SXSW: Wisdom Of Crowds

March 11, 2006

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SXSW Wisdom Of Crowds

James Surowiecki, who wrote

Siemens (what will be the market lifespan of a product?)

Google (how many users with GMail have after three quarters?)

Eli Lilly (which drugs will make it through clinical trials?)

Why does this work? Everyone participating in these markets has "some" idea of what the answers will be, but they also have biases. However, this doesn't always work. For this to work, it requires three things:

Some form of aggregating peoples' judgements

Why is diversity important? Wise crowds need cognitive diversity ... difference in frames of reference, tools used to solve problems, etc. It simply expands the range of information that is available, and avoids the hurdles and obstacles that a single individual may run in to. Diversity helps to even out the blind spots and biases in a crowd...and the biases and blind spots of "experts" as well. The phrase "collective intelligence" is being used extensively to capture this concept. Diversity also helps in get around peer pressure. Story is told of peer pressure in psychological experients, as well as examples of "

Fundamental lessons The knowledge that we want is often NOT in places that we think to look. We also typically overestimate who "experts" are. IMPORTANT: There is a difference between "experts" and "expert information." We overestimate what an "expert" says, but a diverse, independent crowd can derive the "expert information." Great point on the "echo chamber" effect -- people get locked into small worlds, even on the internet. (Think of the case where one only gets information from a limitied set of sources.) Final story: What collective intelligence can look like

Over 50, it's pretty certainly a "crowd." However, even in small groups (6-8 people), even the group's collective judgement may surpass the results of the group's smartest member. The challenge with small groups is that it takes a lot of work to ensure diversity and independence. Q&A: What are some other areas where the wisdom of crowds could work? Crime solving is one. Juries could be another...although the drive for unanimity is challenging. Add to document.write("

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