Monday, November 2, 2020

Review of The Wisdom of Crowds by James Surowiecki

This review was written by Eugene Kernes

Book can be found in:
Genre = Decision Making

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Elaborate Review

Individuals do not act the same when they are in a crowd.  Crowds can be mad or wise.  This book sets the conditions to make a crowd wise.  A solution from a wise crowd might not be the best compared to a few individuals within it, but it will generate some of the best answers most of the time.  The conditions for a wise crowd are to make the individuals within it diverse, independent, decentralized, and have an aggregation method.  Diversity enables thinking about different alternative solutions.  Independent ensures people use their ideas rather than reusing others.  Decentralized understanding means that people use their specialized local knowledge.  An aggregation method facilitates people to come together to share their information.  Knowledge is not concentrated in individuals.  It is dispersed in a crowd with everyone knowing something.

A group does not depend on the smartest people or require everyone to be experts.  Limited understanding to a problem does mean that the collective solution will be limited.  A wise group does need people who know about the topic, and use their views on the topic to make a decision.  Wise groups talk and learn from members, but too much talking and learning from each other would cause them to be less independent.  Disagreement and contest produce better collective decisions than consensus or compromise.  Individual independence in a group makes the group wiser as they will keep their diverse ideas creating different alternatives.  Errors do not correlate in a group of independent individuals.  Homogenous groups have a reduced capacity to come up with alternatives. 

There are three problems with which collective intelligence can facilitate solutions which are cognitive, coordination, and cooperation.  Cognitive problems lack definite answers, but there is a quality to the answers.  Coordination problems are those in which everyone is trying to engage with everyone’s behavior knowing that everyone else is doing the same.  Cooperation problems are those in which groups obtain a reward but no individual wants to carry the costs. 

In a very eloquent prose, the author describes what makes crowds wise or mad.  The complexity of the argument is provided using various fields, perspectives, and examples.  The problem with this book is that the book is mainly examples after examples without discussing within them their connection to the core arguments of how to make a crowd wise.  Sometimes, the examples which appear to be an example of a wise crowd, requires credulousness from the reader.  There are some characterizations of crowds that the author dismisses, but the lack of explanation for their dismissal leaves a misunderstanding.  

Questions to Consider while Reading the Book

•What is the raison d’etre of the book?  For what purpose did the author write the book?
•Why do people change their behavior in a group?
•What are the conditions for a group to be wise?  What are some conditions which are not required? 
•Why is each condition needed?  What happens if a condition is not met? 
•What kind of problems can collective wisdom find solutions for? 
•What is the purpose of dissentions? 
•What are information cascades?
•Why do people imitate others? What are the benefits and disadvantages of imitation? 
•What causes the amount of information within a system to change? 
•Why do individuals trust other?
•What are some examples of a crowd that is wise?  Crowd that is mad?  Why are they either wise or mad?

Book Details

Edition ISBN:  9780385721707
Pages to read:  291
Publication:     2005
Format:            Paperback

Ratings out of 5:
Readability     5
Content           5
Overall           5