Xing Huang, Assistant Professor, Eli Broad College of Business, Michigan State University: Harnessing the Wisdom of Crowds

Time:2016-12-21 Print

Topic: Harnessing the Wisdom of Crowds

Speaker: Xing Huang, Assistant Professor, Eli Broad College of Business, Michigan State University.

Date: December 21st (Wednesday.)

Time: 10:00-11:30am

Location: Building 4, Room 101

Language: English


We examine the negative information externality associated with herding on a crowd-based earnings forecast platform ( By tracking user viewing activities, we monitor the amount of information a user views before she makes an earnings forecast. We find that the more public information a user views, the less weight she will put on her private information. While this improves the accuracy of each individual forecast, it reduces the accuracy of the consensus forecast, since useful private information is prevented from entering the consensus. Predictable errors made by “influential users” early on persist in the consensus forecast and result in return predictability at earnings announcements. To address endogeneity concerns related to information acquisition choices, we collaborate with to run experiments where we restrict the information set for randomly selected stocks and users. The experiments confirm that “independent” forecasts lead to a more accurate consensus and convince to switch to a “blind” platform from November 2015. Overall, our findings suggest that the wisdom of crowds can be better harnessed by encouraging independent voices from the participants.

About the speaker:

Xing Huang is currently an assistant professor of the Department of Finance at the Eli Broad College of Business, Michigan State University. She received a Ph.D. in Economics from the University of California at Berkeley in 2013, and a B.A. (2005) and a M.A. (2007) in Finance from Peking University in China. Xing's research focuses on behavioral finance, asset pricing and household finance. She is interested in empirically characterizing how market participants behave, and identifying how these (non-standard) behaviors can improve our understanding on the pricing of the financial market. In her recent work, she studies the wisdom of crowds through crowdsourcing platform, the effect of investors' limited attention on market slow incorporation of multinational firms' foreign information, the impact of prior investment experience and categorical thinking, mutual fund investors’ sophistication through their assessment of fund manager’s skill, the effect of housing price expectations on the timing of first-home purchases, and the effect of first impression on entrepreneurial finance decisions.


>Tsinghua National Institute of Financial Research