John Maynard Keynes understood this in 1936 when he compared financial markets to a beauty contest—not the kind where judges select the most attractive face, but a peculiar newspaper game of his era where readers chose the six faces they thought other readers would find most attractive. The prize went not to the person with the best aesthetic judgment, but to the person who best predicted the crowd’s predictions.

“It is not a case of choosing those which, to the best of one’s judgment, are really the prettiest,” Keynes wrote, “nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be.”