The Wisdom of Crowds James Surowiecki Abel D
The Wisdom of Crowds James Surowiecki Abel D. Betancourt, Jr. BUSN 403 October 27, 2014
Skittles Challenge Take out a piece of paper and write down how many skittles are in the plastic bag! Don’t let anyone look at your estimate! Winner will get to keep the bag of skittles.
So How Much? ! ? ? ?
Surowiecki’s Main Points • Groups do not need to dominated by intelligent people to be “smart” • When imperfect judgments are added up in the right way, the collective intelligence is often excellent • Collective intelligence: the knowledge of the entire group • Group-think: the concept that the masses are better problem solvers, forecasters and decision makers than any one individual or elite few
3 Kinds of Problems That Affect “Collective Intelligence” • Cognition problems • Problems that have definitive solutions • Example: Seeing a person injured (best option is to call 911) • Coordination problems • Group must try to coordinate their behaviors, knowing that everyone else has the same goal • Example: Working on a group presentation and everybody gets the same grade • Cooperation problems • Encouraging distrustful people to work together • Example: 9/11
Four Conditions of a “Wise Crowd” • Diversity of opinion • Each person should have private information and own interpretation of known facts • Independence • YOUR opinion is not determined by the opinions of OTHERS; freedom • Decentralization • People are able to specialize and draw on local knowledge • Aggregation • Varying opinions can provide a solution more likely to be smarter than the smartest person’s answer
Diversity • Grouping only smart people does not work well • Smart people are similar to each other • Hard to keep learning • “They spend too much exploiting, and not enough time EXPLORING” • Adding people who know less, but different, improves the group performance • Introduce a radical or unlikely idea • Better, robust forecast and decisions than the most skilled “decision maker”
Diversity IDEA! IDEA! IDEA! IDEA!
Independence • Smart groups are made up of people with diverse perspectives who are able to stay independent of each other • “Independence is important to keep the mistakes people make from becoming correlated. ” • Example: Skittles experiment • We fall into “hearding” • The tendency to assume that if lots of people are doing something or believe something, there must be a good reason why. • Due to fear of being seen as “crazy” • Stop being sensible • Encouraging people to make incorrect guesses actually makes a group smarter
Independence DISCLAMER: THIS PICTURE WAS TAKEN MANY YEARS AGO. I AM NOT THAT FAST ANYMORE .
Decentralization • “Power does not fully reside in one central location, and many important decisions are made by individuals based on their own local and specific knowledge. ” • The closer a person is to a “problem”, the more likely he or she is to have a good solution. • Due to our specialization, we become productive and efficient and increases the scope of diversity • Perfect opportunity for communication and collaboration
Decentralization Lupas! Sweet Engines! “We need a solution to decide what type of coffee I should get tonight!” Common Grounds! Harvest! Starbucks! PSL all the way!
Aggregation • Coming together with a solution • Able to witness that the results of the solution came perfectly well than with the results of a group of geniuses alone
What did the I get out of this book? It is possible to describe how people in a group think as a whole Groups are more intelligent and often smarter than the smartest people There is no need to chase the expert
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