[extropy-chat] Wisdom of Crowds

[kevinfreels.com]

So why not post a poll about the date of the coming singularity?


> On 5/15/06, "Hal Finney" wrote:
> <snip>>
> > But more fundamentally, according to a book I've read recently, The
Wisdom
> > of Crowds (a phrase Kurzweil used quite a bit) by James Surowiecki,
there
> > is something of a paradox in human estimation ability.  Individually we
> > tend to be highly overconfident.  But, collectively, our estimates
> > are often extremely good.  Surowiecki describes classic examples like
> > guessing the weight of a pig, or the number of jelly beans in a jar.
> > Collecting guesses from a crowd and averaging them, the result is
usually
> > right to within a few percent.  Often the crowd's result is closer than
> > any individual guess.
> >
> > Surowiecki sees this phenomenon as being behind the success of such
> > institutions as futures markets, including idea futures.  The reason
> > these institutions work is because they are successful at aggregating
> > information from a diverse set of participants.  Surowiecki emphasizes
the
> > importance of diversity of viewpoints and describes a number of studies
> > showing that, for example, ethnically diverse juries do a better job.
> > He also describes several traps that can arise, such as a copycat effect
> > where people are polled publicly and sequentially for their guesses,
> > causing later participants to amend their mental estimates to fall into
> > line with the emerging consensus.  Markets are sometimes vulnerable to
> > this but at least the financial incentive is always there to encourage
> > honesty.
> >
> > The bottom line is that the wisdom of crowds is one of the best guides
> > we have to the future, and so when people refuse to make guesses because
> > they have recalibrated themselves into a mental fog, they are no longer
> > contributing to the social welfare.  It's much better, when being polled
> > like this, for people to try to cut through the uncertainty and find
that
> > "50%" point where they feel they are as likely to be too low as too
high.
> > If they can do that, and avoid being influenced by the guesses of those
> > who speak before them, and if the group is reasonably diverse, you can
> > get about as good an estimate as you're going to get.  I would have
liked
> > to have received that estimate, and would have found it one of the most
> > valuable pieces of information I took away that day.
> >
>
>
> This very popular book may be exaggerating the benefits of popular
opinion.
>
> It is correct to claim that the crowd *sometimes* can be a useful
> predictor. But to get a good result you have to be very careful about
> the selection of the crowd, the selection of the possible results, and
> control of the crowd behaviour.
>
> Michael Shermer reviewed this book in Dec 2004
>
<http://www.sciam.com/article.cfm?chanID=sa006&articleID=00049F3E-91E1-119B-
8EA483414B7FFE9F&colID=13>
>
> Everybody can think of cases that disprove the wisdom of crowds.
> Surowiecki mentions some of them in his book. Earlier books have put
> the opposite case. Mackay's 'Extraordinary Popular Delusions and the
> Madness of Crowds' include the well known tulipmania phenomenon.
> Canetti wrote 'Crowds and Power' with the shouts of Hitler's Nuremberg
> rally figuratively ringing in his ears.  Also sociologists such as
> Gustave Le Bon, in his classic work The Crowd: A Study of the Popular
> Mind: "In crowds it is stupidity and not mother wit that is
> accumulated."
> Lynch mobs are another example.
>
> Surowiecki makes a major point of the stock market's reaction on
> January 28, 1986, the day the space shuttle Challenger exploded. Of
> the four major shuttle contractors--Lockheed, Rockwell International,
> Martin Marietta and Morton Thiokol--the last (the builder of the
> defective solid-rocket booster) was hit hardest, with a 12 percent
> loss, compared with only 3 percent for the others. Given four
> possibilities, the masses voted correctly.
>
> But the next shuttle disaster supported the opposite conclusion.
> "Herding" can be a problem when the members of a group think uniformly
> in the wrong direction. The stock market erred after the space shuttle
> Columbia disaster on February 1, 2003, dumping stock in the booster's
> manufacturer even though the boosters were not involved.
>
> The crowd tossed a coin and came up right once and wrong once.
>
>
> As Shermer says:
> For a group to be smart, it should be autonomous, decentralized and
> cognitively diverse, which the committee that rejected the foam-impact
> theory of the space shuttle Columbia while it was still in flight was
> not. In comparison, Google is brilliant because it uses an algorithm
> that ranks Web pages by the number of links to them, with those links
> themselves valued by the number of links to their page of origin. This
> system works because the Internet is the largest autonomous,
> decentralized and diverse crowd in history, IMHO.
> ------------------
>
> So, just ask Google, they know the answer to everything!   :)
> (assuming they fix their recent search problems).
>
>
> BillK
>
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