The wisdom of the crowd...

[Fugazi]

Sir Francis Galton, a pioneer in the field of statistics observed that, under certain conditions, the collective judgment of a diverse group of people could produce a remarkably accurate aggregate prediction or decision, often referred to as the "wisdom of the crowd."

Galton's most famous observation of this phenomenon occurred at a livestock fair, where he noted that the crowd's average guess of an ox's weight was surprisingly accurate, closer to the ox's true weight than the estimates of most individual fairgoers or even experts. This observation led to the insight that under the right conditions—specifically, where judgments are independent, diverse, and there is a mechanism to aggregate these judgments—the collective wisdom can indeed lead to very accurate results.

I wonder, if this generally applies to the direction of markets.....

[Dallas]

Couple of blogs here you might find useful
https://www.betfairtradingblog.com/effi ... g-markets/
https://www.betfairtradingblog.com/betf ... t-markets/

[Euler]

Here is a video which specifically mentions the Ox: -

https://youtu.be/yP3uPQPsrys

I have a Galton board in the office.

[napshnap]

Sir Francis Galton, a pioneer in the field of statistics observed that, under certain conditions, the collective judgment of a diverse group of people could produce a remarkably accurate aggregate prediction or decision, often referred to as the "wisdom of the crowd."

Galton's most famous observation of this phenomenon occurred at a livestock fair, where he noted that the crowd's average guess of an ox's weight was surprisingly accurate, closer to the ox's true weight than the estimates of most individual fairgoers or even experts. This observation led to the insight that under the right conditions—specifically, where judgments are independent, diverse, and there is a mechanism to aggregate these judgments—the collective wisdom can indeed lead to very accurate results.

I wonder, if this generally applies to the direction of markets.....

Winners SPs, obviously.

[Dublin_Flyer]

I looked at something similar a few years ago using the Livescore app predictions as a base. Using 10k predictions as a minimum to see did the "crowd" percentage converted to a price have any value compared to BF price at kick off time....

They didn't, it was roughly 10-15% calling a draw in every game so massively skewing the win odds on home or away if you were to go by the "crowd" wisdom. Any profit in the underpriced home or away wins was quickly neutralised by the frequency of draws that the wise crowd didn't predict.

[Anbell]

Sir Francis Galton, a pioneer in the field of statistics observed that, under certain conditions, the collective judgment of a diverse group of people could produce a remarkably accurate aggregate prediction or decision, often referred to as the "wisdom of the crowd."

Galton's most famous observation of this phenomenon occurred at a livestock fair, where he noted that the crowd's average guess of an ox's weight was surprisingly accurate, closer to the ox's true weight than the estimates of most individual fairgoers or even experts. This observation led to the insight that under the right conditions—specifically, where judgments are independent, diverse, and there is a mechanism to aggregate these judgments—the collective wisdom can indeed lead to very accurate results.

I wonder, if this generally applies to the direction of markets.....

No. An exchange is not a democracy.

[Michael5482]

I looked at something similar a few years ago using the Livescore app predictions as a base. Using 10k predictions as a minimum to see did the "crowd" percentage converted to a price have any value compared to BF price at kick off time....

They didn't, it was roughly 10-15% calling a draw in every game so massively skewing the win odds on home or away if you were to go by the "crowd" wisdom. Any profit in the underpriced home or away wins was quickly neutralised by the frequency of draws that the wise crowd didn't predict.

I suppose you have to assume 10k will be putting their money down and is 10,000 market participants enough? (I don't know myself if I'm honest) I think people behave differently when there's money involved and when money is involved they either behave rationally or irrationally, that's the way I look at it anyway.

Without the irrational people the rational people (like traders or pro bettors) wouldn't be able to profit. When I think about it my trading is built around this logic it just took me a while to work that out, when I see something I believe is irrational I use rational rules to hopefully take advantage of the irrational.

To summarise it's towards the extremes of the wisdom of the crowds where I lurk not around the mean.

[Euler]

'Wisdom' of the crowd is a measurement problem.

Depending on how you measure a market, you can prove it's very efficient or inefficient.

For example, I can prove that price movements before the off are entirely random. But I can also confirm that they are not. It's just that everything averages itself out when you look at it from a broad level.

All generalisations are false, including this one.

[henbet22]

[henbet22]

Depends on the crowd

[Kai]

'Wisdom' of the crowd is a measurement problem.

Depending on how you measure a market, you can prove it's very efficient or inefficient.

For example, I can prove that price movements before the off are entirely random. But I can also confirm that they are not. It's just that everything averages itself out when you look at it from a broad level.

All generalisations are false, including this one.

Very well said there

[Kai]

Depends on the crowd

Well if the crowd can influence a price, even temporarily, it pays to be aware of their opinion

I think one of the key misconceptions for people is they think they can't trade randomness

Tbf I think I would rather trade random market noise than follow trends I'm probably already late for