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The Wisdom of Crowds....

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  1. #1

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    The Wisdom of Crowds....

    Great article ...

    Sharing Information Corrupts Wisdom of Crowds | Wired Science | Wired.com


    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.
    “Opinion polls and the mass media largely promote information feedback and therefore trigger convergence of how we judge the facts,” they wrote. The wisdom of crowds is valuable, but used improperly it “creates overconfidence in possibly false beliefs.”

    Similar to mobs you find on online forums like this....
    Football16 likes this.

  2. #2

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    Fascinating - thanks for sharing Shri.

    I wonder if one can extrapolate to share markets and property markets - the more people talk (or share data via internet etc) about these prices the less likely we are to get "accurate pricing"


  3. #3

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    Quote Originally Posted by MovingIn07:
    Fascinating - thanks for sharing Shri.

    I wonder if one can extrapolate to share markets and property markets - the more people talk (or share data via internet etc) about these prices the less likely we are to get "accurate pricing"
    Bullsh!t buzzwords again huh?

  4. #4

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    Moving: I think it is true. The real estate agents start by raising the prices, people eventually believe them as they get the same price from multiple sources and the price often begins to go higher than reality - just like the stock markets as can be seen over the last year or so...

    Is it a case of repeat the lie often and it will become the truth? Specially when you have media that forget the role of the third estate.

    Jimbo - thin line between science and BS....


  5. #5

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    One interesting thing that the article talks about is the diversity of the opinions if people were not allowed to read (or know) what others in the mob were thinking and talking about.

    Can that be translated into community / user driven sites like this?

    Often we can see on here .. the first response to a post can often set the tone as the rest of the mobs follow and tag onto the first opinion or response.


  6. #6

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    So what Shri - we should post a thread and you hide the responses for (say) half an hour and then simultaneously put them all up? I guess you could give it a try - no idea how it might change the dynamic of the conversation!


  7. #7

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    Quote Originally Posted by MovingIn07:
    Fascinating - thanks for sharing Shri.

    I wonder if one can extrapolate to share markets and property markets - the more people talk (or share data via internet etc) about these prices the less likely we are to get "accurate pricing"
    The most buying occurs at the market tops be it equities or property. In stocks it is the phenomenon of shares moving from the strong to the weak hands - something that has occurred several times in stocks as prices move up, correct and trend back up again.

    In property, the thinking is that prices are rising so fast if I don't buy now I will be buying much higher later on.

    I just can't say this from any HK experience as my stocks are in North America, London as is my property experience.

  8. #8

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    Very interesting article Shri.
    Don't know why, but reminds me of 12 Angry Men.

    wisdom of crowds or mob mentality or religion, or cult-following, they all have a common thread, don't they?

    Last edited by gunsnroses; 19-05-2011 at 09:52 AM.