I know, I know, everyone has read this book already. I’m still going to write about it.

The Wisdom of Crowds takes a scientific look at the theory that given the right composition and the right problems to solve, a group can collectively be smarter than its smartest member. It sounds like it can’t be true, I know, but the author is quite convincing. The book details three different types of problems crowds can help solve:

1. Cognition problems: Problems that have definitive solution, such as how many jelly beans are in this big jar?
2. Coordination problems: Problems that require members of a group to figure out how to coordinate their behavior with each other, such as driving safely in heavy traffic.
3. Cooperation problems: Problems that require self-interested, distrustful people to work together, even when narrow self interest would seem to dictate that no individual should take part, i.e. paying taxes or taking care of the environment.

There are also necessary ingredients in a successful crowd: Diversity of opinion, independence and decentralization.

There are lots of interesting examples of the above throughout the book. I found the studies on cooperation problems to be specifically interesting - the ultimatum game (p112) and the public-goods (p139) experiments are great examples of this.

Still, I’m sure that after reading all that, you still have doubts, as it seems counterintuitive to think that a crowd of undetermined intelligence is smarter than a really intelligent individual. I’ll leave you, dear readers, with this to think about (from the afterword, pp277-278):

The Wisdom of Crowds is not an argument against experts, but against our excessive faith in the single individual decision maker. I think there are two big problems with relying on a single individual - no matter how well informed. The first is that true experts - that is, the real titans - are surprisingly hard to identify. In fact, if a group is smart enough to know whether an individual is a genuine decision-making prodigy, then the group is smart enough not to need that individual.