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Social groups can be remarkably smart and knowledgeable when their averaged judgements are compared with the judgements of individuals. This wisdom of crowd effect was recently supported by examples from stock markets, political elections, and quiz shows. In contrast, we demonstrate by experimental evidence that even mild social influence can undermine the wisdom of crowd effect in simple estimation tasks. The “social influence effect” diminishes the diversity of the crowd without improvements of its collective error. Examples of the revealed mechanism range from misled elites to the recent global financial crisis.

(Source: Ars Technica)