Limits Of Wisdom Of Crowds

When people can learn what others think, the wisdom of crowds may veer towards ignorance.

The researchers attributed this to three effects. The first they called “social influence”: Opinions became less diverse. The second effect was “range reduction”: In mathematical terms, correct answers became clustered at the group’s edges. Exacerbating it all was the “confidence effect,” in which students became more certain about their guesses.

“The truth becomes less central if social influence is allowed,” wrote Lorenz and Rahut, who think this problem could be intensified in markets and politics — systems that rely on collective assessment.

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