The wisdom of crowds
from Lars Syll
A classic demonstration of group intelligence is the jelly-beans-in-the-jar experiment, in which invariably the group’s estimate is superior to the vast majority of the individual guesses. When finance professor Jack Treynor ran the experiment in his class with a jar that held 850 beans, the group estimate was 871. Only one of the fifty-six people in the class made a better guess.
There are two lessons to draw from these experiments. First, in most of them the members of the group were not talking to each other or working on a problem together. They were making individual guesses, which were aggregated and then averaged … Second, the group’s guess will not be better than that of every single person in the group each time.
In many (perhaps most) cases, there will be a few people who do better than the group. This is, in some sense, a good thing, since especially in situations where there is an incentive for doing well (like, say, the stock market) it gives people reason to keep participating. But there is no evidence in these studies that certain people consistently outperform the group. In other words, if you run ten different jelly-bean-counting experiments, it’s likely that each time one or two students will outperform the group. But they will not be the same students each time. Over the ten experiments, the group’s performance will almost certainly be the best possible. The simplest way to get reliably good answers is just to ask the group each time.
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Real-World Economics Review Blog 
“if you run ten different jelly-bean-counting experiments, it’s likely that each time one or two students will outperform the group.”
This would very much depend on the group. If you include some crazies (as the general population does, you may even have all but one individual do better than average if one individual is waaaaay off.
Also, this is a very basic, sensory estimate test on a well defined object. If you tried this in economics, or politics, or moral philosophy, the result would probably be radically different.
Hi, Culturalanah, so brilliantly correct. Independent decisions, averaged arithmetically, vs stars. Notice that some of the big hedge fund winners have pulled back from high risk-high reward investing, while others have continued & become greatly weakened financially. Thus, CEO’s need quality in thoughtful & divergent advisors, which makes Mr T an enormous risk.
In economics, the majority is always wrong.
John Kenneth Galbraith
Hi, Larry, I believe John Kenneth was concerned about POLITICAL majorities, which are highly interactive & heavily impacted by their information sources from earliest times–long before the internet & certainly after the advent of printing.
There’s a message here we shouldn’t overlook. An amusing tale about William James opens the door for us. James was once approached after a lecture by an elderly woman who shared her theory that the earth is supported on the back of a giant turtle. Gently, James asked her what the turtle was standing upon. “A second, far larger turtle!” she replied confidently. “But what does the second turtle stand upon?” James continued, hoping to reveal the absurdity of her argument. The old lady crowed triumphantly, “It’s no use, Mr. James—it’s turtles all the way down!
So, it is with life on earth. It’s groups all the way down. Margaret Thatcher could not have been more incorrect in her statement, “there is no such thing as society – only individuals and their families.” Life consists of groups, all the way down. Every organism is a society. From the smallest cell to the collective life we call human culture. And all function the same way. “Solid citizens” who function well as groups and “sinners” who gain at the expense of solid citizens. The group-level benefits of working together and the individual-level benefits of exploiting the group. As I said, groups all the way down.
Hi, Ken, what about the Queen Bee at cost to the Worker Bees, or the dominant male among hoofed & flesh-eating mammals, as just a start? The Donald Trump’s come lieing, cheating & sexing–others may be envious, but mostly don’t dare living such a life so openly. Trump’s “secret” is that he apparently has neither developed internal guilt mechanisms nor fear of public disclosure. So he will likely be among us until society by a voting majority indicates that his values are not their’s, I expect.
James, good example. Both cultural adaptation and biological evolution are average effects processes. This is the result of chance and uncertainty. The group structure I described is the result. In that structure, Trump (“sinners”) is an expected development.