The Wisdom of Crowds - Four Elements Required To Form A Wise Crowd

Four Elements Required To Form A Wise Crowd

Not all crowds (groups) are wise. Consider, for example, mobs or crazed investors in a stock market bubble. According to Surowiecki, these key criteria separate wise crowds from irrational ones:

Criteria Description
Diversity of opinion Each person should have private information even if it's just an eccentric interpretation of the known facts.
Independence People's opinions aren't determined by the opinions of those around them.
Decentralization People are able to specialize and draw on local knowledge.
Aggregation Some mechanism exists for turning private judgments into a collective decision.

Based on Surowiecki’s book, Oinas-Kukkonen captures the wisdom of crowds approach with the following eight conjectures:

  1. It is possible to describe how people in a group think as a whole.
  2. In some cases, groups are remarkably intelligent and are often smarter than the smartest people in them.
  3. The three conditions for a group to be intelligent are diversity, independence, and decentralization.
  4. The best decisions are a product of disagreement and contest.
  5. Too much communication can make the group as a whole less intelligent.
  6. Information aggregation functionality is needed.
  7. The right information needs to be delivered to the right people in the right place, at the right time, and in the right way.
  8. There is no need to chase the expert.

Read more about this topic:  The Wisdom Of Crowds

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