Wisdom of Crowds

The Wisdom of Crowds = the theory that a larger group of diverse people can make better decisions, and display more intelligence than any smaller collection of experts

James Surowiecki's book of the same title focuses on collaborations whereby "a diverse group of individuals work largely independently of one another".

See the critique of Wisdom of Crowd applications in the Unwisdom of Crowds.

Key Book to Read

Book: The Wisdom of Crowds. Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations. James Surowiecki. Doubleday, 2004

"This book discusses the theory that a larger group of diverse people can make better decisions, and display more intelligence than any smaller collection of experts. Surowiecki's central concept is that the insights of a diverse group of individuals working independently can be aggregated together." (Review by Chris Cowan at http://humergence.typepad.com/the_never_ending_quest/2006/03/book_review_the.html)

"While our culture generally trusts experts and distrusts the wisdom of the masses, New Yorker business columnist Surowiecki argues that "under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them." To support this almost counterintuitive proposition, Surowiecki explores problems involving cognition (we're all trying to identify a correct answer), coordination (we need to synchronize our individual activities with others) and cooperation (we have to act together despite our self-interest). His rubric, then, covers a range of problems, including driving in traffic, competing on TV game shows, maximizing stock market performance, voting for political candidates, navigating busy sidewalks, tracking SARS and designing Internet search engines like Google. If four basic conditions are met, a crowd's "collective intelligence" will produce better outcomes than a small group of experts, Surowiecki says, even if members of the crowd don't know all the facts or choose, individually, to act irrationally. "Wise crowds" need (1) diversity of opinion; (2) independence of members from one another; (3) decentralization; and (4) a good method for aggregating opinions. The diversity brings in different information; independence keeps people from being swayed by a single opinion leader; people's errors balance each other out; and including all opinions guarantees that the results are "smarter" than if a single expert had been in charge. Surowiecki's style is pleasantly informal, a tactical disguise for what might otherwise be rather dense material. He offers a great introduction to applied behavioral economics and game theory." (Publisher's Weekly, cited in http://innovationcommons.blogspot.com/2006/06/wisdom-of-crowds.html)