Shelfari: The Site for Books & ReadersShelfari Logo

The Wisdom of CrowdsThe Wisdom of Crowds
 

The Wisdom of Crowds

by James Surowiecki

Unabridged on 7 cassettes (read review)

Top tags: business,  economics,  science,  sociology,  wisdom of the crowds (all tags)

Readers

Groups

Other Reviews

Amazon Reviews
 

Most Helpful Reviews

Liked It

John P
  • Rated 5 stars

“Review from Shelfari:
In this fascinating book, New Yorker business columnist James Surowiecki explores a deceptively simple idea: Large groups of people are smarter than an elite few, no matter how brilliant–better at solving problems, fostering innovation, coming to wise decisions, even predicting the future.

With boundless erudition and in delightfully clear prose, Surowiecki ranges across fields as diverse as popular culture, psychology, ant biology, behavioral economics,...”

John P’s full review »
more reviews »
Community:
  • Rated 4.101449 stars
Amazon:
  • Rated 0 stars
  

Newest Comments

  • Andy McKenzie

    andy mckenzie said:

    “Fatherofhollywood: the book cannot be "full of sweeping claims and generalizations" and have sound arguments. Your post has a logical inconsistency. ”

    posted Wednesday, April 9 2008
  • FatherOfHollywood

    fatherofhollywood said:

    “I found this book full of sweeping claims, generalizations and is confusing in its presentation. However it made me think. Overall the writer is saying that people independently working on a problem can in a fair vote be more accurate then the smartest individual. He then quotes examples for such behavior and examples of when the crowds got it wrong when they acted not independently but in mass. I suspect that much of his arguments are sound. ”

    posted Sunday, October 28 2007
  • surfkapuhi

    surfkapuhi said:

    “Chapter Five: Shall We Dance? Coordination in a Complex World

    • Defn Coordination Problem: ubiquitous in everyday operations and life. To solve it, a leader must think about what he believes but what other people think is the right answer. How does the crowd walk down the NYC sidewalk? How does a manager decide on pricing, manufacturing levels, inventory, allocating resources. Another great example is CEMEX that outfitted its cement trucks in 1997 with GPS tracking technology and put the trucks “In orbit” around a Mexican City. Efficiency and revenues skyrocketed.
    – Independent decision making is pointless
    • Persuasion versus coercion
    – In American culture (liberal, free thinking, society) authority has limited effectiveness reach over citizens. Because of this coordination problems require bottom-up and not top-down solutions.
    • Bottom-up solutions will mean people will voluntarily make their actions fit together in an orderly and efficient manner.
    • Conventions maintain order and stability of the crowd but they reduce the amount of thinking—you deal w/ situations w/out much thought
    – First come first serve seating in a subway train (coordination takes place w/out you even thinking about it so you can think about more important things such as reading the paper or drinking your Starbucks on the way to work)
    – The convention of movie pricing includes a fear of disruption. Why would the theater charge the same amount for Gigali as for the opening weekend of Spider-Man? Movie theaters have Uncoordinated themselves with patrons b/c of fear of disruption.

    Chapter Six: Society Does Exist: Taxes, Tipping, Television, and Trust
    ? The definition of a cooperation problem is very similar to a coordination problem. However, a coordination problem will be solved even if every individual is acting only in their self-interest. Cooperation problems require people to have a broader definition of self-interest than the one that maximized profits in short term demands. Members of society must do more, with a greater risk of zero return, to solve a cooperation problem. Examples: shoveling snow off the sidewalk, paying taxes, and curbing pollution/litter.
    • Scientist Robert Axelrod argued that cooperation is the result of repeated interactions (alley neighborhood shoveling snow—everyone always does it). The foundation of an effective cooperation relationship is not trust but the durability (length, frequency) of the relationship. “A stable pattern of cooperation”
    • Why trust? Capitalism teaches us to trust one another because it is valuable. If you purchase a TV from Best Buy, you expect it to work when you get it home. If it doesn’t Best Buy will refund your money. If this wasn’t the case, Best Buy would loose revenue. Honesty pays.
    • Faith—example of the Quakers in 18th and 19th Century Britain. Common faith facilitated trust.
    • People who trust have an advantage because they spend less time protecting themselves and more time in productive/active endeavors.
    ”

    posted Wednesday, February 14 2007
  • surfkapuhi

    surfkapuhi said:

    “Chapter Four
    • Current decentralization trends exist in Business, Sciences, and Social Sciences (coincides with the rise of the internet)
    – Business: reengineering has grasped the idea of self-directed work teams
    – Sciences: more attention to self-organizing, decentralized systems that are robust and adaptable (beehives, ant colonies)
    – Social Sciences: recognized the importance of Social Networks with no one person “in charge”
    • CIA/FBI are decentralized but failed to predict 1993 WTC bombing, Cole Bombing, Kenya Embassy Bombing, and 9-11. Why?
    – No system of aggregation (grouping and transmitting valuable data efficiently)
    • Another Example of failure of aggregation is the Iraqi Fedayeen paramilitaries after the Iraq invasion. They were quickly marginalized because they had no method of aggregation of data/knowledge/TTP’s. “All tactics and no Strategy.” By May 2003 they had faded into the background and the mujahideen had taken over as the insurgents.
    • Tacit Knowledge Transfer--The person closest to the problem has the greatest probability to have a solution (this is the same idea of American Democracy where local governments provide health and welfare – specifically local governments regulate public schools)
    • The weakness of decentralization is that valuable information (tacit knowledge and problem solving solutions) will not permeate and transmit completely through an organization.
    ”

    posted Wednesday, February 14 2007
  • surfkapuhi

    surfkapuhi said:

    “Chapter Three: Monkey See, Monkey Do: Imitation, Information Cascades, and independence.

    Surowiecki includes a John Mayndard Keynes quote that illustrates he danger of herding.

    Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.

    Herders follow the crowd because that is where it is safest. NFL Coaches don’t go for the first down when its 4th and 3 yards to go on the opponent’s 45 yard line even though Romer has mathematically proven it to be more beneficial to try for the first down. Perception has a lot to do with this. An NFL coach and a money manager make decisions based on the crowd’s perception of their performance. The decisions to punt on 4th and 3 on the opponent’s 45 yard line and the decision to buy a blue chip stock like IBM both seem rational. The fear of seeming irrational causes these types of poor decisions. The practical application in leadership and is that Good leaders must be able to separate herding from decision-making.

    According to Wikipedia an information cascade “is a situation in which every subsequent actor, based on the observations of others, makes the same choice independent of his/her private signal. In an informational cascade, everyone is individually acting rationally. Still, even if all participants as a collective have overwhelming information in favor of the correct action, each and every participant may take the wrong action.” It is a sequence of uninformed choices because people are copying / imitating those around them. The telecom “dark fiber” bust of the late 1990’s is a great example. [Thomas Friedman’s book, The World is Flat, spends an entire chapter discussing the importance and significance of this mistake.] Not all imitation is bad. Surowiecki discusses Slavish versus intelligent imitation. Intelligent imitation is effective because individuals make correct decisions efficiently.

    A cascade maintains it momentum b/c people value public information more than their private information. Finally, the more important the decision, the less likely an information cascade will take place. The crux in leadership is getting people to pay less attention to what everyone else is saying. One technique is to ensure colleges/peers are making leadership decisions simultaneously so they aren’t susceptible to herding or an information cascade.



    ”

    posted Monday, February 12 2007
© 2008 Tastemakers, Inc. | Portions of Shelfari.com are Copyright © 1996-2008 Amazon.com, Inc. or its affiliates. Terms & Conditions | Privacy Policy | Copyright Policy