in Humans, Psychology

The Wisdom of Crowds: Intro

James Surowiecki’s The Wisdom of Crowds is the best book I’ve read in a while. In it he forwards a compelling thesis:

If you put together a big enough and diverse enough group of people and ask them to make decisions affecting matters of general interest that group’s decision will, over time, be intellectually superior to the isolated individual no matter how smart or well-informed he is.

This strikes me as a useful tool in the business design toolbox, where constant collaboration with people with a diversity of opinions and from multiple disciplines raises the quality of work.

He addresses three kinds of problems:

  • Cognition problems, that have or will have definitive solutions
  • Coordination problems, that require members of a group to figure out how to coordinate their behavior with each other
  • Cooperation problems, that involve the challenge of getting self-interested, distrustful people to work together

And he identifies four conditions that characterize 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 opinions are not determined by the opinions of those around them)
  3. decentralization (people are able to specialize and draw on local knowledge)
  4. aggregation (some mechanism exists for turning private judgments into collective decisions)

The rest of the book is dedicated to telling stories that illustrate and explain the above four conditions. More in future posts…