Wisdom of crowds is the idea that large groups of people are collectively smarter than individual experts when it comes to problem-solving, decision-making, innovating, and predicting. The idea is that the viewpoint of an individual can inherently be biased, whereas taking the average knowledge of a crowd can result in eliminating the bias or noise to produce a clearer and more coherent result.

The theory is often applied to financial markets to show why markets in some instances operate efficiently and other times, inefficiently. Market participants in the crowd need to be diverse and have an incentive for markets to function efficiently.