What is the Wisdom of the Crowd?
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Q. Lewis, I have watched a few of your YouTube videos at your channel AskLewis, Lewis Harrison. Many of these videos are concerned with futurism, predictions, and probabilities. You have mentioned a concept called the Wisdom of the Crowd a number of times. Can you explain what this is?
A. You are very perceptive. The Wisdom of the Crowd is the collective opinion of a group of individuals rather than that of a single individual. This process, while not new to the Information Age, has been pushed into the mainstream spotlight by social information sites such as Yahoo, Wikipedia, Answers, Quora, Stack Exchange, and other web resources that rely on categorizing collective human knowledge. An explanation for this phenomenon is that there is idiosyncratic noise – An specific and unique idiosyncratic element inherent in an asset or asset group, due to specific qualities of that asset. This idiosyncratic noise is associated with each individual judgment, and taking the average over a large number of responses will go some way toward canceling the effect of this noise.
Trial by jury can be understood as at least partly relying on the wisdom of the crowd, compared to a bench trial that relies on one or a few experts. In politics, sometimes sortition (the action of selecting or determining something by the casting or drawing of lots) is held as an example of what wisdom of the crowd would look like. Decision-making would happen by a diverse group instead of by a fairly homogenous political group or party. Research within cognitive science has sought to model the relationship between wisdom of the crowd effects and individual cognition.
A large group’s aggregated answers to questions involving quantity estimation, general world knowledge, and spatial reasoning have generally been found to be as good as, and often superior to, the answer given by any of the individuals within the group, even when these individuals are recognized as experts.
Aristotle is credited as the first person to write about the “wisdom of the crowd” in his work titled Politics. According to Aristotle, “it is possible that the many, though not individually good men, yet when they come together may be better, not individually but collectively, than those who are so, just as public dinners to which many contribute are better than those supplied at one man’s cost”.
The classic wisdom-of-the-crowds finding involves point estimation of a continuous quantity. At a 1906 country fair in Plymouth, 800 people participated in a contest to estimate the weight of a slaughtered and dressed ox. Statistician Francis Galton observed that the median guess, 1207 pounds, was accurate within 1% of the true weight of 1198 pounds. This has contributed to the insight in cognitive science that a crowd’s individual judgments can be modeled as a probability distribution of responses with the median centered near the true value of the quantity to be estimated.
In recent years, the “wisdom of the crowd” phenomenon has been leveraged in business strategy and advertising spaces. Firms such as Napkin Labs aggregate consumer feedback and brand impressions for clients. Meanwhile, companies such as Trada invoke crowds to design advertisements based on clients’ requirements, and many Political Action Groups also research these patterns.
Non-human examples are also prevalent. For example, the Golden Shiner is a fish that prefers shady areas. The single Shiner has a very difficult time finding shady regions in a body of water whereas a large group of Shiners is much more efficient at finding the shade.
Although classic wisdom-of-the-crowds findings center on point estimates of single continuous quantities, the phenomenon also scales up to higher-dimensional problems that do not lend themselves to aggregation methods such as taking the mean.
Although classic wisdom-of-the-crowds findings center on point estimates of single continuous quantities, the phenomenon also scales up to higher-dimensional problems that do not lend themselves to aggregation methods such as taking the mean. More complex models have been developed for these purposes, many related to the game theory HAGT (Harrison’s Applied Game Theory) and collaborative thinking.
Speaking of predicting the future, many futurists I know use sports analytics to predict winners and losers in Fantasy sports. Here is a link to a free video and information about Sports Betting and FIFA Fantasy Football. This is an introduction to one of my favorite systems. If you want to use predictive skills to explore this Complete Analytics-Driven Sports Fantasy Football and Sports Betting System. It’s based on the ideas presented in the book and movie Moneyball. Press on the play button below.
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