Book Review: The Wisdom of Crowds, James Surowiecki, (2004)
By SirDarryl Roundtree
Quantitative Analysis
In the book, The Wisdom of Crowds by James Surowiecki, the author uses the
story of an early 1900’s scientist and his use of an impromptu “social experiment”
regarding the knowledge of the common person versus more educated elite person. To
the scientist astonishment, the results of the experiment were greatly against his
hypothesis. His hypothesis was that if the common person, is uneducated in affairs such
as arithmetic, politics, etc., then when it come to guessing the full dress weight of a
slaughtered Ox the group of uneducated common individuals would be way off from the
correct answer. The experiment showed, in fact, that the crowd was surprisingly close to
the correct answer. This story provides the entire basis for the novel and the thought
process around using groups to develop solutions to many different problems. Based on
this story, James Surowiecki wrote a fantastic novel showing his support in the
application of “crowd thinking” to various scenarios.
Surowiecki felt that this approach fit many problems, but generated a short list of the
various types of problems that he thought “crowd” thinking would best fit.
The types of problems that the author offered up to be solved were:
Cognition problems – problems with definitive solutions (i.e.- sales projections, weight of an ox,
etc.)
Coordination problems – group problems where groups with basically the same knowledge trying
to solve a problem. (i.e. – people on a sidewalk, traffic, market price of a product)
Cooperation problems – how groups of “self-interest” work with each. (i.e. – paying taxes, the
ultimatum game)
Based on the three types of problems, the author illustrated examples of how
“crowds” could successfully solve each example. In addition, the author provided some
potential pitfalls and benefits of using the “crowd” method to solve problems. One
example, was the use of intelligence as it related to the 9/11 attack on the Twin Towers in
New York City. The author showed examples where a much better outcome would have
been provided by utilizing a more centralized approach to the intelligence around the
incident. Surowiecki also illustrated examples in gambling where the bookmaker in Las
Vegas manages the odds to steer gamblers to ensure that the “house” doesn’t lose too
much money in sports gambling.
As it applies to our lives as MBA students, I think we can certainly apply the
ideas from Wisdom of Crowds in our own groups as we matriculate through the MBA
program. Although, because the groups are small, we have to be careful of “group think”
and having enough diversity of thought when it comes to the different ideas that we are
deliberating on. It also encourages us to be independent in thought, even though we are
in a group environment. By being individuals with regards to our thoughts we elevate the
group as a whole with our thought diversity. I think this was one of the key points of the
book. That when participating in a group atmosphere, rather than influencing individuals
from their original thoughts, we should embrace the differences and try to develop total
solution that will encompass the individual ideas of each group member and furnish a
solution based on collective input.