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Intuitive Biases in Choice versus Estimation: Implications for the Wisdom of Crowds

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  • Joseph P. Simmons
  • Leif D. Nelson
  • Jeff Galak
  • Shane Frederick

Abstract

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.

Suggested Citation

  • Joseph P. Simmons & Leif D. Nelson & Jeff Galak & Shane Frederick, 2011. "Intuitive Biases in Choice versus Estimation: Implications for the Wisdom of Crowds," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 38(1), pages 1-15.
    • Handle: RePEc:oup:jconrs:doi:10.1086/658070
    DOI: 10.1086/658070
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    Cited by:

    1. Ethan Mollick & Ramana Nanda, 2016. "Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts," Management Science, INFORMS, vol. 62(6), pages 1533-1553, June.
    2. Oliver Merz & Raphael Flepp & Egon Franck, 2021. "Underestimating randomness: Outcome bias in betting exchange markets," Working Papers 390, University of Zurich, Department of Business Administration (IBW).
    3. Beck, Susanne & Brasseur, Tiare-Maria & Poetz, Marion & Sauermann, Henry, 2022. "Crowdsourcing research questions in science," Research Policy, Elsevier, vol. 51(4).
    4. Bernd Frick & Franziska Prockl, 2018. "Information Precision In Online Communities: Player Valuations On Www.Transfermarkt.De," Working Papers Dissertations 37, Paderborn University, Faculty of Business Administration and Economics.
    5. repec:cup:judgdm:v:11:y:2016:i:5:p:449-459 is not listed on IDEAS
    6. Clintin P. Davis-Stober & David V. Budescu & Stephen B. Broomell & Jason Dana, 2015. "The Composition of Optimally Wise Crowds," Decision Analysis, INFORMS, vol. 12(3), pages 130-143.
    7. Michael D. Lee & Megan N. Lee, 2017. "The relationship between crowd majority and accuracy for binary decisions," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 12(4), pages 328-343, July.
    8. Alexander C. Walker & Martin Harry Turpin & Jonathan A. Fugelsang & Derek J. Koehler, 2019. "Intuition speed as a predictor of choice and confidence in point spread predictions," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 14(2), pages 148-155, March.
    9. Blunden, Hayley & Logg, Jennifer M. & Brooks, Alison Wood & John, Leslie K. & Gino, Francesca, 2019. "Seeker beware: The interpersonal costs of ignoring advice," Organizational Behavior and Human Decision Processes, Elsevier, vol. 150(C), pages 83-100.
    10. Darren W Dahl & Eileen Fischer & Gita V Johar & Vicki G Morwitz, 2017. "Making Sense from (Apparent) Senselessness: The JCR Lens," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 44(4), pages 719-723.
    11. David V. Budescu & Eva Chen, 2015. "Identifying Expertise to Extract the Wisdom of Crowds," Management Science, INFORMS, vol. 61(2), pages 267-280, February.
    12. Peeters, Thomas, 2018. "Testing the Wisdom of Crowds in the field: Transfermarkt valuations and international soccer results," International Journal of Forecasting, Elsevier, vol. 34(1), pages 17-29.
    13. J. Edward Russo & Jonathan C. Corbin, 2016. "Not by desire alone: The role of cognitive consistency in the desirability bias," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(5), pages 449-459, September.
    14. Till Blesik & Markus Bick & Tyge-F. Kummer, 2022. "A Conceptualisation of Crowd Knowledge," Information Systems Frontiers, Springer, vol. 24(5), pages 1647-1665, October.
    15. Philip W. S. Newall & Dominic Cortis, 2021. "Are Sports Bettors Biased toward Longshots, Favorites, or Both? A Literature Review," Risks, MDPI, vol. 9(1), pages 1-9, January.
    16. Julia A. Minson & Jennifer S. Mueller & Richard P. Larrick, 2018. "The Contingent Wisdom of Dyads: When Discussion Enhances vs. Undermines the Accuracy of Collaborative Judgments," Management Science, INFORMS, vol. 64(9), pages 4177-4192, September.
    17. repec:cup:judgdm:v:12:y:2017:i:4:p:328-343 is not listed on IDEAS
    18. Greg Fisher & Emily Neubert, 2023. "Evaluating Ventures Fast and Slow: Sensemaking, Intuition, and Deliberation in Entrepreneurial Resource Provision Decisions," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1298-1326, July.
    19. Haeussler, Carolin & Vieth, Sabrina, 2022. "A question worth a million: The expert, the crowd, or myself? An investigation of problem solving," Research Policy, Elsevier, vol. 51(3).
    20. repec:cup:judgdm:v:14:y:2019:i:2:p:148-155 is not listed on IDEAS

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