Mastermind groups can collectively can produce even higher returns than the best individuals can alone. As reported in their book Superforecasting: The Art and Science of Prediction, Tetlock and his colleague Dan Gardner found that already high-performing “superforecasters” could improve their accuracy by 50 percent after joining a “superteam.”
Partly inspired by Superforecasters,I started a private, online group of PredictIt investors and political experts. We share tips, insights, and intelligence. We don’t always reach the same conclusions. But on balance, I’ve made better bets since forming the group.
Logistically, Slack and private Facebook groups both workreasonably well. More important though, is addressing the three main obstacles to making a superteam work.
The first is an educational challenge to make members realize the source of the group’s value. Members may join with the expectation that they will make more money by exchanging opinions on specific trades. While this may happen, the most important benefits of a good superteam are subtle and accrue over time. They materialize through day-to-day discussions and debates on issues that often appear incidental to specific markets and trades. This is because these interactions lead to greater:
- Awareness and control over cognitive biases;
- Judgment in isolating noteworthy news, trends, and developments from the day-to-day chatter;
- Intuition about the way PredictIt investors respond to events and the biases they bring to their bets; and
- Ideas on recruiting and retaining the best forecasters.
Another major obstacle is trust. Everyone in the group must have confidence that:
- There won’t be leaks, and that
- The costs of not sharing freely are far higher than the gains from freeriding.
Here are a few ways to overcome the trust issue:
- Be extremely selective in who you admit to the group
- Set clear expectations on what the group can and cannot deliver (Make sure the value proposition of the group is clear)
- Do not hesitate to remove anyone in the group that does not participate constructively
- Create social cohesion among the group, for example, by meeting in person and scheduling regular calls where members can become better acquainted[1]
Finally, overcoming a natural tendency to avoid confrontation. Psychologists Carol Tavris and Elliot Aronson have found that the most effective means of self-correction from our blind spots is to surround ourselves with “a few trusted naysayers…critics who are willing to puncture our protective bubble of self-justifications and yank us back to reality if we veer too far off.”
Here are some of the questions I ask on the application for my group:
- What is your trackrecord with investing/gambling?
- Where did you go toschool (HS, College, Grad School)?
- What is your highesttest score?
- Occupation?
- What is your MyersBriggs personality type?
- What areas ofexpertise do you have outside of politics?
- Do you have anethical objection to insider trading on PredictIt?
- Do you have access to inside information that you’d be willing to share with the mastermind group?If yes, what kind of information?
As you form a group, one question to think about is whether the group is optimally representative.
An obvious concern is that too many conservatives, libertarians, or leftists could create a bias. A Northwestern University study of the Iowa Electronic Markets found that in the 2000 and 2004 presidential election cycle, traders tended to believe that the party with which they were affiliated was more likely to win. Libertarians are apparently no exception, inflating Ron Paul’s odds to 10 percent in the 2008 Intrade markets. Nor are political experts immune from these biases; Abramowicz noticed that National Journal’s poll of congressional insiders “routinely shows vast discrepancies in predictions between Democrats and Republicans.”
At the same time though, conscientiousness is associated with conservative social and economic attitudes, and it seems plausible to me that there is a correlation between conscientiousness and predictive skills.
If the criteria I use to vet members make sense, then a superteam of PredictIt investors in fact would not be representative in other ways either. Consider, for example, how unrepresentative INTJs are compared to the general population.
Among other things, INTJs are twice as likely to be male than female and are more likely to be Independents or Republicans. A 1998 survey found that 41% of INTJs are Independents and 40% are Republicans, while just 19% are Democrats.
Studies have also found that those interested in political prediction markets are far from representative, increasing the likelihood that the best traders and experts would come from certain demographics. Bettors in political prediction markets generally are predominantly young and male. On PredictIt specifically, most traders are males between the ages of 22 and 35 in metropolitan areas. PredictIt traders appear to mirror those who were on Intrade—men in their twenties who a BuzzFeed reporter described as “the Xbox and Red Bull demographic”: an active community of “finance guys, card sharks, political junkies.” In terms of scholars on political prediction markets, libertarian technocrats and market behavioralists have taken the most interest. These finding are all consistent with evolutionary and cross-cultural perspectives on gambling positing that gambling is an outgrowth of differing sexual selection strategies between men and women, as well as the high residual reproductive value of young adults that rewards risk in pursuing status and resources to maximize reproductive success.
[1] I’ve learned a great deal about social cohesion through my interest in elite social networks. See for example, George Harriman, College Secret Societies; Alexandra Robbins, Secrets of the Tomb: Skull and Bones, the Ivy League, and the Hidden Paths to Power, Little, Brown, and Co., 2002; David Rothkopf, Superclass: The Global Power Elite and the World They Are Making, Farrar, Straus and Giroux, 2008; Dino Knudsen, “The Trilateral Commission and Global Governance: Informal Elite Diplomacy, 1972-82,” Routledge, 2016