What to tell? Wise communication and wise crowd

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What to tell? Wise communication and wise crowd Chen Li1 • Ning Liu2 Accepted: 12 October 2020 Ó Springer Science+Business Media, LLC, part of Springer Nature 2020

Abstract This paper investigates how communication influences people’s judgment quality in simple estimation tasks. Except for an exchange of estimates, our design also allows the exchange of supportive evidence underlying the estimates in a controlled manner. Compared with the control treatment, the exchange of estimates and supportive evidence together improves judgment quality at both the individual level and the crowd level. On the other hand, the exchange of estimates or supportive evidence separately has no impact. Keywords Advice taking  Communication  Judgment and decision making  Wisdom of the crowd

1 Introduction Combining estimates from different people, even by simply taking the average, can generate a surprisingly accurate aggregate estimate under certain circumstances. This phenomenon was first observed more than one hundred years ago (Galton 1907), and is often referred to as the wisdom of the crowd (WoC). WoC has been observed in many scientific studies and general observations (Surowiecki 2005), and its application has been studied in various tasks and environments (Laughlin et al. 2006; Chen 2007; Pentland 2007; Nguyen 2008; Krause et al. 2010; Lee and Chang 2010; Lykourentzou et al. 2010; Beer 2013). Although WoC is of a statistical nature & Ning Liu [email protected] Chen Li [email protected] 1

Room H12-29 Erasmus School of Economics, Burgemeester Oudelaan 50, 3062PA Rotterdam, The Netherlands

2

School of Economics and Management, New Main Building A1005, Beihang University, Xueyuan Rd. 37, Beijing 100191, China

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C. Li, N. Liu

(Stroop 1932), taking full advantage of WoC requires behavioral insights to design proper processes where WoC is likely to work best. One of the claimed cornerstones of WoC is independence, which requires that individuals form and express their opinions independent of others’ influences (Surowiecki 2005; Wagner and Vinaimont 2010). In his best seller, Surowiecki (2005) documented a series of collective failures showing the possible downside of communication. In many real life situations, decisions are rarely made by one individual acting alone. Blocking communication is unrealistic. Projects from ‘‘Listening government’’ in the UK (Coleman and Blumler 2011) to the ‘‘Good Judgment project’’ in the US highly depend on the internet to harness the WoC, and communication is ubiquitous in such environments. Moreover, it is premature to see communication as a problem. Two questions have to be answered first. How important is independence for judgment aggregation and how does communication affect independence? When individual judgments are used as input of a combination process that takes the average of individual judgments, independence is valuable as it cultivates diversity and makes the crowd more accurate. In this special case, the magnitude of individu