The idea of ‘Wisdom of Crowds’ has been gaining immense popularity in the last few years among both investors and business strategists. This concept is based on the concept proposed by New Yorker writer James Surowiecki in his 2004 book, The Wisdom of Crowds. It highlights the potentials of collective intelligence and the incentives of drawing knowledge and information from diverse populations.

At its core, wisdom of crowds is the principle that collective intelligence is better than any individual expert or specialist. It states that decisions made by larger groups of individuals tend to be more accurate and reliable than decisions made by small groups or individual experts. This is because a large group of people tend to have a wider range of knowledge and expertise which gives them the opportunity to draw from a much larger pool of resources in making their decisions.

An effective crowd should also have certain characteristics in order to have an impactful outcome. To begin, it should have a diversity of opinions, each being independent, and free from any influence. The quality of the crowd is also very important. If the members are ill-informed or do not have sufficient knowledge on the subject, it can lead to ill-conceived outcomes. The members of the crowd should also be willing to accept disagreement, share facts and perspectives openly, and weigh each participant's opinion rather than disregarding them.

The Wisdom of Crowds theory has been said to explain market movement and herd-like behavior among investors. This is because the more people agree on a certain subject, the more it drives widespread thought and decision making. As investors begin to experiment and come to the same conclusion, the decision of the majority begins to have a profound effect on market movements and investment decisions on a large scale. Similarly, the wisdom of crowds has been applied to democratic decision making as well as predicting trends in technology and social movements.

There are several advantages to applying the wisdom of crowds to decision making. It helps to curb bias, increase objectivity and make sure that opinions are not biased by any individual's idea or expertise. Furthermore, it encourages everyone to contribute their own knowledge, perspective, and thoughts which can help improve the quality of decision making and ensure that multiple points of view are considered.

The theory of Wisdom of Crowds is one of the most powerful and efficient ways to employ collective intelligence and decision making. As a concept and tool, it helps individuals and organizations leverage the power of groups in order to gain more accurate and reliable outcomes. This can have huge implications for future decision making in various domains such as commerce, politics, and society.