The Wisdom of Crowds: Collective Decisionmaking

notes from Surowiecki, James. The Wisdom of Crowds. (Anchor: 2005).

If a crowd is asked to guess a value for something (say, a number of jellybeans in a jar), the average of the guesses will be a value that’s about 95% accurate, far better than the individual answers. The guessers are not working as a group, just as individuals. The group’s guess will not be better than all answers, but it will be far better than the majority of them.

Four conditions characterize these “wise crowds:”

  1. Diversity of opinion: each person should have some private information, even if it’s just an eccentric interpretation of the known facts.
  2. Independence: people’s opinons should not be determined by the opinions of those around them.
  3. Decentralization: people should be able to specialize and draw on local knowledge.
  4. Aggregation: some mechanism must exist for turning private judgments into a collective decision.

With most things, the average is mediocrity. With decisionmaking, it’s often excellence. You could say it’s as if we’ve been programmed to be collectively smart.

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