Wisdom of Crowds

So “Carmageddon” passed with less traffic than average.  In a weird way, it reinforces some of my faith in humanity.  In ’04, a dude named James Surowiecki wrote a book called The Wisdom of Crowds, which argues that given the right conditions, decisions are made more accurately and effectively by the aggregate mass of population than by individual ‘experts’.

Two examples in the book involve:

1) A crowd at a circus is supposed to guess the weight of an ox, and the winner gets some sort of prize.  The average of all guesses from everyone in the crowd ended up being significantly more accurate than any individual guess.

2) Let’s say Tao or Busby’s East is the new crackin spot to go to.  If there’s room to mingle and dance then people have a better time.  If there isn’t, then people have a horrible time.  If you consider a bar at 60 or 70% capacity a good time, then somehow from the aggregate of all the people that had a choice of going to Busby’s East on Friday night, around 60-70% of those people actually end up going.  Independently, the people that choose to go feel that the pleasure derived from going beats the pain that might potentially come from a crowded bar, and vice versa for the people who choose not to go.

It’s as if the crowd silently and randomly coordinates within itself, without too much communication with the rest of the crowd.  Ants and bees also make their decisions in related ways.

Anyway, my thought is that the same thing happened this weekend on the LA freeways.  Despite all the drastic and apocalyptic predictions about this weekend (myself included), we all forgot to factor in that humans are adaptive.  If the same amount of people decided to drive this weekend as usual, then yeah LA would be fuckin nuts.  But the media hyped it up, people who didn’t have to drive stayed home, people who had to be somewhere else in LA drove Thursday night, and the population of LA silently coordinated with one another to keep the freeways of LA relatively empty and drivable.  Enough people independently decided that it was not worth the pain of driving on the freeways, and left the freeways open to only the people that decided it would be more painful to miss a trip planned 2 months ago or to miss a mud run in Irvine than to sit in traffic.

This is kinda like a ‘no shit’ type of observation, but I feel like it relates to a bigger phenomena or ability of the human race to coordinate effectively with one another.

From Wikipedia:

Types of crowd wisdom

Surowiecki breaks down the advantages he sees in disorganized decisions into three main types, which he classifies as

  • Cognition
Thinking and information Processing
Market judgment, which he argues can be much faster, more reliable, and less subject to political forces than the deliberations of experts or expert committees.
  • Coordination
Coordination of behavior includes optimizing the utilization of a popular bar and not colliding in moving traffic flows. The book is replete with examples from experimental economics, but this section relies more on naturally occurring experiments such as pedestrians optimizing the pavement flow or the extent of crowding in popular restaurants. He examines how common understanding within a culture allows remarkably accurate judgments about specific reactions of other members of the culture.
  • Cooperation
How groups of people can form networks of trust without a central system controlling their behavior or directly enforcing their compliance. This section is especially pro free market.

[edit] Four elements required to form a wise crowd

Not all crowds (groups) are wise. Consider, for example, mobs or crazed investors in a stock market bubble. According to Surowiecki, these key criteria separate wise crowds from irrational ones:

Criteria Description
Diversity of opinion Each person should have private information even if it’s just an eccentric interpretation of the known facts.
Independence People’s opinions aren’t determined by the opinions of those around them.
Decentralization People are able to specialize and draw on local knowledge.
Aggregation Some mechanism exists for turning private judgments into a collective decision.

Based on Surowiecki’s book, Oinas-Kukkonen[2] captures the wisdom of crowds approach with the following eight conjectures:

  1. It is possible to describe how people in a group think as a whole.
  2. In some cases, groups are remarkably intelligent and are often smarter than the smartest people in them.
  3. The three conditions for a group to be intelligent are diversity, independence, and decentralization.
  4. The best decisions are a product of disagreement and contest.
  5. Too much communication can make the group as a whole less intelligent.
  6. Information aggregation functionality is needed.
  7. The right information needs to be delivered to the right people in the right place, at the right time, and in the right way.
  8. There is no need to chase the expert.

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