The Wisdom of Crowds James Surowiecki -...
Transcript of The Wisdom of Crowds James Surowiecki -...
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The Wisdom of CrowdsJames Surowiecki
Abel D. Betancourt, Jr.
BUSN 403
October 27, 2014
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Skittles Challenge
Take out a piece of paper and write down how many skittles are in the plastic bag!
Don’t let anyone look at your estimate!
Winner will get to keep the bag of skittles.
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So How Much?!
???
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Surowiecki’s Main Points
• Groups do not need to dominated by intelligent people to be “smart”
• When imperfect judgments are added up in the right way, the collective
intelligence is often excellent
• Collective intelligence: the knowledge of the entire group
• Group-think: the concept that the masses are better problem solvers,
forecasters and decision makers than any one individual or elite few
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3 Kinds of Problems That Affect
“Collective Intelligence”
• Cognition problems
• Problems that have definitive solutions
• Example: Seeing a person injured (best option is to call 911)
• Coordination problems
• Group must try to coordinate their behaviors, knowing that everyone else has the same goal
• Example: Working on a group presentation and everybody gets the same grade
• Cooperation problems
• Encouraging distrustful people to work together
• Example: 9/11
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Four Conditions of a “Wise Crowd”
• Diversity of opinion
• Each person should have private information and own interpretation of known facts
• Independence
• YOUR opinion is not determined by the opinions of OTHERS; freedom
• Decentralization
• People are able to specialize and draw on local knowledge
• Aggregation
• Varying opinions can provide a solution more likely to be smarter than the smartest person’s answer
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Diversity
• Grouping only smart people does not work well
• Smart people are similar to each other
• Hard to keep learning
• “They spend too much exploiting, and not enough time EXPLORING”
• Adding people who know less, but different, improves the group performance
• Introduce a radical or unlikely idea
• Better, robust forecast and decisions than the most skilled “decision maker”
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Diversity
IDEA!
IDEA!
IDEA!
IDEA!IDEA!
IDEA!IDEA!
IDEA!
IDEA!
IDEA!IDEA!
IDEA!
IDEA!
IDEA!
IDEA!IDEA!
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Independence
• Smart groups are made up of people with diverse perspectives who are able to stay independent of each other
• “Independence is important to keep the mistakes people make from becoming correlated.”
• Example: Skittles experiment
• We fall into “hearding”
• The tendency to assume that if lots of people are doing something or believe something, there must be a good reason why.
• Due to fear of being seen as “crazy”
• Stop being sensible
• Encouraging people to make incorrect guesses actually makes a group smarter
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Independence
DISCLAMER: THIS PICTURE WAS TAKEN MANY YEARS AGO. I AM NOT THAT FAST ANYMORE.
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Decentralization
• “Power does not fully reside in one central location, and many important
decisions are made by individuals based on their own local and specific
knowledge.”
• The closer a person is to a “problem”, the more likely he or she is to have a
good solution.
• Due to our specialization, we become productive and efficient and increases the scope
of diversity
• Perfect opportunity for communication and collaboration
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Decentralization
“We need a solution to decide
what type of coffee I should get
tonight!”
Sweet Engines!
Harvest!
Lupas!
Starbucks! PSL
all the way!
Common Grounds!
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Aggregation
• Coming together with a solution
• Able to witness that the results of the solution came perfectly well than with
the results of a group of geniuses alone
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What did the I get out of this book?
It is possible to describe how people in a group think as a whole
Groups are more intelligent and often smarter than the smartest people
There is no need to chase the expert