The Wisdom Of Crowds And Financial Bubbles...
By Tom Foremski - November 28, 2008
In the "Web 2.0" scene there has been much spoken about the "wisdom of crowds." It is rare to see anyone challenge this accepted notion.
Communities are encouraged to express themselves and when they do, you tend to get a uniformity of thinking.
I was always brought up to question the wisdom of crowds, to question the accepted beliefs of the majority. I tend to stay away from "crowd" thinking. As a younger man I was always pleased that there was a "Doubting Thomas" that I could draw inspiration from.
If anything, there are many examples of the "madness of crowds." Pogroms, Adolf Hitler coming to power, wars, are easy ones to spot where there has been a huge lack of wisdom from the crowds.
I wonder if the recent financial speculative bubbles will do much to erode the accepted notion of the "wisdom of crowds."
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Comments (5)
Tom, there will always be cases on both the dumbness and wisdom of crowds, and the latter remains far from being widely accepted (apart from quoting it in public speeches or blog posts).
To me, the question is where to apply the crowds or the (one or more) experts' wisdom, and I do believe that, in general, the potential of many remains underused.
Posted: November 28, 2008 4:54 PM
Tom,
There certainly is untapped wisdom in crowds, but following the crowd's level of wisdom can be a vicious circle that is doomed to repeat.
So interesting that you felt this was the topic to share now, as I've been churning on this notion for a few weeks. Might have something to do with reading Seth Godin's new book, "Tribes." Might be the Thanksgiving hangover and desire to appreciate more and improve upon things.
Here's what your post stirred up this morning:
I keep wondering where all the interesting intellectuals are these days. I was still in college growing roots leaning to the left, but I enjoyed reading and listening to people like William F Buckely Jr. http://en.wikipedia.org/wiki/William_F._Buckley,_Jr.
There are great thought leaders today -- like at the TED conference -- but I wonder if the wisdom of crowds has crowded out and devalued reflection and connection to ancient sources, philosophers and even (dare I say) poets.
Yesterday I was listening to the Disposable Heroes of Hiphopracy, a San Francisco treasure back in the early 1990s. Lyrics from the great contemporary poet Michael Franti describing what he was seeing 15 years ago...it's all still happening today! One line in particular rings true: hypocrisy is the greatest luxury, so let's raise the double standard.
If anything, the wisdom of the crowds might move to higher ground if we could elevate the importance of great leaders, great thinkers of our time...and move away from mediocre.
Yet, I do like that our culture appreciates brainstorming and sharing more freely, openly then past generations. I do think if this continues, we'll have more ideas and the best ideas will rise to the top with the help of great communication and wise, open-minded leaders.
We don't follow leaders anymore, we choose and empower them to help us achieve our goals. At least I hope this how our society has evolved.
Posted: November 29, 2008 12:01 PM
The "wisdom of crowds" describes distributed decision making as opposed to decisions being decided by a few. It is important to separate the efficiency of this process from the actual result. The former is the real benefit that can be derived from using many agents. The idea that a better decision is arrived at is just the media misunderstanding the mechanism. Let's not add to that delusion.
Posted: November 30, 2008 2:06 AM
Ralph: Fair point. I just don't feel comfortable with these accepted notions.
Posted: November 30, 2008 11:29 PM
Wisdom of crowds is a contradiction in terms.
Wisdom is much more likely to come from a dissenting individual who ignores the herd instinct in the rest of the population. That instinct was the defining characteristic of America once - at the time when the Empires of Europe, and their incestly commercial elite, controlled much of the world.
What is at stake is a defining aspect of the American psyche - the dissenting individual driven by conscience.
Posted: December 7, 2008 7:10 AM