Charles R. Plott: The Design of Information Aggregation Mechanisms: Collecting and Using the Wisdom of Crowds

It is well known that markets collect and aggregate information dispersed in small amounts across the population. For example, almost daily we read about market dynamics that reflect expectations and beliefs. In recent years, experimental economists have begun to understand the principles at work in such examples. The principles are used in the implementation of mechanisms designed explicitly to capture and quantify information that is otherwise held in small amounts across many people in the form of intuition and weakly held beliefs. This lecture will focus on information aggregation mechanisms, what they do, how they work, and how they can be improved. The presentation will focus on the basic behavioral principles as found in laboratory experiments, and how they influenced the designs. Recent field and business applications will be summarized.

Charles R. Plott is the Edward S. Harkness Professor of Economics and Political Science at Caltech.