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Intuitive Biases in Choice versus Estimation: Implications for the Wisdom of Crowds
Joseph P. Simmons, Leif D. Nelson, Jeff Galak and Shane Frederick
Journal of Consumer Research
Vol. 38, No. 1 (June 2011), pp. 1-15
Published by: Oxford University Press
Stable URL: http://www.jstor.org/stable/10.1086/658070
Page Count: 15
You can always find the topics here!Topics: Games, Betting, Wisdom, Point estimators, Intuition, Professional sports, Casinos, Gambling, Estimation bias, Warnings
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Although researchers have documented many 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.
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