Do massess know more than individuals?

When contestants playing who wants to be a millionarie chooses to use the help from the public, this help is usually right. This phenomenon can be attributed to the Logic of Collective Intelligence: Ability to Exclude.

The model works the following way:

-Let's assume we have three players (Bert, Cecilia, and Dora)

-There are four options (A … D). Let’s assume the correct answer is A.

-Bert knows “It’s not B or C”. à guesses randomly between A (p=0.5) and D (p=0.5).

-Cecilia knows “It’s not C or D”. à guesses randomly between B (p=0.5) and A (p=0.5).

-Dora knows “It’s not D or B”. à guesses randomly between A (p=0.5) and C (p=0.5)

-Highest Probability: A (p = 0.5). All others have p = 0.5 / 3 = 0.1667.

This way we can prove that by eliminating options the odds of having the correct answer increases in large pulls. but why is this important?

Well, organizations can use this knowledge to perform better forecasting within the organization. By using the common knowlegde of the people and the increase penetration of technological tools, management will be able to predict better forecasts in cost, sales, human resources, etc.

Another use could include the stock market. The mass usually is more accurate than the prediction of some experts. The public might have a better understanding of the market conditions delivering a more accurate forecast than the ones from the experts.