Intuitive Biases in Choice vs. Estimation: Implications for the Wisdom of Crowds
Joseph P. Simmons
University of Pennsylvania - The Wharton School
Leif D. Nelson
University of California, Berkeley - Haas School of Business
Carnegie Mellon University
Yale School of Management
July 22, 2010
Simmons, Joseph P., Leif D. Nelson, Jeff Galak, and Shane Frederick (2011), “Intuitive Biases in Choice vs. Estimation: Implications for the Wisdom of Crowds,” Journal of Consumer Research, 38 (June), 1-15.
Although researchers have documented instances of crowd wisdom, it is important to know whether some kinds of judgments may lead the crowd astray, whether crowds’ judgments improve with feedback over time, and whether crowds’ judgments can be improved by changing the way judgments are elicited. We investigated these questions in a sports gambling context (predictions against point spreads) believed to elicit crowd wisdom. In a season-long experiment, fans wagered over $20,000 on NFL football predictions. Contrary to the wisdom-of-crowds hypothesis, faulty intuitions led the crowd to predict “favorites” more than “underdogs” against point spreads that disadvantaged favorites, even when bettors knew that the spreads disadvantaged favorites. Moreover, the bias increased over time, a result consistent with attributions for success and failure that rewarded intuitive choosing. However, when the crowd predicted game outcomes by estimating point differentials rather than by predicting against point spreads, its predictions were unbiased and wiser.
Number of Pages in PDF File: 16
Keywords: Judgment and Decision Making, Heuristics and Biases, Intuition, Preference Reversals, Learning
Date posted: February 17, 2010 ; Last revised: August 24, 2012