The Wisdom of Crowds
Author: James Surowiecki
Paperback: 336 pages, $14.00
“Does it please the people to leave its administration in the hands of those who are actually in charge of it?”
– Jean Jacques Rousseau
The Wisdom of Crowds by James Surowiecki is a book that everyone should read. It’s up there with Jean Jacques Rousseau’s Social Contract. The book questions the traditional ideology that a single individual is more intelligent than the group. It was previously thought that within groups there is chaos and that overall intelligence is weakened with increasing numbers. However, as the book lays out in a very organized form, there have been numerous occasions when the group consensus has far surpassed the ability of any individual, no matter how versed in a given topic. From sports betting, to predicting terrorist attacks, to finding sunken submarines, the group response was correct even when no one individual in the group knew the correct answer.
Large groups of people are smarter than an “elite few.” Surowiecki thoroughly explains the conditions that support this theory in his book. First the group has to be diverse, “the best collective decisions are a product of disagreement and contest, not consensus or compromise.” Diversity permits the greatest number of allowable outcomes. Second, the individuals of a set group must maintain autonomy. They can not be influenced to think one way or another. This leads us to the third, and possibly the most important variant, decentralization. The decision should never be made by a single, central authority. These factors must be put together, or coordinated, to provide the best possible solution for any given problem.
Just for fun, no money involved here although that seems to help the group decision to be more accurate, let’s bet on who is going to win the Superbowl this year. This little exercise is a perfect example of what Surowiecki is talking about. We all posses internal knowledge regarding this topic, even those that don’t think they do. I’m betting on the Colts just for the hell of it, but it will probably be a close game.
So come on crowd, check out the book and enlighten us with your wisdom. What do you think, the Colts or the Bears?