The Wisdom of Crowds

Independence is important to intelligent decision making for two reasons. First, it keeps the mistakes that people make from becoming correlated. Errors in individual judgment won’t wreck the group’s collective judgment as long as those errors aren’t systematically pointing in the same direction. One of the quickest ways to make people’s judgments

So who picks the sweetest-smelling one? Ideally, the crowd would. But here’s where striking a balance between the local and the global is essential: a decentralized system can only produce genuinely intelligent results if there’s a means of aggregating the information of everyone in the system. Without such a means, there’s no reason to think that

This seems like an eccentric conclusion, and it is. It just happens to be true. The legendary organizational theorist James G. March, in fact, put it like this: “The development of knowledge may depend on maintaining an influx of the naïve and the ignorant, and . . . competitive victory does not reliably go to the properly educated.” The reason, Ma

On teams or in organizations, by contrast, cognitive diversity needs to be actively selected, and it’s important to do so because in small groups it’s easy for a few biased individuals to exert undue influence and skew the group’s collective decision.

Decentralization’s great strength is that it encourages independence and specialization on the one hand while still allowing people to coordinate their activities and solve difficult problems on the other. Decentralization’s great weakness is that there’s no guarantee that valuable information which is uncovered in one part of the system will find

More important, there’s no real evidence that one can become expert in something as broad as “decision making” or “policy” or “strategy.” Auto repair, piloting, skiing, perhaps even management: these are skills that yield to application, hard work, and native talent. But forecasting an uncertain future and deciding the best course of action in the

For an answer, consider a hive of bees. Bees are remarkably efficient at finding food. According to Thomas Seeley, author of The Wisdom of the Hive, a typical bee colony can search six or more kilometers from the hive, and if there is a flower patch within two kilometers of the hive, the bees have a better-than-half chance of finding it. How do the

Individually, some of the agents were very good at solving the problem while others were less effective. But what Page found was that a group made up of some smart agents and some not-so-smart agents almost always did better than a group made up just of smart agents. You could do as well or better by selecting a group randomly and letting it solve

In the first stage of this process, the list of possible solutions is so long that the smart thing to do is to send out as many scout bees as possible. You can think of Ransom Olds and Henry Ford and the countless would-be automakers who tried and failed, then, as foragers. They discovered (in this case, by inventing) the sources of nectar—the gaso