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Wisdom of Crowds & Types of crowd wisdom

Watch video in link below then read the following paragraphs :)!

-TYPES OF CROWD WISDOM-

Surowiecki breaks down the advantages he sees in disorganized decisions into three main types, which he classifies as

Cognition

Thinking and information Processing
Market judgment, which he argues can be much faster, more reliable, and less subject to political forces than the deliberations of experts or expert committees.

Coordination

Coordination of behavior includes optimizing the utilization of a popular bar and not colliding in moving traffic flows. The book is replete with examples from experimental economics, but this section relies more on naturally occurring experiments such as pedestrians optimizing the pavement flow or the extent of crowding in popular restaurants. He examines how common understanding within a culture allows remarkably accurate judgements about specific reactions of other members of the culture.

Cooperation

How groups of people can form networks of trust without a central system controlling their behavior or directly enforcing their compliance. This section is especially pro free market.


-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:

#1."Criteria" = Diversity of opinion. "Description" = Each person should have private information even if it's just an eccentric interpretation of the known facts.

#2."Criteria" = Independence. "Description" = People's opinions aren't determined by the opinions of those around them.

#3."Criteria" = Decentralization. "Description" = People are able to specialize and draw on local knowledge.

#4."Criteria" = Aggregation. "Description" = Some mechanism exists for turning private judgements into a collective decision.

The" Wisdom of Crowds"depends on the type of problem(s)!