The Wisdom of Crowds: Collective Organization

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

Pedestrians are a well-organized crowd, “in which lots of small, subtle adjustments in pace and stride and direction add up to a relatively smooth and efficient flow.” They are solving coordination problems: “to solve [a coordination problem], a person has to think not only about what he believes the right answer is but also about what other people think the right answer is. And that’s because what each person does affects and depends on what everyone else will do, and vice versa.”

Schelling points are “salient landmarks or focal points, upon which people’s expectations would converge.” As in, if we agree to meet but don’t communicate where or when, most people would pick a central public space at noon. That space and that time are Schelling points. “They show that people can find their way to collectively beneficial results not only without centralized direction but also without even talking to each other. Second, the existence of Schelling points suggests that people’s experiences of the world are often surprisingly similar, which makes successful coordination easier.”

This is of course all related to cultural norms and conventions of behavior. Conventions are accepted rules that could have come from a central authority but are reached collectively. Not only will violating these conventions sometimes result in unintended responses, it can also be an uncomfortable experience for the rule breaker.

The most successful norms are not just externally established and maintained. The most successful norms are internalized.

Convention also has a lot to do with economic life, and the way corporations interact.

Spontaneous order (hayek again): “a flock is a wonderful example of a social organization that accomplishes its goals and solves problems in a bottom-up fashion, without leaders and without having to follow complex algorithms or complicated rules.”

At its core, after all, what is the free market? It’s a mechanism designed to solve a coordination problem: getting resources ot the right places at the right cost. No one can see the whole market, the whole picture, but people still get what they need when and where they need it.”

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