Power of Markets. A new book by James Surowiecki called The Wisdom of Crowds:Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations examines the power of capturing the collective wisdom of groups rather than relying on individual experts. One area where this is applied is markets. 
Markets are a method of collecting the wisdom that is spread across a group of people and summarizing that wisdom into one number such as a stock price or point-spread.
Click here to read a short review of the book.
Markets are a method of collecting the wisdom that is spread across a group of people and summarizing that wisdom into one number such as a stock price or point-spread.
Click here to read a short review of the book.
"If you ask a large enough group," [Surowiecki] says, "to make a prediction or estimate a probability," the errors they make cancel each other out. "Subtract the error, and you're left with the information." In this fashion, the TV studio audience of "Who Wants to Be a Millionaire," guessed the right answer to questions 91 percent of the time, torching the "experts," who guessed the right answer only 65 percent of the time.
