Wisdom of Crowds Effect

A Wisdom of Crowds Effect is an aggregation phenomenon that produces superior collective judgments through independent estimate combination from diverse participants.

• AKA: Collective Intelligence Effect, Crowd Wisdom Phenomenon, Aggregate Superiority Effect, Group Judgment Advantage.
• Context:
  • It can typically generate wisdom of crowds effect accuracy exceeding individual performance.
  • It can typically require wisdom of crowds effect conditions including independence and diversity.
  • It can typically manifest in wisdom of crowds effect domains like forecasting and estimation.
  • It can often employ wisdom of crowds effect aggregation using statistical methods.
  • It can often benefit from wisdom of crowds effect size with larger participant pools.
  • It can often fail under wisdom of crowds effect breakdowns like information cascades.
  • It can range from being a Weak Wisdom of Crowds Effect to being a Strong Wisdom of Crowds Effect, depending on its improvement magnitude.
  • It can range from being a Homogeneous Wisdom of Crowds Effect to being a Heterogeneous Wisdom of Crowds Effect, depending on its participant diversity.
  • It can range from being a Simple Wisdom of Crowds Effect to being a Weighted Wisdom of Crowds Effect, depending on its aggregation method.
  • It can range from being a Domain-Specific Wisdom of Crowds Effect to being a Universal Wisdom of Crowds Effect, depending on its application scope.
  • ...
• Examples:
  • Forecasting Wisdom of Crowds Effects, such as:
    • Prediction Market Aggregation, in financial markets.
    • Tournament Forecast Aggregation, in forecasting competitions.
    • Poll Aggregation, in election predictions.
  • Estimation Wisdom of Crowds Effects, such as:
    • Jellybean Jar Estimation, the classic demonstration.
    • Stock Market Valuation, through market mechanisms.
  • AI Wisdom of Crowds Effects, such as:
    • Ensemble Learning Performance, in machine learning.
  • ...
• Counter-Examples:
  • Groupthink, which lacks independent judgment.
  • Information Cascade, which violates independence requirement.
  • Herding Behavior, which reduces diversity.
• See: Aggregation Phenomenon, Aggregate Forecast, Ensemble Learning System, Collective Intelligence, Statistical Aggregation Method, Independence Assumption, Diversity Measure, Prediction Market, Forecast Combination Method.

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