The Forum Project, and democracy more generally, is based on the principle that there is a wisdom in a crowd. To be sure, there is also great stupidity, which often exceeds that of the most ambitious individual. This is why mechanism design is important. Mechanism design is the science of building systems that amplify people’s kindness, wisdom and creativity, while mitigating our negative qualities.

How much does the bull weigh?

Over 100 years ago, the polymath Francis Galton ran a competition, to see if a large crowd of people could estimate the weight of a bull. Their predictions were individually very inaccurate, as you might expect from a crowd of non-experts. However, when he took the average of their answers, there was less than a 1% gap from the true weight.

This effect isn’t down to magic; it’s just due to the fact that, in a large and intellectually diverse group, the errors cancel out. It doesn’t work for all problems, but for a surprisingly broad range of questions, a large group of non-experts can collectively do better than a smaller number of experts.

Betting on the future

One of the more interesting innovations in mechanism design is the prediction market. As the name implies, this structure gives people the opportunity to bet on certain future events. These might be geopolitical developments, economic indicators, or sporting outcomes. When the event happens and the result is clear, the people who made (more) accurate predictions are financially rewarded.

There are quite a lot of prediction markets already, and research has shown that they’re surprisingly effective at coming up with the right answer, often doing better than qualified experts in a field. A prediction market gives people the opportunity to have a greater influence (by ‘betting’ more) when they’re confident. It also gives them feedback, so they can learn over time and get better at predicting.

Wisdom of the Forum

Here at Forum, we’re passionate about using the proven power of crowds to make smarter decisions. By integrating more information from more people than ever before, our systems enable groups of all shapes and sizes to govern themselves more effectively. Find out more here.