Wisdom Of Crowds

According to James Surowiecki The Wisdom of Crowds: there are four conditions that define the elements of a wise crowd:

Diversity of opinion: each person should have some “private,” i.e., unique, information, even if that “information” is an opinion

Independence: people’s opinions not determined by other people’s opinions

Decentralization: people specialize and draw on local knowledge

Aggregation: some method of turning private judgments into collective decision

An individual familiar with a particular subject matter cannot beat the influence of a large group of people, regardless of how inaccurate their influence may be. Conversely, the ideals shared by a large group of people don’t hold as much credence as the common nature of the group causes those within to think and act in a similar fashion. Diversity, the aspect that details that everyone possesses a unique opinion or piece of information, not only has the potential to increase the amount of new ideas to be discovered but it can also reveal where differing viewpoints can be expressed. Social proofing is another aspect of crowd wisdom that should be discussed. Social proofing is a method of conformity where the thinking is defined as “if everyone is doing it, there has to be a good reason why” or the “Everybody can’t be wrong” philosophy.

The groups who introduces a decision that is better than the decision of an individual, it is commonly in the in the best interest of the individual to follow the group.

Surowiecki reasons that if too many people followed that mode of thinking, the crowd (the group and the individual) loses a part of their wisdom, which includes their diversity as decision makers and their overall independence. Surowiecki goes on to detail an aspect of crowd wisdom known as the “information cascade.” This principle is basically rooted in the fact that a project reaches a level of authority over a crowd because groups of people accept or deny the project as it being legitimate because others have said it was so, not because of they are taking the time to reach these conclusions on their own. They proceed to neglect their own intelligence and knowledge and begin to imitate the knowledge of others around them.

Imitation has become a norm as it pertains to learning and interpretation information from others. Surowiecki continues with his condition of decentralization, which he explains as the use of knowledge that can’t be abridged or shared through communication. Decentralization doesn’t have the ability to guarantee that information generated in one place will be spread elsewhere. Surowiecki’s ideals on aggregation are also highly prevalent because without aggregation, there is no earthly way that the absolute best idea or possible solution will be found from the pool of possibilities suggested by a crowd. As this relates to a classroom setting, teachers (givers of knowledge and information) and students (receivers of knowledge and information) can greatly benefit from the wisdom of crowds.

More specifically, an instructor should pay a great deal of attention to decentralization as well as aggregation. This means that any teacher should find a balance between the two elements in hopes of having a successful class session. A teacher should make individual knowledge readily available and useful, all the while making it intrinsic. As students, we can learn from professors and don’t need a widely accepted answer for the questions we have on a certain theory. Cognition, which requires a specific answer, in my opinion, isn’t always the best method when trying to share knowledge.

What teachers should do is communicate information on a cooperation/coordination level, an approach that is more based on their individual knowledge and background instead of facts and definitions. That introduces the possibility for students to theorize and come to conclusions more prevalent to their way of thinking. Lastly, when Surowiecki begins discussing prediction markets and the Delphi method, I began to wonder about how fashion retailers must use the theory of wisdom clouds when determining how to make a profit. Working as a commission salesman for sometime, I very quickly realized that the key to success in retailing is being able to predict trends and make them scarce in order to increase that item’s value. What many retailers like Macy’s or Nordstrom or Bloomingdales do is to correlate predictions of clothing and accessory designs on what people are consuming, rejecting and what they request and can’t find.

Store managers believe that crowds know what they want, and thus, collectively make a decision on what can be considered a trend in fashion. The managers of these retailers think that the indicator of success in whether a hot ticket item is a fashion trend is not if it is sold out everywhere or if it’s price increases as it’s numbers dwindle, it’s only a trend when it’s forecasts where predicted accurately.