Professor Bainbridge...on law, politics, religion, culture & food

The Wisdom and Madness of Crowds

Rob weighs in with a long essay on the wisdom of crowds versus experts:

There is a war against expertise on the web and in the business press. We are beginning to believe that crowds are the answer to our problems, and that experts will be confined to stodgy old companies that don't "get it." I confess, I too was taken with the "wisdom of crowds" when I first encountered the concept. The democracy, the egalitarianism, the anti-establishment aspects... it's a very sexy idea isn't it? After a lot of thought I have decided that I'm switching sides. Crowds have their place, but experts live in niches, and for businesses that is where the real value lies.

Crowds doubtless have their wisdom, but they also have their madness. I wonder if there has been research on whether prediction markets limited to experts in the field do better than prediction markets open to any and all comers.