The Wisdom of Crowds by James Surowiecki, Little, Brown/Time Warner Books, 拢16.99, ISBN 0316861731 Reviewed by Wendy M. Grossman
A DIVERSE crowd can come up with better answers for many problems than the single smartest individual in that crowd. That鈥檚 the central idea of The Wisdom of Crowds.
Of course, counter-examples immediately spring to mind, such as the mass of mutual-fund managers versus the very rich investor Warren Buffett. James Surowiecki, who writes an entertaining financial column for The New Yorker, proposes that the more diverse, independent and decentralised a crowd is, the smarter its collective answer. (Draw your own conclusion about fund managers.) The Wisdom of Crowds describes this principle in action, from fair-goers guessing the number of marbles in a jar to the stock market collectively pondering the cause of the Columbia shuttle disaster.
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London鈥檚 traffic congestion charge, TV game-show juries, the ill-fated Pentagon plan for a market in terrorist futures, and internet file-sharing all provide examples of Surowiecki鈥檚 three types of problem: cognitive, coordination and cooperation. While some of his assumptions are questionable, the analysis is thought-provoking.
But crowds cannot solve everything. The title indicates this by echoing Charles MacKay鈥檚 The Madness of Crowds. And discussion doesn鈥檛 help, it polarises, as anyone who spends time on the internet knows.