How collective decision-making works well; how it goes wrong.

The Wisdom of Crowds
by James Surowiecki
Anchor; Reprint edition (August 16, 2005), $14
ISBN: 0385721706

New Yorker business columnist James Suroweicki demonstrates that large groups of people can be smarter than an elite few, explaining both why democracy works, and also how it goes wrong.

The crowd can be wise: IF it is diverse; if it has a particular kind of decentralization; if its individual members think independently; and if they all have some information.

A group made up of only people who agree with each other (such as all-conservative OR all-liberal groups) make bad decisions. So will a group in which most members defer to the judgment of a few. And even a large and diverse group of independent-minded people are unlikely to make good engineering decisions if none of them know anything about engineering.

The collective judgment of a large and diverse group of voters, however, WHEN all of them have some information (even if each of them thinks all the others are misinformed), AND they are free to disagree and contest with each other, AND their individual opinions can be aggregated in a process that produces a collective judgment -- that judgment will be a good one. Not a perfect one, but good enough to live with, and better than an elite few could have decided for them.

Some of the elements of "why it goes wrong" connect with "how societies fail" in Collapse (by Jared Diamond). When a small group of decision-makers with centralized power are insulated from the effects of their decisions, you have a disaster in the making.

Suroweicki makes the point that the input of each individual's local information and personal self-interest is important, and essential to making democracy work. Each individual voter does not have to be fully informed about all factors affecting everybody; each individual does have to have a way to get our own information into the pot and our personal questions answered.

The book is a good contribution to understanding how Homo Wannabe Sapiens could actually become Homo Sapiens Sapiens, but it is just a starting point. Much more needs to be written on how to create good group decisions, and how to avoid bad ones. Quickly, before a dumb, partisan, groupthink mob runs us all off the edge of a cliff.

Some quotes:

"Gustave Le Bon had things exactly backward. If you put together a big enough and diverse enough group of people and ask them to 'make decisions affecting matters of general interest," that group's decisions will, over time, be 'intellectually [superior] to the isolated individual,' no matter how smart or how well informed he is."

"Diversity and independence are important because the best collective decisions are the product of disagreement and contest, not consensus or compromise... Paradoxically, the best way for a group to be smart is for each person in it to think and act as independently as possible."

James Suroweicki on NPR

Also worth reading: Blink and The Wisdom of Crowds, a dialog between James Surowiecki and Malcolm Gladwell, in Slate magazine.

Imported from external blog