The value of collective intelligence

Discussion in 'Psychology' started by Pekelo, Oct 14, 2008.

  1. Pekelo


    "A Pool of Intelligence

    How did Wall Street know what would happen? It acted like a prediction market, a pool of intelligence that can foresee the future. Prediction markets are simply bets on ideas: What do you think something is worth, and more important, what will it be worth tomorrow? When groups of people bet on something, their combined intelligence is often remarkably prescient. British scientist Francis Galton was one of the first to notice this in 1906, when he observed 787 people at a country fair try to guess the weight of an ox after it was slaughtered. The average of all guesses was 1,197 pounds, only one pound less than the correct answer."
  2. maybe you can try an experiment- stand outside a hospital ward and ask everyone there if you have one of innumberable diseases- and what their prescribed treatment is. The crowd is always right no?

    For the stupidity of crowds you might want to read "crowds and power" by Elias Canetti for starters.
  3. Pekelo


    Or, for the smartness of the crowds, you could try:

    James Surowiecki expanded on Galton's observation in his 2004 book The Wisdom of Crowds. :)


    " The Iowa Electronic Markets is one of the most famous prediction markets, set up to foretell U.S. Presidential elections. Thomas Rietz, a University of Iowa finance professor who helps direct the IEM, notes it has accurately foretold each election result since 1988 with only a 1.33% error rate in voter totals."
  4. zdreg


    the posters have found what makes a market.
  5. a pool of intelligence that can foresee the future.

    Ah yes, The pool of intelligence, that worked out well re WMD in Iraq.

    Tell me more.:eek: