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| | The Wisdom of Crowds: Why the Many Are Smarter than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations |  | Author: James Surowiecki
Publisher: Random House Audio Publishing Group
Category: Book
This item is no longer available
Avg. Customer Rating:  164 reviews
Media: CD-ROM
ISBN: 0385513453
EAN: 9780385513456
ASIN: 0385513453
Publication Date: 2004
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| • | Hardcover - The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations (Random House Large Print (Paper)) | | • | Hardcover - The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations | | • | Audio Download - The Wisdom of Crowds: Why the Many Are Smarter Than the Few (Unabridged) | | • | Audio Download - The Wisdom of Crowds: Why the Many Are Smarter than the Few | | • | Paperback - The Wisdom of Crowds | | • | Hardcover - The Wisdom of Crowds: Why the Many are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations | | • | Paperback - The Wisdom of Crowds | | • | Paperback - Wisdom of Crowds | | • | Audio Cassette - The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations | | • | Audio CD - The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations | | • | Kindle Edition - The Wisdom of Crowds |
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| Customer Reviews: Read 159 more reviews...
 Important and Paradoxical January 4, 2009
Surowiecki's The Wisdom of Crowds documents and analyzes an extremely important phenomenon. When people guess at a question to which nearly no one knows the answer but most people can make a sensible guess (e.g., what proportion of the world's airports are in the USA; how many marbles can fit into a box that is a meter on each side) the average of a large group is nearly always more accurate than the guess of any member of that group. Moreover, the more people involved, the more accurate the average is.
This phenomenon was first discovered by Francis Galton, Charles Darwin's first cousin. Throughout his life, Galton was obsessed with measurement and categorization. His study of fingerprints led to their use by the police to identify criminals. His study of twins revealed that biological heredity determines intelligence and temperament. He also worked out the coefficient of correlation, which is a basis of modern statistics. In 1906, when Galton was eighty-five and still as inquisitive as ever, he visited a country fair. One of the events was a contest to try to guess what the weight of an ox, which was on display, would be after it had been killed and dressed. In order to enter the contest, a person had to pay sixpence and write his guess, along with his name and address, on a piece of paper. After the contest was over, Galton borrowed the papers with the guesses. There were 787 papers in total. To his amazement, the average guess was only one pound less that the actual weight (1,198 pounds). That was closer than any individual guess. Yet, some of the participants in the contest were butchers and cattle raisers, who would be expected to do much better than the average.
This phenomenon also applies to predictions of future events. That is why it is nearly impossible to make money consistently by betting on sporting events - because the odds are determined by the average of all bets, which is extremely accurate. The most striking illustration of this phenomenon is the otherwise inexplicable fact that, with very few exceptions, professional stock investors (managers of mutual funds, pension funds, etc.) do worse than the stock market indexes. Professional investors are highly intelligent people, who devote all their time to analyzing stocks and stock market trends; they have specially developed soft-ware and teams of assistants. But their analyses are not as accurate as the average analysis of all investors.
However, for the wisdom of crowds to work, two conditions must be met (pages 10-11, 36-7). One is that the opinions of the individuals involved must be formed and expressed independently of the others. When decisions are made by groups meeting together, the group is often swayed by a consensus that seems to have formed or by one or two of its member who seem to have more expertise, or who express their opinions forcefully. Also, the individuals involved must have some knowledge of what is involved. For example, the average prediction of Indonesian peasants as to which team will win the National Football League championship would be worthless.
In line with the second condition, the wisdom of crowds does not apply to areas of technical expertise. The average guess of a crowd as to the weight of an ox when it has been slaughtered and dressed is more accurate than the estimate of any butcher in the crowd. But the butchers in the crowd are more adept than any non-butchers at carving the ox, storing its meat, and preparing it for sale.
Surowiecki offers a general explanation (pages 10-11) for why the crowds are wiser than any of their individual members and specific reasons (pages 34, 44-50) for why professional stock investors do worse than the stock indexes. I found the latter explanations more convincing than the former.
Surowiecki also discusses (pages 236, 245-6) the obvious objection that the average prices of stocks, houses, and commodities often rise and fall sharply, without regard to the value of the assets involved. Such price swings do not occur with ordinary goods and services, such as televisions or haircuts; nor does a rise in price of ordinary goods and services induce more people to buy them. Average predictions of the results of sporting events or of elections are also immune from irrational price bubbles. In these cases, the accuracy of the predictions is decided unequivocally at a specific time in the near future. That keeps the crowd tethered to reality. But when the prices of stocks, houses, and commodities rise, that means that they can be resold at a higher price; and there is no point at which the bet is definitely over and the bettors have undeniably been proved right or wrong.
 Some of the arguments are intriguing, but not all of them are convincing December 8, 2008
Makes the argument that groups of people, apprropriately diversified and independent, can make better decisions than even the smartest individuals in the group most of the time, when their individual ideas, votes, or guesses are properly aggregated.
If it seems like I've used too many qualifiers in summarizing the argument, so does the author in making the argument. Some of the arguments are intriguing, but not all of them are convincing, and in the second half of the book he spends more time discussing general examples without driving the arguments home.
Really Good Book December 2, 2008
I borrowed this book from the local library. I just finished it yesterday. It is a really quick read. I liked how the author used "real world" examples to illustrate his point. I plan to apply many of these techniques into my own business.
great stuff! November 9, 2008
I read this for a MBA class. Out of the stack of books assigned, so far, this is the only one I liked. It is relevant to today's curious questions of how to get crowds engaged, how crowds behave, and why we even care.
I'm trying to teach people to work collaboratively together at work. They "think" they already are doing this but the author gives me new ideas on how to further their participation in team work. I find that in corporate america, people contribute mostly in their assigned role. "I am a business analyst so I don't give my 2 cents when solutioning". Yikes it drives me crazy that they put their single hats on then multi-task when we start talking about something that isn't their specialty.
Anyway, I underlined something on every other page which is a sign that I found this useful and something I will want to learn to apply.
Did I mention how good a writer this guy is?
UNique thinking for these turbulent times October 19, 2008
I love books that take a new and unique idea, thoroughly research and expand the idea, and then present the findings in an entertaining, though-provoking way.
The Wisdom of Crowds is one such book. Other recent titles that have achieved the same type of cult following for presenting unique hypotheses include The Tipping Point, Blink and The 4 Hour Work Week.
You know the old saying, if you always do what you've always done, you'll always get what you always got, and in the current turbulent economic and socially challenging times, this could not ring more true.
Surowiecki presents a unique concept that the collective thoughts of many will always be smarter than the elite few. He delves deep into this concept, and presents scenario after scenario for which this hypotheses holds true. The arguyment is compelling as it is entertaining and is hard to refute with all the evidence set forth.
Even if you disagree with the central theme, you'd be hard-pressed to say that you didn't find this book an entertaining read. The examples used to support his case alone are entertaining, educational and thought-provoking.
We really do need forward thinkers like Surowiecki to help look at the world's problems from a differing perspective. I really do look forward to Surowiecki's next book.
A great read!
Leigh Burke
Author of Niche Internet Marketing
NICHE Internet Marketing: The secrets to exploiting untapped niche markets and unleashing a tsunami of cash
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