The Wisdom of Crowds

The Wisdom of Crowds - why groups are smarter than individuals ( original title: . The wisdom of crowds Why the many are smarter than the few and how collective wisdom shapes business, economies, societies and nations ) is the title of a book by James Surowiecki, the was published in 2004. He argues that the accumulation of information in groups lead to common group decisions that are often better than solutions of individual participants.

Content

The book presents numerous case studies and anecdotes to illustrate his argument. Besides, many disciplines are involved, but mainly the economics and psychology.

The introductory story of Francis Galton's surprise that visitors to the West of England Livestock Fair 1906, the carcass weight of cattle accurately estimated in the context of a lottery, if one assumed as an estimate of the group the average of all 787 estimates. ( The estimate of the group was even better than that of each participant, including some experts, such as butcher. )

The book refers to different groups independently decisive people, not to phenomena of mass psychology. He draws parallels with statistical selection procedure, after which a different group individually decisive people may rather represent the totality of all possible outcomes of an event and thus is able to make better predictions for the future.

The English title of the book is an allusion to Charles Mackay's Extraordinary Popular Delusions and the Madness of Crowds, which was released in 1841.

Types of the Wisdom of Crowds

Surowiecki decisions divided into three main groups, which he classified as problem areas:

• Cognition: This problem area includes decisions where there is a concrete solution that can be detected through the use of cognitive skills. Surowiecki argues that this is a group much more accurate, faster and independent of political forces could succeed as experts or expert groups.
• Coordination: Coordination of behavior includes optimizing the use of a restaurant or accident-free driving. The book contains many examples of experimental economics, this section is based but more on naturally occurring phenomena, such as pedestrians, which optimize the sidewalk - use or utilization of popular restaurants. He examines how shared beliefs / standards allow amazingly accurate predictions about the reactions of other members of that culture within a culture.

Elements of the foundation of the wisdom of crowds

Not all groups are wise. Examples of such considerations include unruly mob or investors in the stock market by a stock market boom or crash. Investigations are necessary to the effect of more examples of faulty intelligence group uncover and avoid them. Nevertheless, it is possible to define key criteria that distinguish a group of as an irrational group.

Error of collective intelligence

Surowiecki examined situations in which the group built up a very bad reputation, arguing that in these situations the knowledge or cooperation is flawed. This happened in his view, the fact that the group members too listened to the views of other people and emulate them, instead of making yourself a picture of the situation and differentiate. He mentions various details of experiments, after which the group habits through a selected speakers will be known. He claims on top of that the main reason for the intellectual conformity to a group is mainly to make systematic mistakes.

When the final authority is not able to accept the group as the lead, according to Surowiecki's statements to the fact that the people and the right lost the self-information. Cooperation in the group can only be as good, or worse rather than better in this way, as the smartest member ( The possibility exists apparently ). Detailed case studies include the following error on:

Loss of independence in the group

Surowiecki spoke in the context of independent individuals and groups have the fact that some individuals might be involved too much ("too well integrated " are).

He dealt with the question of how an individual maintains its independence in interactions without processing a certain amount of data, which turns out to be the key factor of group intelligence.

He responds as follows:

• Holding loose connections.
• Attempts to obtain as much information as possible.

Requirements

Surowiecki is a strong advocate of the benefits of decision markets and regrets the errors in DARPA's controversial private policy analysis ( potential intellectual Descended from the RAND Corporation and author John Brunner's pool Delphi Delphi method ) to return to the earth. It builds on the success of public and internal cooperation as a starting point for a new individual point of view of a group with different experiences and the same motivation ( for the success of thing), to create new conditions. Surowiecki's beforehand incurred prophecies are more meaningful than all the predictions of any other group of individuals who hired considerations. His statements are, above all, market- based, so that it excludes as little cooperation from authoritarian markets and companies, as well as unforeseeable terrorist activities.

To support his thesis, he indicates that his editor has information that a compelling statement published in a book, which consists of several individual authors. In this way, it should be possible to delve into the wisdom of a much larger mass than would be possible with a writing home team.

The journalist Will Hutton argues that Surowiecki's analysis as well as on prejudice based on factual backgrounds to Invoking " amazed decently fixed, own, collected, volunteer experience " on the experiences of many people. He concludes that " there is no better way to teach citizenship, individuality, and democracy as a really free press.

Only a few experimental attempts have been made to explore how collective wisdom arises. One of such attempts is a so-called poll or voting server named Opinion Republic. Here collect market research after the multiple-choice principle opinions on statements to a respective subject area and evaluate them. With the normally passive users so -called " lurkers " activating mechanism of the voting comes into being each a fairly high number of opinions, which is becoming increasingly quality and therefore less meaningful according to the law of large numbers. Unfortunately, here is negative should be noted, in contrast to other voting that each user before his vote is already seeing the results achieved to date, which jeopardizes the independence of his judgment. However, this would be not only a high diversity of perspectives and views (range ) required when intelligent solutions to be created.

Application in the practice

Numerous methods and applications which use or even based on the principle that describes Surowski in his book. In the understanding of collective intelligence opens the principle of " The Wisdom of Crowds " into a consensus-based decision-making. The Internet accelerates this process and is itself a medium for the implementation of the principle: Decentralized knowledge of different people, for example, through forums or blogs coordinated. Crowdsourcing is a good example of how the principle is utilized in the application in the medium of the Internet. Through online asked questions, the "crowd ", ie the user community, make decisions together.

The principle of " The Wisdom of Crowds " is also held in business use. Thus, the method Social Forecasting makes this principle advantage and build on it. The framework provided by Social Forecasting ensure that the principle can be used effectively, in order to evaluate, for example, products or ideas.

In the course of wisdom of the crowd and the scientist Francis Galton is mentioned, which ( unintentionally) demonstrated in a test 1906 that the principle works.

Others

20 January 2008 Günther Jauch moderated an interactive, directly transmitted television program entitled The Wisdom of Crowds. In this show, the question should be clarified whether a single expert is smarter than all of the spectators. Various celebrities were presented as experts on a topic and had knowledge of this or estimated answer questions, while the viewers voted by telephone on the same question. At the end of the program the result between experts and spectators was balanced.