“Andrew King from the Royal Veterinary College found that it falls apart, but only in certain circumstances. At his university open day, he asked 82 people to guess the number of sweets in a jar. If they made their guesses without any extra information, the wisdom of the crowd prevailed. The crowd’s median guess was 751.* The actual number of sweets was… 752.
This collective accuracy collapsed if King told different groups of volunteers about what their peers had guessed. If they knew about the previous guess, a random earlier guess or the average of all the earlier guesses, they overestimated the number of sweets. Their median guesses ranged from 882 to 1109. King likens this effect to real-world situations where people collectively drive the prices of items above their value and create economic bubbles. It’s what happened to create the recent US/British housing market crash or, more historically, the tulip mania of 17th century Holland.
Jan Lorenz recently found the same thing. Swiss college students can form a wise crowd when answering questions independently, but once they could find out what their peers had guessed, their answers became more inaccurate. In his summary of the study, Jonah Lehrer wrote, “The range of guesses dramatically narrowed; people were mindlessly imitating each other. Instead of canceling out their errors, they ended up magnifying their biases, which is why each round led to worse guesses.”
Is the crowd doomed to groupthink? Not quite. King found that he could steer them back towards a wiser guess by giving them the current best guess. When this happened, the median returned to a respectable 795. So the crowd loses its wisdom when it gets random pieces of information about what its members think, but it regains its wisdom if it finds out what the most successful individual said.”