- Publisher: Anchor; First Paperback Edition edition (2005)
- Language: English
- ISBN-10: 0349117071
- ISBN-13: 978-0349117072
- Product Dimensions: 4.2 x 7 inches
- Shipping Weight: 7.8 ounces
- Average Customer Review: 301 customer reviews
- Amazon Best Sellers Rank: #6,343,421 in Books (See Top 100 in Books)
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The Wisdom of Crowds Paperback – 2005
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From Publishers Weekly
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.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to an out of print or unavailable edition of this title.
From Bookmarks Magazine
Surowiecki first developed his ideas for Wisdom of Crowds in his “Financial Page” column of The New Yorker. Many critics found his premise to be an interesting twist on the long held notion that Americans generally question the masses and eschew groupthink. “A socialist might draw some optimistic conclusions from all of this,” wrote The New York Times. “But Surowiecki’s framework is decidedly capitalist.” Some reviewers felt that the academic language and business speak decreased the impact of the argument. Still, it’s a thought-provoking, timely book: the TV studio audience of Who Wants to Be a Millionaire guesses correctly 91 percent of the time, compared to “experts” who guess only 65 percent correctly. Keep up the good work, comrades.
Copyright © 2004 Phillips & Nelson Media, Inc. --This text refers to an out of print or unavailable edition of this title.
Top customer reviews
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If nothing else, The Wisdom of Crowds should entertain you. It may not do much more than this if you are already well read in economics, complexity theory, decision analysis, organizational theory, social psychology, prospect theory and other fields. Few readers will have delved into all the relevant areas to any great extent, so most can expect to learn something new, interesting, and quite possibly useful. Surowiecki's wide-ranging gathering of sources to support his argument is a virtue, yet it's also something of a problem. The difficulty of knowing much about all the areas on which he draws makes it easy for him to pick and choose studies and arguments selectively. While many of his points are well made, the way he supports his case sometimes seems one-sided.
In evaluating and supporting the idea of the wisdom of crowds, Surowiecki looks at how collective intelligence can be applied to three kinds of problems: Cognition problems (which have definitive solutions), coordination problems, and cooperation problems (which require self-interested agents to work together). The first half of the book sets out the theory, thoroughly and entertainingly illustrated by examples. These include the smarts of the audience on game shows, how to design an excellent search engine, why short selling is a good thing, and how a group finds a lost submarine. The second half of the book applies the ideas to show various ways in which people organize toward common goals in cases such as traffic, science, juries, committees, business organizations, markets, and democracies.
Among the main points that may be useful to executives, Surowiecki emphasizes that for the crowd to be wise, it must be characterized by diversity of opinion, independence of members from one another, and a specific kind of decentralization, and there needs to be a good method for aggregating opinions. He stresses that the best collective decisions result from disagreement and contest, not consensus or compromise.
While corporations often rely on experts, the book does well at challenging our confidence in expertise as compared to the average of the crowd. In the course of a discussion of the role of independence, we learn that to improve your organization's decision making you should ensure that decisions are made simultaneously rather than one after the other. Finally, I have to second Surowiecki's puzzlement at the apparent lack of interest by companies in using markets (such as decision markets) for corporate strategy and market research.
Surowiecki looks out how using the judgement of the group helps to make better decisions, as long as the group is diverse, comes by their knowledge separately and gets to make their judgements (votes) at the same time (so they aren't unduly influenced by early voters or those with more power).
I've made it an extra credit book in my senior social work class at Rutgers, and I think that it is a wonderful book about how we think and make decisions (on par with Outliers & How We Know What Isn't So).
One of the basic points of the book is that in making a decision people have two components, information and error. Often by aggregating the decisions of many individuals the errors will cancel out and you are left with a very good decision. Another point is that for complex problems there is no "expert" who completely and thoroughly understands the problem, and can thus give the "right" answer. Most big problems are solved by making our best guesses and then seeing if our decisions were right or good enough. A group of people, because together they have more information, can make better choices.
James Surowiecki uses a variety of interesting examples to discuss how much better decisions a group can make. His first example is how Francis Galton found that an average group of people at a county faire in England back one hundred years ago were able to guess the weight of an ox within a pound, much closer than any of the "experts" were able to get. It was fascinating to learn that within hours of the Challenger Space Shuttle explosion the stock market picked which company was responsible, by a big drop in the stock price, long before there was any clear understanding of what had happened. And within a couple weeks the international health community was able work together to understand SARS, without any guiding hand or one organization in charge.
The author also explores under what conditions a group of people might make a poor decision. He found that a group of experts, who all tend to have a similar viewpoint on a particular topic, may make a worse decision than a group with a few "less smart" people who will see a problem from different view points. Another situation that happens is where there is a vague problem for which people don't see a clear answer so if someone will go public with his answer, then other people will go along with the first answer, rather than making their best guess. He calls this information cascade. It is better that everyone be encouraged to make their best guess, and then work through a process of resolving or aggregating the decisions.
The chapter on how to pick good solutions for issues raised by new technology was fascinating. The author compared the process of how the free market finds good solutions to how a beehive looks for food. One example was the early development of the automobile. In both cases scouts go out looking for solutions (honey or car designs) and bring them back to be evaluated by the group. The market reviewed hundreds of designs for cars and gave feedback on which designs were better. The basic design quickly developed. It is key to have a system which generates lots of alternatives and allows losers to be abandoned quickly. It is important to have both diversity of solutions and diversity of perspectives to generate better results.
Some books are interesting and educational, but after reading them there is little need to go back and reread them. You can learn the basic lessons in one reading. "The Wisdom of Crowds" is one of those which needs to be reread every so often because there are so many interesting ideas explained and thoughts explored. It is well written and is worth the time to read and worth thinking about after reading.
Most recent customer reviews
I was also aggravated by the:
a) the writing style (perhaps OK for a...Read more