Thursday, October 27, 2005

The Wisdom of Crowds 眾人的智慧.txt

The Wisdom of Crowds 眾人的智慧
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The Wisdom of Crowds (2004, complete title: The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations) is a book written by James Surowiecki about the aggregation of information in groups, resulting in decisions that, he argues, are often better than could have been made by any single member of the group. The book presents numerous case studies and anecdotes to illustrate its argument, and touches on several fields, primarily economics and psychology.

Arguably the book is misnamed, as Surowiecki's argument relates to diverse collections of independently-deciding individuals, rather than crowd psychology as traditionally understood. (The name might have been chosen to evoke amusement in those familiar with Charles Mackay's famous 18th century classic Extraordinary Popular Delusions & the Madness of Crowds.) There are parallels with statistical sampling theory - a diverse collection of independently-deciding individuals is likely to be more representative of the universe of possible outcomes, thereby producing a better prediction.

Contents [hide]
1 Intellectual achievements of the crowd
2 Failures of crowd intelligence
3 Proposals
4 See also
5 References and further reading



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Intellectual achievements of the crowd
Surowiecki's proposition is that decentralized decisions can be vastly better than experts (or the public) expect them to be, or even than any one expert can make. His first example is Francis Galton's surprise that the crowd at a local market accurately guessed the weight of an ox in a fair when their individual guesses were averaged (the average was closer to the ox's true weight than the estimates of most crowd members, and also closer than the separate estimates made by cattle experts).

He breaks down the advantages he sees in disorganised decisions into three main types, which he classifies as:

Cognition: Market judgement, which he argues can be much faster, more reliable, and less subject to political forces than the deliberations of experts, or expert committees (compare Groupthink).
Coordination of behaviour, such as optimizing the utilization of a popular restaurant, or not colliding in moving traffic flows. The book is replete with examples from experimental economics, but this section relies more on naturally occurring experiments such as pedestrians optimizing the pavement flow, or the extent of crowding in popular restaurants. He examines how common understanding within a culture allows remarkably accurate judgements about specific reactions of other members of the culture.
Cooperation: How groups of people can form networks of trust without a central system controlling their behaviour or directly enforcing their compliance. This section is especially pro-free market.
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Failures of crowd intelligence
In order to make his case, Surowiecki studies situations (such as rational bubbles) in which the crowd produces very bad judgment, and argues that in these types of situations their cognition or cooperation failed because (in one way or another) the members of the crowd were too conscious of the opinions of others and began to emulate each other and conform rather than think differently. Although he gives experimental details of crowds collectively swayed by a persuasive speaker, he says that the main reason that groups of people intellectually conform is that the system for making decisions has a systematic flaw.

He thinks that what happens when the decision making environment isn't set up to accept the crowd is that the benefits of individual judgments and private information are lost, and that the crowd can only do as well as its smartest member, rather than perform better (as he shows is otherwise possible). Detailed case histories of such failures include:

Too centralized: The Columbia shuttle disaster, which he blames on a hierarchical NASA management bureaucracy that was totally closed to the wisdom of low-level engineers.
Too divided: The U.S. Intelligence community failed to prevent the September 11, 2001 attacks partly because information held by one subdivision was not accessible by another. Surowiecki's argument is that crowds (of intelligence analysts in this case) work best when they choose for themselves what to work on and what information they need. (He cites the SARS-virus isolation as an example in which the free flow of data enabled laboratories around the world to coordinate research without a central point of control.)
Too imitative: Where choices are visible and made in sequence, an "information cascade" can form in which only the first few decision makers gain anything by contemplating the choices available: once this has happened it is more efficient for everyone else to simply copy those around them.
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Proposals
Surowiecki is a very strong advocate of the benefits of decision markets, and regrets the failure of DARPA's controversial Policy Analysis Market (potential intellectual descendant of RAND's Delphi method and author John Brunner's Delphi pool) to get off the ground. He points to the success of public and internal corporate markets as evidence that a collection of individuals with varying points of view but the same motivation (to make a good guess) can produce an accurate aggregate prediction. According to Surowiecki the aggregate predictions have been shown to be more reliable than the output of any think tank. He advocates extensions of the existing futures markets even into areas such as terrorist activity, and prediction markets within companies.

The book follows a tradition of enquiries in economics by using its own creation to illustrate its thesis: he says that his publisher is able to publish a more compelling output by relying on individual authors under one-off contracts bringing book ideas to them. In this way they are able to tap into the wisdom of a much larger crowd than would be possible with an in-house writing team. Another feature of the book which might be taken to implicitly support his argument is its poor quality copy editing; in the paperback edition there are several mistakes which wouldn't survive the day on Wikipedia, but which a limited set of Little, Brown eyeballs couldn't spot. (The most extreme case is the repetition of an entire paragraph on page 258.)

Will Hutton has argued that Surowiecki's analysis applies to value judgements as well as factual issues, with crowd decisions that "emerge of our own aggregated free will [being] astonishingly... decent". He concludes that "There's no better case for pluralism, diversity and democracy, along with a genuinely independent press."[1]

Quite a few other experimental sites have been constructed to explore the potential of building collective wisdom. One site, http://www.flylittlebird.org is an experiment to build collective wisdom from 150 commencement speeches. Another site, Opinion Republic (http://www.opinionrepublic.com) is an experiment to capture public opinion and then converge on the most broadly accepted opinions. Wikipedia, while not explicitly intended as such, also is built on ideas similar to collective wisdom.

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See also
Crowd psychology
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References and further reading
Surowiecki, James (2004). The Wisdom of Crowds Little, Brown ISBN 0-316-86173-1
Lee, Gerald Stanley (1913). Crowds. A moving-picture of democracy. Doubleday, Page & Company. Available from Project Gutenberg at [2], retrieved May 2005.
Le Bon, Gustave. (1895), The Crowd: A Study of the Popular Mind. Available from Project Gutenberg at [3].
Retrieved from "http://en.wikipedia.org/wiki/The_Wisdom_of_Crowds"

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