Abstract:
The “wisdom of the crowd” effect is the finding that the average estimate of a group can be more accurate than the estimate of an expert. This study discovered that even mild social influence can undermine the wisdom of the crowd effect in simple estimation tasks.
To design the study, the researchers asked 144 participants to answer some simple estimation questions about demographics and crime statistics in Switzerland, with a financial incentive for accurate estimates.
Over five consecutive rounds, the participants were then asked to create new estimates after being given some information about the estimates of other participants.
Key Points:
- As participants found out what other people were guessing, the estimates began to converge, substantially reducing the diversity of the group’s estimates without improving its accuracy.
- The remaining range of estimates was often so small that the correct value shifted from the center to the outside of the range.
- Despite this, participants became more confident in the accuracy of their answers the closer they were to the group average.
Takeaway:
Social influence tends to reduce the accuracy of human decision-making.
