Professional Documents
Culture Documents
Introduction: When our imperfect judgments are aggregated in the right way our
collective intelligence is often excellent. This intelligence, or what Ill [Surowiecki}
call the wisdom of crowds, is at work in the world in many different guises. Its
the reason the Internet search engine Google can scan a billion Web pages and find
the one page that has the exact piece of information you were looking for. P. xiv.
The argument of this book is that chasing the expert is a mistake, and a costly one
at that. We should stop hunting and ask the crowd (which, of course, includes the
geniuses as well as everyone else) instead. P. xv.
There are conditions that are necessary for the crowd to be wise: diversity,
independence, and a particular kind of decentralization. P. xviii
Groups work well under certain circumstances, and less well under others. Groups
generally need rules to maintain order and coherence, and when theyre missing or
malfunctioning, the result is trouble. Groups benefit from members talking to and
learning from each other, but too much communication, paradoxically, can actually
make the group as a whole less intelligent.
While big groups are often good for solving certain kinds of problems, big groups
can also be unmanageable and inefficient. Conversely, small groups have the virtue
of being easy to run, but they risk having too little diversity of thought and too
much consensus.
Diversity and independence are important because the best collective decisions are
the product of disagreement and contest, not consensus or compromise. P. xix
The best way for a group to be smart is for each person in it to think and act as
independently as possible. P. xx.
Part 1
The Wisdom of Crowds
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Wisdom of Crowds
themselves out. Each persons guess, you might say, has two components:
information and error. Subtract the error, and youre left with the
information. P. 10
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, its often excellence. You could say its as if weve been programmed
to be collectively smart. P. 11
The crowd is especially good in horse racing. The final odds reliably predict
the races order of finish (that is, the favorite wins most often, the horse
with the second lowest odds is the second-most-often winner. P. 14
Googlesurveying three billion Web pages and finding the right page quickly
is built on the wisdom of crowds. It uses the Page Rank algorithm first
defined by Sergey Brin and Lawrence Page, founders of Google p. 16
Google is a republic, not a perfect democracy. The more people that have
linked to a page, the more influence that page has on the final decision. P.
27
The real key of tapping into the wisdom of the crowd is to satisfy the
conditions of diversity, independence, and decentralization. P. 22
Chapter 2 The difference Difference Makes: Waggle Dances, the Bay of Pigs, and
the Value of diversity
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initial information is incorrect, that people will make the wrong decision,
simply because the initial diners, by chance, got the wrong information. P. 54.
The fundamental problem with an information cascade is that after a certain
point it becomes rational for people to stop paying attention to their own
knowledgetheir private informationand to start looking instead at the
actions of others and imitate them. But once each individual stops relying on
his own knowledge, the cascade stops becoming informative. They think they
are making decisions based on what they know when in fact people are
making decisions based on what they think the people who came before them
knew.
Instead of aggregating all the information individuals have, the way a market
or a voting system does, the cascade becomes a sequence of uninformed
choices, so that collectively the group ends up making a bad decision. P.55
According to Malcolm Gladwell in The Tipping Point certain individuals
mavens, connectors, and salesmenare important in spreading ideas. Some
people are more influential than others, and cascades (he calls them
epidemics) move via social ties, rather than being a simple matter of
anonymous strangers observing each others behavior. P. 55.
People believe that the ones who have information are the mavens,
connectors and salesman. P. 55
If most decisions to adopt new technologies or social norms are driven by
cascades, there is no reason to think that the decisions we make are, on
average, good ones. Collective decisions are most likely to be good ones when
theyre made by people with diverse opinions reaching independent
conclusions, relying primarily on their private information. In cascades, none
of these things are true.
Effectively speaking, a few influential peopleeither because they happened
to go first, or because they have particular skills and fill particular holes in
peoples social networksdetermine the course of the cascade. In a
cascade, peoples decision are not made independently, but are profoundly
influenced by those around them. P. 57
Sometime we imitate others. In a sense it is a kind of rational response to
our own cognitive limits. Each person cant know everything.
In the long run, imitation has to be effective for people to keep doing it.
The more important the decision, the less likely a cascade is to take hold.
And thats obviously a good think since it means that the more important the
decision, the more likely it is that the groups collective verdict will be right.
Information cascades are interesting because they are a form of
aggregating information.
The fundamental problem with cascades is that peoples choices are made
sequentially, instead of all at once. P. 63
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Wisdom of Crowds
One key to successful group decisions is getting people to pay much less
attention to what everyone else is saying. P. 65.
Chapter 4 putting the pieces together: the CIA, Linux, and the art of
decentralization.
What do we mean by decentralization?power does not reside in one central
location, and many important decisions are made by individuals based on their
own local and specific knowledge rather than by an omniscient or farseeing
planner. [Schools are an example NOTE MINE] p, 71
Decentralizations great strength is that it encourages independence and
specialization on the one hand while still allowing people to coordinate their
activities and solve difficult problems on the other.
Decentralizations great weakness is that theres no guarantee that valuable
information which is uncovered in one part of the system will find its way
through the rest of the system. P. 71
A decentralized system can only produce genuinely intelligent results if
theres a means of aggregating the information of everyone in the system.
[We dont have this in public education. NOTE MINE]
Aggregation, paradoxically, is therefore important to the success of
decentralization. P. 75
Decentralized works well in some conditions and not very well under others.
Given the premise of the book decentralized ways of organizing human
effort are, more often than not, likely to produce better results than
centralized ways. P. 75
Its hard to make real decentralization work, and hard to keep it going, and
easy for it to become disorganization. P. 76.
The kind of decentralization led to the lack of ability for security agencies
to coordinate information prior to 911. There was no way to aggregate and
share. P. 77
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Wisdom of Crowds
Peoples experiences of the world are often surprisingly similar, which makes
successful coordination easier.
Culture also enables coordination in a different way, be establishing norms
and conventions that regulate behavior. Some of these norms are explicit
and bear the force of law.
Most norms are long-standing but it also seems possible to create new forms
of behavior quickly, particularly if doing so solves a problem. P. 92
Conventions obviously maintain order and stability and they reduce the
amount of cognitive work you have to put in to get through the day. We
dont have to think about how to act in some situations and allow groups of
disparate, unconnected people to organize themselves with relative ease and
an absence of conflict. P. 93 e.g. how people seat themselves in a theater,
even if they leave to get popcorn.
The most successful norms are not just imposed externally but are
internalized.
Convention has a profound effect on economic life and on the way companies
do business. Its the way its always been done. [We get hung up on that in
education a great deal. NOTE MINE] e.g. instead of laying off workers,
companies will reduce everyones pay to keep people working. [Is this an
example of value-laden behavior that is a good thing? He really doesnt
address values and ethics in this book and the influence on group behavior
from the values/ethical standpoint. NOTE MINE]
Another example is how movie tickets are priced. Economically, it makes
sense to charge more for newly released films and gradually decrease price
as they have been out a while. Yet we dont do that because thats not the
way its been done since movies were first made P. 99
In the stock market regular people not brokers-- do as well in the market
as do experts. A well functioning market will make everyone better off
than they were when trading beganbut better off compared to what they
were, not compared to anyone else. On the other hand, better off is better
off. Nave, unsophisticated agents, (Smith) says that these agents can
coordinate themselves to achieve complex, mutually beneficial ends even if
theyre not really sure, at the start, what those ends are or what it will take
to accomplish them. P. 107
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There is a problem as well: the more people trust, the easier they are for
others to exploit. And if trust is the most valuable social product of market
interactions, corruption is its most damaging. P. 126
The t.v. industry with the sweeps 4 times a year is an example of allowing a
single self-interested faction dictate a groups decisions. Because the
programming is different during sweeps, and only some people are polled, and
the results are not aggregated by the local market, just by the greater
market, the key players in the t.v. industry have allowed a single self-
interested group dictate the decision about programming. P. 134
Taxpaying is a cooperation problem. People will pay as long as they think
everyone else is paying too, even though you can reap all the benefits of a
tax systemeducation, parks, etcwithout paying. A healthy tax system
requires people to pay voluntarily. People also have to believe that the guilty
will be punished for not paying.
Successful taxpaying breed successful taxpaying. P. 141.
Part II
Chapter 7: Traffic: What we have here is a failure to Coordinate
The study of traffic is one that really looks at the behavior of crowds. Various
strategies to reduce traffic flow, e.g. London charging drivers $5. Each time
they come to central London during rush hour has been relatively successful.
Singapore has also had success in using computer chips and as soon as you enter
the pay zones, money is deducted from your account so drivers are in control.
This has been very successful. P. 147
One reason coordination on the highway is so difficult is the diversity of drivers
how people drive, use brakes, leave room between cars, etc. p. 153
Studies have shown that drivers are uncomfortable giving up control as in having
cars drive for you.
If an intelligent crowd cannot save itself from traffic jams, perhaps intelligent
highways can. P. 157 [by using meters, smart cards, traffic sensors, etc NOTE
MINE]
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also cooperate by playing fair with their data. Second, science depends not only
on an ever-replenishing pool of common knowledge but also on an implicit faith in
the collective wisdom of the scientific community to distinguish between those
hypotheses that are trustworthy and those that are not. P. 170
The flaw in the way the scientific community discovers truth is that most
scientific work never gets noticed.
Also those scientists who have name recognition are more likely to be published
and read than those who are no known. P. 171 Reputation should not be the
basis of a scientific hierarchy. P. 172
Chapter 9: Committees, Juries, and Tams: The Columbia disaster and how
small groups can be made to work.
Small groups are ubiquitous in American life, and their decisions are
consequential. Boards of directors, juries, etc.
Small groups are different in important ways because the nature of the
relationship in the group is qualitatively different.
Small groups can make very bad decisions because influence is more direct and
immediate and small-group judgments tend to be more volatile and extreme. P.
176
Few organizations have figured out how to make groups work well consistently.
Its still unusual for a small group to be more than just the sum of its parts,
Much of the time, far from adding value to their members, groups seem to
subtract it. Individuals will go along with others more readily. The more vocal
opinion often gets discussed. P. 177
Members, if there is disagreement, dismiss the need to gather more
information. They may just make a decision. P. 177
They succumb to confirmation bias which causes decision makers to
unconsciously seek those bits of information that confirm their underlying
intuitions.
A team may believe that it knows more than it does.
Small groups have a real danger in emphasizing consensus over dissent. They
prefer the illusion of certainty to the reality of doubt, e.g. Bay of Pigs decision,
p. 180
One thing that helps is that group deliberations are more successful when they
have a clear agenda and when leaders take an active role in making sure that
everyone gets a chance to speak. P. 182
Paradoxically, Stasser found that in unstructured, free-flowing discussions, the
information that tends to be talked about the most is the information that
everyone already knows. P. 183
Small groups also fall victim to the lack of diversity. Organizations tend to hire
from the same places, have groups of like-minded people. P. 183
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Wisdom of Crowds
Small groups get polarized more readily. People are constantly comparing
themselves to everyone else and they want to maintain their position within the
group and tend to go along with the group or change their mind more so than in a
larger group. P. 185
The order in which people speak has a profound effect on the course of a
discussion. Those who speak earlier are more influential and they tend to
provide a framework within which the discussion occurs. P. 186
Talkativeness has profound effect on the kinds of decisions small groups reach.
If you talk a lot in a group, people will tend to think of you as influential almost
by default. Talkative people are not necessarily well-liked by other members of
the group, but they are listened to. And talkativeness feeds on itself. The
more someone talks, the more he is talked to by others in the group. So people
at the center of the group tend to become more important over the course of a
discussion. P. 187
There is no clear correlation between talkativeness and expertise.
Extremists tend to be more rigid and more convinced of their own rightness
than moderates. P. 188
Nonpolarized groups consistently make better decision and come up with better
answers than most of their members, and surprisingly often the group
outperforms even its best member. P. 189
There is no point in making small groups part of a leadership structure if you do
not give the group a method of aggregating the opinions of its members. If an
organization sets up teams and then uses them for purely advisory purposes, it
loses the true advantage that a team has: namely, collective wisdom. P. 191
Chapter 10 The Company: Meet the New Boss, same as the Old Boss?
No organizational model offers an ideal solution.
Although corporations pay lip service to becoming less hierarchical and more
collaborative, most American corporations did not try to do so. Collective
decision-making was too often confused with the quest for consensus.
Consensus-driven groupsespecially when the members are familiar with each
other-tend to trade in the familiar and squelch provocative debate.
Top execs are too often isolated from the real opinions of everyone else.
Too often corporations say they are making decisions democratic. They
confuse that democracy means endless discussions rather than a wider
distribution of decision-making power. P. 203
In American corporations the assumptions that integration, hierarchy, and the
concentration of power in a few hands lead to success continue to exert a
powerful hold on much of American business. While the success of Silicon
Valley companieswhich, in general do have more decentralized structures with
less emphasis on top-down decision makingmad companies anxious to at least
appear to be pushing authority down the hierarchy, reality has only rarely
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Chapter 11: Markets: Equity Contests, Bowling alleys and stock prices
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Bubbles and crashes occur when the mix [of opinions] shifts too far in the
direction of dependence.
A crash is simply the inverse of a bubble, although its typically more sudden and
vicious. In a crash, investors are similarly uninterested in the real value of a
stock, and similarly obsessed with reselling it.249
The insidiousness of a bubble, is that the longer it goes on, the less bubble like
it seems. Part of that is the fact that no one knows when its going to end (just
as no one, even in retrospect can really know when it started.} p. 251
Bubbles are not collective hysteria. If groups on the whole are relatively
intelligent (as we know they are), then theres a good chance that a stock price
is actually right. The problem is that once everyone starts piggybacking on the
wisdom of the group, then no one is doing anything to add to the wisdom of the
group. P. 251
As investors start mirroring each other, the wisdom of the group as a whole
declines. P. 251
Groups are only smart when there is a balance between the information that
everyone in the group shares and the information that each member holds
privately. And the media does play a role in that process. P. 246
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The experts dont know the answers. Elites are just as partisan and no more
devoted to the public interest than the average voter. P. 267
Democracy allows for the persistent injection into the system of what
Surowiecki called local knowledge. About the impact of government on the
everyday lives of citizens. P. 267
In the Federalist Papers James Madison feared factions because he felt they
would make it harder for government to seek the public good. That fear
survives today in the familiar critique of the power of interest groups and
lobbyists [and we had a Supreme Court that allowed PACS to contribute vast
amounts of money to exert influence!!!! NOTE MINE]
In a democracy we have no standard that allows us to judge a political decision
to be right or wrong. There is really no objective sense of what the
common good is. Two politicians may see that entirely differently. P. 270
Choosing candidates and making policy in a democracy are not, in that sense,
cognition problems and so we should not expect them to yield themselves to the
wisdom of the crowd. On the other hand, theres no reason to think that any
other political system (dictatorship, aristocracy, rule by elites) will be any
better at making policy, and the risks built into those systemsmost notably
the risk of the exercise of unchecked and unaccountable powerare much
greater than those in a democracy. P. 270
Democracy is a way to deal with the most fundamental problems of cooperation
and coordination. How do we live together? How can living together work to our
mutual benefit.
A healthy democracy inculcates the virtues of compromise and change. The
decisions that democracies make may not demonstrate the wisdom of the crowd.
The decision to make them democratically does. P. 271
Afterword
Growing interest in collective wisdom is the product of a host of different
factors but Surowiecki thinks it is directly to the increased importance of the
Internet. The Net is fundamentally respectful of and invests in the idea of
collective wisdom, and in some sense hostile to the idea that power and
authority should belong to a select few. Wikipedia and the Net and
antihierarchical. P. 275-6
We dont always know where good information is. Thats why in general, its
smarter to cast as wide a net as possible, rather than wasting time figuring out
who should be in the group and who should not.
The Wisdom of Crowds is not an argument against experts, but against our
excessive faith in the single individual decision maker. P. 277 For two reasons:
identifying true experts is surprisingly hard to identify and if the group is
smart enough to identify that expert its smart enough not to need that expert.
P. 278
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If youre careful to keep a group diverse, and careful to prevent people from
influencing one another too much, the individual mistakes people make will be
irrelevant. And their collective judgment will be wise. P. 279
It is certainly true that you often need a smart individual to recognize the
intelligence of the group. As the value of collective wisdom becomes more
widely recognized, people will be more likely to adopt, on their own, collective
approaches to problem solving and the Internet affords us any number of
examples of wise crowds that are, for the most part, self-organized and self-
managed. Were a long way from anything resembling bottom-up decision
making, either in government or in corporate America, [or in education NOTE
MINE], but certainly the potential for it now exists. P. 281
What Surowiecki thinks we know now is that in the long run, the crowds
judgment is going to give us the best chance of making the right decision, and in
the face of that knowledge, traditional notions of power and leadership should
begin to pale. P. 282
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