The Wisdom Of Crowds
In the endlessly fascinating book, New Yorker columnist James Surowiecki explores a deceptively simple idea that has profound implications: “large groups of people are smarter than an elite few”. This seemingly counterintuitive notion has endless and major ramifications for how businesses operate, how economies are and how we live our daily lives. With delightfully clear prose and immaculate erudition, Surowiecki ranges across fields as diverse as popular culture, ant biology, behavioral economics etc. – to illustrate how this principle operates in the real world.
The examples he uses are surprisingly down to earth and fun to ponder at:
Why is the line in which you are standing always the longest and slowest? Why is the TV network so awful with so much of junk advertisements? Why are there traffic jams? What’s the best way to win money on a game show? Why is it that you can buy a screw anywhere in the world and be sure that it will a bolt bought 10,000 miles away? Do we as voters really think democracy is an excellent vehicle for making intelligent decisions while casting vote?
From such examples he draws brilliant conclusions about human society, free markets, scientific research and even the environment. This book is truly an eye opener for anyone interested in making things happen.
The author identifies the following characteristics of smart crowds:
- Cognitive Diversity: The more diverse individuals are the more will be the inputs for brainstorming.
- Decentralization: This helps people think on their own feet rather than following the dictator.
- Independence & Passion: Group members must come to a collective verdict but at the same time must have the satisfaction of knowing that they have done their best.
Experts no matter how smart they are have limited amounts of information. Diversity and independence are important because the best collective decisions are the product of disagreement and contest and not consensus or compromise. Group intelligence is evident under conditions of true uncertainty – when the right answer is seemingly unknowable – like in case of stock markets.
If you use the internet regularly – getting instantaneous responses from with the exact page you need high up in the rankings from Google won’t surprise you. But then, its worth letting yourself be a little amazed at what happened during those 0.10 secs. Google’s heart is its Page Rank algorithm – that capitalizes on the uniquely democratic characteristic of the web by using its vast linking structure as an organizational tool. It interprets a link from page A to page B as a vote and assesses a page’s importance by number of votes it receives. Thus in that 0.12 secs Google seeks inputs from the diversest resources to produce amazingly accurate search results.
The author describes such everyday phenomenon with concrete reasoning to illustrate the wisdom of crowds. In large groups, as he points out – the governing assumption seems to be that when things are uncertain – the best thing to do is just follow along. Herders may think that they are right since group’s decision would be perfect but if we have herders as a majority in the group – the group as a whole stops being sensible and smart.
Thus, I found this book as a biography of an idea~one with important lessons for how we live our lives, select our leaders, conduct businesses & collaborate, coordinate and compete in our complex world.