Last year, a group of California scientists plunked down a $20 bet on the Kentucky Derby.
The wager was on the “Superfecta,” which requires correctly picking the first-, second-, third- and fourth-place finishers. The odds of doing so are tiny, so the payout ratio is a whopping 540-1.
Their $20 bet turned into $10,822 once the race was over. A tech journalist even wrote about the experiment days before the Derby (and sadly, she only bet $1).
How’d they do it?
It was all part of a study on “collective intelligence” conducted by Silicon Valley startup Unanimous A.I. Collective intelligence (CI) taps into the knowledge of groups and, when done right, can outperform just about any other predictive method.
In this case, the researchers surveyed a small group of people who knew horse racing and “pooled” their insights and knowledge using computer algorithms.
Interestingly, none of the individuals in the study picked the trifecta correctly on their own (nor did any of the race track’s own experts).
But when Unanimous combined the expertise of a group of horse racing enthusiasts, the result was spectacular.
Scientists don’t know exactly why collective intelligence works, but it does. And the applications for this technology are practically endless.
To help explain how CI is being used in the investing world, I’ve brought in two pioneers of the field.
Interview With Collective Intelligence Experts Fred Campbell and Tom Kehler of CrowdSmart
