The Statue That Didnt Look Right and the

The Statue That Didn’t Look Right and the Wisdom of Crowds

The Statue That Didn’t Look Right J. Paul Getty Museum and the kouros “intuitive repulsion” and “fresh” Our brain uses two very different strategies to make sense of many situations: (1) conscious and (2) unconscious. The latter operates entirely below the surface of consciousness. “Fast and Frugal”: you often simply know before knowing why (e. g. , Iowa card decks experiment). Unknown Greek about 530 B. C. or modern forgery Marble H: 6 ft. 9 1/8 in. ; W [greatest, at forearms]

Getting That “ 6 th Sense” with Blue (good) & Red (bad) Decks of Cards

The Adaptive Unconscious as an “Internal Computer” As a form of rapid cognition, it quickly and quietly processes a lot of the data we need in order to keep functioning. We toggle back and forth between conscious, deliberative decisionmaking and unconscious, more spontaneous decision-making. e. g. , Nalini Ambady’s “teacher rating” experiment: started with 3 ten-second silent video clips, then five-second clips and then finally two-second clips. . . = end-of-the-semester full student evaluations Your adaptive unconscious still makes mistakes; it can be thrown off, distracted and disabled, but it tends to be for specific and consistent reasons (as we will see later on).

The Wisdom of Crowds Conventional wisdom: “beware of the masses, ” “avoid the ‘herd mentality’, ” Henry David Thoreau: “The mass never comes up to the standard of its best member, but on the contrary degrades itself to a level with the lowest. ” Friedrich Nietzsche: “Madness is the exception in individuals but the rule in groups. ” e. g. , mobs, genocide Soren Kierkegaard: “Wherever the crowd is, there is untruth. ” -----------------------------15 questions in a row = $1 million Stumped? (1) Have 2 of the 4 multiple-choice questions removed (2) Call a friend or relative, a smart person (65% correct) (3) Poll the studio audience (91% correct) * key: individual guesses aggregated (no consulting on another)

The Wisdom of Crowds Norman L. Johnson (Los Alamos National Laboratory) In calculating what he called the group’s “collective solution, ” he simply noted what a majority of the agents did at each node and then plotted a path through the maze based on the majority’s overall decisions. Instead of 34. 3 steps, which was the average for each agent’s first trip, or 12. 8 steps, the average for their second trip, the group’s path was, on average, just 9 steps long.

Stock Market as an “Individual Aggregator” Teacher Christa Mc. Auliffe, 37 Rockwell International (shuttle/main engines) Lockheed (managed ground support) Martin Marietta (ship’s external fuel tank) Morton Thiokol (solid-fuel booster rocket) Within a half-an-hour, the stock market “knew” what company was responsible. How?

The Wisdom of Crowds Four Key Conditions that Characterize Wise Crowds: (1) (2) (3) (4) Diversity of opinion (each person should have some private information, even if it’s just an eccentric interpretation of the known facts) Independence (people’s opinions are not determined by the opinions of those around them) Decentralization (people are able to specialize and draw on local knowledge) Aggregation (some mechanism, like Wall Street or a casino, exists for turning private judgments into a collective decision) Ask a hundred people to run a 100 -meter race, and then average their times. The average will be worse than many of the fastest runners. Ask a hundred people to answer a question or solve a problem, and the average answer will often be at least as good as the answer of the smartest member. With most things, the average is mediocrity. With decision-making, it’s often excellence.

Sports Betting The “vig” is the winning gambler’s commission to the bookmaker (the losing gambler simply loses the amount he/she wagered, nothing more). The “opening line” is key and then it moves based on how gamblers respond to it. A game’s point spread ends up representing bettors’ collective judgment of what the Final outcome of that game will be. ¾ of the time, the Mirage’s final line will be the most reliable forecast of the outcomes NFL games of any that you can find. Robert Walker, race and sports book director at the Mirage Hotel and Casino in Las Vegas

The Wisdom of Crowds: Iowa Electronic Markets

The Wisdom of Crowds: Controversy The program, called the Futures Markets Applied to Prediction (Future. MAP), would have involved investors betting on the likelihood of the assassination of Yasser Arafat, the overthrow of the King of Jordan, or a missile attack from North Korea.