The Wisdom of Crowds: From Livestock to Lehman
|Jun 5th, 2012 | Filed under: Alpha Strategies, Today's Post | By: cfaille||
In a famous experiment in 1906, members of a crowd at an agricultural fairground guessed the weight of an ox about to be slaughtered. Some participants were experts in livestock, others were not, and anyone at the fair could participate. The average guess of the crowd (of 800) turned out to be a very accurate one, considerably more accurate than that of the experts as individuals.
Dr. Yaniv Altshuler, described on the MIT Media Lab site as an “expert in collective intelligence methods,” working with Prof. Alex Pentland and the eToro investment network, developed a much more recent experiment to test the ‘wisdom of crowds.’
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Christopher Faille is a Jamesian pragmatist. William James has taught him, for example, that "you can say of a line that it runs east, or you can say that it runs west, and the line per se accepts both descriptions without rebelling at the inconsistency."