Two Lessons from a Jar of Jellybeans
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At a recent conference, my firm used the “guess-the-number-of-jellybeans-in-the-jar” trick to boost traffic. The results of the contest were thought provoking.
Since you are all now wondering how many jellybeans were in the jar, I will relieve the suspense and tell you. There were 3,745.
But the guesses were all over the map. They ranged from a low of 274 to a high of 9,779. The winning guess was 4,000 beans – about 7% off the actual number.
The average of all guesses was 3,208. So, the wisdom of the crowd was 14% off target, but better than most individual guesses. Only four guesses were closer than the average.
We all know that the jellybeans-in-a-jar exercise is designed to show us that collective assessments are often more accurate than any individual’s assessment. In this case, we demonstrated that once again – a full 88% of the guesses were worse than the average.
But what struck me was a more fundamental question. How could the range of guesses be so wide? Everyone was looking at the same physical object – a jar of jellybeans – yet how they perceived what they saw was very different.
Is there a lesson here for financial advisors? Indeed, there are two.