Summary of the book, "The wisdom of crowds"
"The wisdom of crowds" book by James Surowiecki underlines the importance of the wisdom of the the crowd in making better decisions. This is contrary to the general belief that experts always have the right answers and they can make better decisions.
The book describes number of instances where the crowd or a group made a close call. This doesn't mean that well informed analysts are of no use in making good decisions. However the advice of experts need to be pooled with other people to make better decisions. Group decision will be better than most of the people in the group. It's unlikely that one person will be better than the group.
Not all the groups can make good decisions. When a group has people who think alike in worldview and mindset, then they easily fall prey into groupthink. These type of groups would not make the best decisions. Smartest group are made of people with different perspectives who are able to stay independent of each other.
Homogeneous groups are good at doing what they do well, but they become progressively less able to investigate alternatives. They spend much time on doing what they do well and not enough time exploring. Bringing new members into the group, even when they are less experienced, makes the group smarter. What little the new members know is not redundant with what everyone knows.
People in general are overconfident. They overestimate their ability, their level of knowledge and their decision making power. People are overconfident when they face difficult problems. The more power an individual has in then face of complexity and uncertainty, more likely that they will make bad decisions.
The book describes number of instances where the crowd or a group made a close call. This doesn't mean that well informed analysts are of no use in making good decisions. However the advice of experts need to be pooled with other people to make better decisions. Group decision will be better than most of the people in the group. It's unlikely that one person will be better than the group.
Not all the groups can make good decisions. When a group has people who think alike in worldview and mindset, then they easily fall prey into groupthink. These type of groups would not make the best decisions. Smartest group are made of people with different perspectives who are able to stay independent of each other.
Homogeneous groups are good at doing what they do well, but they become progressively less able to investigate alternatives. They spend much time on doing what they do well and not enough time exploring. Bringing new members into the group, even when they are less experienced, makes the group smarter. What little the new members know is not redundant with what everyone knows.
People in general are overconfident. They overestimate their ability, their level of knowledge and their decision making power. People are overconfident when they face difficult problems. The more power an individual has in then face of complexity and uncertainty, more likely that they will make bad decisions.
Good to read about 'The wisdom of the crowds". I liked the part where you write about homogenious groups. For the crowd to be really wisdom one important requirement is that everyone in the crowd must be equally assertive. Even if the crowd has people with different perspectives, the outcome can be influenced by someone in the group who is more forceful or loud.
ReplyDelete- Madhu