The Wisdom of Crowds

Under the right circumstances, groups of people can not only make surprisingly intelligent decisions, but even produce better results than experts or the smartest individuals.

1. Groups Solve Problems Better Than Individuals

Groups often outperform even the smartest individuals in solving problems. This phenomenon is evident in examples like a 1906 livestock fair contest where the collective guesses of visitors, when averaged, accurately predicted the weight of an ox, surpassing even the closest individual guess. This startling observation demonstrated how collective intelligence could emerge when diverse perspectives come together.

Television trivia show Who Wants to Be a Millionaire? highlights a similar trend. Contestants could use lifelines like Ask-the-Expert or Ask-the-Audience to obtain help with answers. Surprisingly, the crowd's answers were correct 91% of the time, whereas experts were only correct 65% of the time. This shows that varied groups bring broad knowledge to problem-solving.

However, as history and mob mentality illustrate, not all groups act wisely. Group intelligence depends on constructive dialogue, diversity, and collaboration to prevent irrational behavior and produce informed decisions.

Examples

• Visitors guessing the weight of an ox at a fair surpassed experts when their guesses were averaged.
• Audiences on Who Wants to Be a Millionaire? showed better accuracy than individual experts.
• Historical mobs demonstrate how groups lose intelligence without proper structure and collaboration.

2. Diversity Breeds Smarter Choices

A group’s diversity enhances its ability to tackle problems and identify innovative solutions. Heterogeneous groups, made up of individuals from varied backgrounds, foster broader thinking and prevent tunnel vision. Each member brings unique experiences and perspectives that others may lack, enriching decision-making.

The Bay of Pigs fiasco under President Kennedy's administration demonstrates the risk of homogeneous thinking. The strategy for the invasion was debated without dissenting voices, leading to a flawed and avoidable failure. Diverse opinions might have challenged assumptions and shifted decisions.

Diversity doesn’t mean excluding experts but using them within a broader group. Experts, valuable for their knowledge, falter when paired only with like-minded individuals. A diverse group can integrate different viewpoints while also evaluating expert input critically.

Examples

• Mixed-gender and -background groups offer unique views, yielding innovative proposals.
• The Bay of Pigs invasion failed due to lack of dissenting opinions.
• Groups combining expert and non-expert perspectives balance informed and unconventional ideas.

3. Bigger Groups Perform Better

Large groups tend to make better decisions by incorporating a wide variety of opinions. With size comes diversity; this helps groups assess unconventional perspectives and minority viewpoints more effectively than smaller, narrower groups.

Smaller groups often succumb to dominant personalities or hierarchical pressures. In military experiments, lower-ranked navigators deferred to higher-ranked pilots, even when the pilots' solutions were incorrect. However, larger groups disperse influence, improving collective decisions.

In larger groups, debates are open and active, avoiding hasty decisions that plague smaller ones. This broader pool of individuals reduces the chances of bias or extreme choices, as different ideas are vetted comprehensively before implementation.

Examples

• Bigger groups involve more varied experiences and reduce biases.
• Military pilots unintentionally overpowered decisions, whereas diverse teams avoided this centrality.
• Boards or panels with multiple members often generate balanced plans.

4. Herd Behavior Limits Intelligence

Herd behavior can cripple group decision-making, as people mimic others, fearing to stand out. This stems from 'social proof,' where individuals believe ideas or actions supported by many must be correct. Herd behavior limits independent thought, fostering conformity over creativity.

Teenagers are archetypal examples, fearing social exclusion. Similarly, high-pressure office environments see employees conforming to a single viewpoint to avoid clashes. Decision-making falters as individuals align without questioning the logic or veracity of collective opinions.

Hierarchies exacerbate this trend, silencing lower-ranking members while empowering superiors to dominate discussions. Without measures to prevent these pitfalls, groups lose the diversity of thought that fuels intelligent decision-making.

Examples

• Peer pressure in teens mirrors societal herd behavior.
• Workplace teams commonly conform to dominant managers unless encouraged to critique.
• Historical examples like mass economic irrationality showcase the risks of herd conformity.

5. Independent Thinking Fosters Better Outcomes

Independent thinking is a cornerstone of intelligent group behavior. Without independence, decisions degenerate into echoes of dominant voices, leaving less room for conflicts, critical evaluation, or unique ideas.

Groups suffering from echo chambers make short-sighted decisions. The Columbia shuttle disaster highlights this; team members raised safety concerns privately but refrained from vocalizing dissent under perceived dominance by stronger voices.

Preserving independence means ensuring every voice is valued. Leaders should encourage civil disagreement and consider diverse perspectives to allow richer decision-making processes.

Examples

• The Columbia shuttle disaster resulted from stifled dissent.
• Focus groups stifled by homogeneity consistently spiral into safe, ineffective conclusions.
• Encouraging open debate engages richer, independent decision-making within teams.

6. Decentralized Structures Aid Group Success

Decentralized organizations allow members to innovate and address problems autonomously. This reduces bureaucratic bottlenecks and enables small, focused groups to handle parts of larger tasks efficiently.

Ancient Athens thrived on decentralization, allowing citizens to handle local matters independently while connecting centrally when needed. This independence fostered quick problem-solving and accountability.

However, decentralization needs information-sharing to ensure optimal group action. In the absence of this, collective intelligence is stunted. The 9/11 tragedy occurred partly due to poor communication across decentralized governmental agencies, leaving critical pieces of intelligence fragmented.

Examples

• Athens allocated petty crime resolution locally for effective administration.
• Crowd-sourced projects thrive when allowed decentralized problem-solving.
• The 9/11 intelligence gaps reveal uneven centralized information handling as an obstacle.

7. Coordination Naturally Arises in Teams

Groups can self-coordinate effectively if members understand shared goals. Activities like city pedestrian traffic show humans’ innate ability to collaborate, avoiding collisions through mutual anticipation.

Such coordination requires individuals to consider group interests while acting. Thomas Schelling’s experiment on meeting a friend in NYC illustrates shared mental frameworks; most students chose the same location intuitively, showcasing natural synchronization.

Whether arranging events or navigating daily commutes, effective team collaboration emerges when people balance mutual needs and adapt to ensure smooth outcomes.

Examples

• Pedestrians on sidewalks adjust naturally to avoid collisions.
• Students in Schelling’s study self-coordinated independently to pick meeting points.
• Logistics teams succeed when members anticipate others' needs, not merely personal roles.

8. Trust Encourages Cooperation

For groups to collaborate effectively, trust is foundational. Without this, members will prioritize short-term selfish gains over collective goals, undermining the group’s profitability.

Companies and nations often rely on enforcement mechanisms, such as contracts or laws, to ensure cooperation. Yet the best teams unite because they believe group affiliation benefits them consistently over time. For example, tipping behavior rewards businesses without direct enforcement, trusting customers will reciprocate satisfactory service.

Building trust involves creating systems where groups benefit both individually and collectively. This nurtures long-term faith and repeated cooperative success.

Examples

• Formal contracts safeguard workplace duties but aren’t foolproof.
• Tipping relies on unspoken mutual trust between servers and patrons.
• Governments build citizen cohesion through education and infrastructure investments.

9. Group Longevity Motivates Its Members

People contribute to groups when convinced their participation matters in the long run. Secure communities foster commitment; transient or poorly managed groups lead to short-term thinking.

Successful systems like charitable organizations thrive by showcasing tangible outcomes benefitting all participants. Participants feel invested when they believe in the greater purpose and future impact of their contributions.

Lasting affiliations encourage individuals to consider the broader picture, encouraging actions that sustain group success beyond personal benefit.

Examples

• Donors to charities rely on visible long-term benefits to stay engaged.
• Educational drives promoting literacy connect societal improvement with individual success.
• Work ethics emphasizing collective growth build stronger team cohesion.

Takeaways

1. Assemble teams rich in diversity and insist on independent thinking to encourage innovation.
2. Avoid rigid hierarchies and enable self-organizing groups while centralizing information for clarity.
3. Foster group trust with clear long-term goals and transparency to keep everyone committed.