How crowds become stupider
Financial Times 2026-07-03 12:40:21
Context: The phenomenon of crowds becoming less intelligent is being observed in prediction markets, where collective decision-making is supposed to yield accurate results. This unexpected outcome occurs when individuals within the crowd start thinking similarly, rather than bringing diverse perspectives to the table. As a result, the collective intelligence of the crowd is compromised.
Key Facts
- Prediction markets, which rely on aggregating information from multiple individuals to make informed decisions, are vulnerable to a decline in collective intelligence when participants share similar thought patterns.
- The issue arises when the diversity of opinions and perspectives within the crowd is reduced, causing the collective decision-making process to become less accurate and more prone to errors.
- Research has shown that when individuals within a crowd start thinking the same way, the crowd's overall intelligence and predictive power suffer as a result, leading to suboptimal outcomes.