The wisdom of crowds: why the many are smarter than the few and how collective wisdom shapes business, economies, societies and nations

Research on the wisdom of crowds (WOC) identifies two paradoxical effects of communication. The social influence effect hampers the WOC, whereas the collective learning effect improves crowd wisdom. Yet it remains unclear under what conditions such communication impedes or enhances collective wisdom. The current study examined two features characterizing communication in online communities, communication network centralization and shared task experience, and their effect on the WOC. Both these features can serve as indicators of the likelihood that underlying communication may facilitate either social influence or collective learning. With an 8-year longitudinal behavioral-trace data set of 269,871 participants and 1,971 crowds, we showed that communication network centralization negatively affected the WOC. By contrast, shared task experience positively predicted the WOC. Shared task experience also moderated the effect of communication network centralization such that centralized communication networks became more beneficial for crowd performance as shared task experience increased.

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“They don’t know better than I do”: People are reluctant to rely on the wisdom of crowds in individual decision making

10.31234/osf.io/z8nr2 ◽

2020 ◽

Author(s):

Merav Yonah ◽

Yoav Kessler

Keyword(s):

Personal Information ◽

Decision Makers ◽

Substantial Part ◽

Wisdom Of Crowds ◽

Collective Wisdom ◽

Decision Bias ◽

Decision Outcomes ◽

Dot Motion ◽

Better Than ◽

The Wisdom Of Crowds

Establishing the way people decide to use or avoid information when making a decision is of great theoretical and applied interest. In particular, the “big data revolution” enable decision makers to harness the wisdom of crowds (WoC) toward reaching better decisions. The WoC is a well-documented phenomenon that highlights the potential superiority of collective wisdom over that of an individual. However, individuals may fail to acknowledge the power of collective wisdom as a means for optimizing decision outcomes. Using a random dot motion task, the present study examined situations in which decision makers must choose between relying on their own personal information or relying on the WoC in their decision. Although the latter was always the rational choice, a substantial part of the participants chose to rely on their own observation and also advised others to do so. This choice tendency was associated with higher confidence, but not with better task performance, and hence reflects overconfidence. Acknowledging and understanding this decision bias may help mitigating it in applied settings.

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