Aggregated knowledge from a small number of debates outperforms the wisdom of large crowd

Trading is often about how to take the appropriate risk without exposing yourself to very human flaws.
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LinusP
Posts: 1871
Joined: Mon Jul 02, 2012 10:45 pm

Interesting paper.
The aggregation of many independent estimates can outperform the most accurate individual judgment. This centenarian finding, popularly known as the wisdom of crowds, has been applied to problems ranging from the diagnosis of cancer to financial forecasting. It is widely believed that social influence undermines collective wisdom by reducing the diversity of opinions within the crowd. Here, we show that if a large crowd is structured in small independent groups, deliberation and social influence within groups improve the crowd's collective accuracy. We asked a live crowd (N=5180) to respond to general-knowledge questions (e.g., what is the height of the Eiffel Tower?). Participants first answered individually, then deliberated and made consensus decisions in groups of five, and finally provided revised individual estimates. We found that averaging consensus decisions was substantially more accurate than aggregating the initial independent opinions. Remarkably, combining as few as four consensus choices outperformed the wisdom of thousands of individuals.
https://arxiv.org/abs/1703.00045#%23
sionascaig
Posts: 1053
Joined: Fri Nov 20, 2015 9:38 am

LinusP wrote:
Fri Dec 21, 2018 8:32 am
Interesting paper.
The aggregation of many independent estimates can outperform the most accurate individual judgment. This centenarian finding, popularly known as the wisdom of crowds, has been applied to problems ranging from the diagnosis of cancer to financial forecasting. It is widely believed that social influence undermines collective wisdom by reducing the diversity of opinions within the crowd. Here, we show that if a large crowd is structured in small independent groups, deliberation and social influence within groups improve the crowd's collective accuracy. We asked a live crowd (N=5180) to respond to general-knowledge questions (e.g., what is the height of the Eiffel Tower?). Participants first answered individually, then deliberated and made consensus decisions in groups of five, and finally provided revised individual estimates. We found that averaging consensus decisions was substantially more accurate than aggregating the initial independent opinions. Remarkably, combining as few as four consensus choices outperformed the wisdom of thousands of individuals.
https://arxiv.org/abs/1703.00045#%23
Not quite the same thing but similar approach to solving difficult issues...

https://en.wikipedia.org/wiki/Citizens%27_assembly

Maybe a way out of the brexit mess engulfing parliament?

I find the example above a bit strange as I thought small groups would be heavily influenced by the 1st person to make a suggestion, e.g. 1st person says 1000ft and everyone else will use that at a point of reference for their estimates / discussion. In the 2nd group 1st person says 1000m and the suggestion will lead the rest of the discussion.

Just goes to show )
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Euler
Posts: 24700
Joined: Wed Nov 10, 2010 1:39 pm
Location: Bet Angel HQ

You may be interested in reading this book: -

https://www.penguinrandomhouse.com/book ... 804136716/
LinusP
Posts: 1871
Joined: Mon Jul 02, 2012 10:45 pm

sionascaig wrote:
Fri Dec 21, 2018 9:11 am
LinusP wrote:
Fri Dec 21, 2018 8:32 am
Interesting paper.
The aggregation of many independent estimates can outperform the most accurate individual judgment. This centenarian finding, popularly known as the wisdom of crowds, has been applied to problems ranging from the diagnosis of cancer to financial forecasting. It is widely believed that social influence undermines collective wisdom by reducing the diversity of opinions within the crowd. Here, we show that if a large crowd is structured in small independent groups, deliberation and social influence within groups improve the crowd's collective accuracy. We asked a live crowd (N=5180) to respond to general-knowledge questions (e.g., what is the height of the Eiffel Tower?). Participants first answered individually, then deliberated and made consensus decisions in groups of five, and finally provided revised individual estimates. We found that averaging consensus decisions was substantially more accurate than aggregating the initial independent opinions. Remarkably, combining as few as four consensus choices outperformed the wisdom of thousands of individuals.
https://arxiv.org/abs/1703.00045#%23
Not quite the same thing but similar approach to solving difficult issues...

https://en.wikipedia.org/wiki/Citizens%27_assembly

Maybe a way out of the brexit mess engulfing parliament?

I find the example above a bit strange as I thought small groups would be heavily influenced by the 1st person to make a suggestion, e.g. 1st person says 1000ft and everyone else will use that at a point of reference for their estimates / discussion. In the 2nd group 1st person says 1000m and the suggestion will lead the rest of the discussion.

Just goes to show )
I can’t remember where I read this but it’s advised to write down your opinion in secret before discussing to prevent the above, supposed to prevent the anchoring you describe.
foxwood
Posts: 390
Joined: Mon Jul 23, 2012 2:54 pm

Always cynical about these refined studies that try to build on others' groundbreaking theories - not sure they often contribute anything but do earn people doctorates or attract research funds :roll:

Seems bleeding obvious from the Clapham omnibus - bit like a pub quiz - the general knowledge of a group of 4 or 5 is greater than the individual or the average of independent individuals (anchoring was avoided in the study by pre-answering according to the OP).
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