The Wisdom of Crowds

Much discussed (hated and loved) in other readings, and wonderfully on sale at the Angel Bookshop on Bene't Street just across the street from my faculty, I bought it and read it at The Orchard.

Bibliographic Deets

 * Surowiecki, James. The Wisdom of Crowds. 2005. Abacus. Great Britain. (Originally published by Random House)

Overview

 * As expressed by the author: "under the right circumstances, groups are remarkably intelligent, and are often smarter that than the smartest people in them. Groups do not need to be dominated by exceptionally intelligent people in order to be smart. Even if most of the people within a group are not especially well-informed or rational, it can still reach a collectively wise decision" (xiii - xiv)

Content

 * WISE CROWDS (10)
 * 1) Diversity of Opinion (ppl act on private info as well as a common info)
 * 2) Independence (decisions of individuals not determined by group but collected within a group)
 * 3) Decentralization (people can be specialists and from varied backgrounds)
 * 4) Aggregation (individual decisions culled together)


 * "With most things the average is mediocrity. With decision making, it's often excellence. You could say it's as if we've been programmed to be collectively smart" (11)


 * E.g. Google -> PageRank & linking as "voting" for best answers to question


 * The Market "What makes a system successful is its ability to recognize losers and kill then quickly. Or, rather, what makes a system successful is its ability to generate lots of losers and recognize them as such and kill them off. " (29)


 * "we know one thing about betting markets: they're very good at predicting the future." (83)

Terms

 * "Social Proof" -> "tendency to assume that if lots of people are doing something or believing something, there must be a good reason why." (43)


 * "Herding" -> "sticking with the crowd and failing small, rather than trying to innovate and running the risk of failing big" (49)


 * "Information Cascade" -> "when people's decisions are not made all at once but rather in sequence" (53) "stop paying attention to their own information ... and to start looking at the actions of others and intimating them" (54).


 * "Tacit Knowledge" -> "knowledge that can't be easily summarized or conveyed to others, because it is specific to a particular place or job or experience, but it is nonetheless tremendously valuable " (71)


 * "Aggregation - which could be seen as a curious form of centralization - is therefore paradoxically important to the success of decentralization" (75)


 * "Schelling Points" -> "'focal points' upon which people's expectations would converge" (91)

From At Cambridge