Books and
Cooks West
February 2006
The Wisdom of Crowds
by James Surowiecki
The Wisdom of Crowds:
Why the Many Are Smarter Than the Few and How Collective
Wisdom Shapes Business, Economies, Societies and Nations
James Surowiecki
Nate's place
Saturday, February 7 at 5:30 PM
Thai take-out, wine, chocolate cake
Our rating: 4.1 cups of tea!
From Publishers Weekly
While our culture generally trusts experts and distrusts the wisdom of
the masses, New Yorker business columnist Surowiecki argues that "under
the right circumstances, groups are remarkably intelligent, and are
often smarter than the smartest people in them." To support this almost
counterintuitive proposition, Surowiecki explores problems involving
cognition (we're all trying to identify a correct answer), coordination
(we need to synchronize our individual activities with others) and
cooperation (we have to act together despite our self-interest). His
rubric, then, covers a range of problems, including driving in traffic,
competing on TV game shows, maximizing stock market performance, voting
for political candidates, navigating busy sidewalks, tracking SARS and
designing Internet search engines like Google. If four basic conditions
are met, a crowd's "collective intelligence" will produce better
outcomes than a small group of experts, Surowiecki says, even if
members of the crowd don't know all the facts or choose, individually,
to act irrationally. "Wise crowds" need (1) diversity of opinion; (2)
independence of members from one another; (3) decentralization; and (4)
a good method for aggregating opinions. The diversity brings in
different information; independence keeps people from being swayed by a
single opinion leader; people's errors balance each other out; and
including all opinions guarantees that the results are "smarter" than
if a single expert had been in charge. Surowiecki's style is pleasantly
informal, a tactical disguise for what might otherwise be rather dense
material. He offers a great introduction to applied behavioral
economics and game theory.
