cow at a country fair are likely to be expert guesses. I wonder how well a New York crowd would do at the same thing? Another thing that strikes me about the wisdom of crowds are the most convincing examples are ones where the guessers are basically guessing-what-other-people-will-guess. That's the essence of markets

baddox 12y ago

> For instance, gamblers are also quite good at assessing probabilities, and when country fairs hold competitions to see who can guess the weight of a cow, the guesses tend to cluster around the correct answer. Does each guess submission cost money? If so, then that's a pretty standard market. People who know more about cow weights are more likely to spend money because they have more to gain. Of course, even with free tickets, it could just be that people at rural fairs know a reasonable amount about cow weights.

warfangle 12y ago
I've seen the example as "guess the number of jellybeans in the jar," as well.
ghaff 12y ago
Under the right circumstances, prediction markets can work surprisingly well even when no money is involved and even when not all the participants are expert. Of course, there needs to be some expertise/information in the group. Random picks aren't going to converge on the right answer.

ghaff 12y ago

Good points. Under the right circumstances, the "wisdom of crowds" can be really compelling. A couple of years back, I ran the data from an Oscar contest that had run over the course of about 30 years and the consensus pick each year was soundly the long-term winner. [1] However, it's an approach that doesn't seem to have been hugely generalizable. [1] http://bitmason.blogspot.com/2012/04/crowdsourcing-prediction-and-other-data.html http://bitmason.blogspot.com/2012/04/crowdsourcing-predictio...

deleted 12y ago

[deleted]

circlefavshape 12y ago

> when country fairs hold competitions to see who can guess > the weight of a cow, the guesses tend to cluster around the > correct answer Do they really? I've seen this a bunch of times, but never seen a citation ... and even if it's true, it strikes me that guesses at the weight of a cow at a country fair are likely to be expert guesses. I wonder how well a New York crowd would do at the same thing? Another thing that strikes me about the wisdom of crowds are the most convincing examples are ones where the guessers are basically guessing-what-other-people-will-guess. That's the essence of markets