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Book Review

The Wisdom of Crowds
by James Surowiecki

ISBN: 0385721706
Publisher: Anchor
Pages: 336

Business columnist James Surowiecki has written a fascinating book. The theory is that under certain conditions collective intelligence can outperform elite experts. Surowiecki illustrates this theory with examples and case studies from a wide variety of fields.

The opening example where the crowd at an exhibition in 1906 collectively guessed the weight of an ox is more amusing than convincing, but as I read along I found the book highly interesting with examples ranging from Google to Linux, over space shuttles and stock markets to traffic jams.

In order for a crowd to be intelligent, it has to be decentralized, independent, every member has to have some private information and there must be a medium to aggregate the knowledge. This is clearly not the fact with committees and teams. Surowiecki illustrates this with an analysis of the Columbia disaster. The shuttles thermal-protection tiles had been damaged, but it wasn’t clear how serious the damage really was. The story, with its fatal outcome, is a tragic example of how being in a group can actually make people dumber. In this case, one problem was that team-leader Linda Ham had a strong and direct influence upon the other people in the group. Ham didn’t believe there was much they could do about Columbia’s damages and by speaking that out during a meeting she unintentionally decided that the damages were inconsequential and the team was no longer able to work with an open mind.

Another point where collective intelligence doesn’t work is in an information cascade, where people’s decisions aren’t made all at once but in sequence. If the initial people make a bad decision everyone else may end up making the wrong decision. Even if everyone has their own private information about the best decision, at some point it becomes rational to ignore it and imitate others. Surowiecki explains that it isn’t “the result of mindless trend-following”; instead “people fall in line because they believe they’re learning something important from the example of others.”

“The Wisdom of Crowds” is fascinating. Surowiecki has really succeeded in making a complex subject easily accessible. It is an easy read that I highly recommend.

Reviewed December 2006

©2005 Adam Petersen