The wisdom of the crowd represents the idea that aggregations of individuals operating independently are better at estimating probabilities than an individual, even a highly informed one. Individuals may be subject to idiosyncratic psychological biases and selective information–the sum of a large number of individuals are likely to cancel out the idiosyncratic biases and result in a more accurate estimate. That’s not to say the “crowd” is always perfect, but groups of highly motivated individuals operating independently are far more likely to obtain a better answer than a single expert.
The caveat of “operating independently” is highly important. A team of individuals that can all discuss and collaborate might let a single charismatic member convince others to change their mind, or acquiesce around a single answer just to avoid being ornery. As a result, the “crowd” requires independent or semi-independent estimates to be most efficient.
The value of the wisdom of the crowd has been confirmed in many contexts. In the stock market, research confirms that individual stock-pickers rarely if ever get returns better than the overall market (the crowd).