The
assumption that the masses can be correct may arise from a theory
that there is a certain wisdom in crowds. There has been some limited
research on this to explain how a form of futures market can explain,
for example, how the public could predict future election winners.
Practical
results from the use of such theory has been non-existent. No real
futures market has ever resulted from past attempts to implement such
theories.
The
problem: If crowds were prescient, there would be no
booms and busts and no economic manias as have existed over past
centuries. All securities markets would then be predicable.
On
the contrary, evidence over the years suggests the opposite; crowds
are invariably wrong. (See the Earl J Weinreb NewsHole® comments.)
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