The Wisdom of Crowds

The Wisdom of Crowds

I am ristening to the Wisdom of Crowds. Great book. Very interesting and full of very cool examples. The basic idea is that when allowed to work, markets do an excellent job of "getting it right." The "it" can be anything from the weight of a pig to the value of a stock, to who will win an election. I really like it! The review from Amazon sums it up nicely:

"If four basic conditions are met, a crowd's "collective intelligence" will produce better outcomes than a small group of experts, Surowiecki says, even if members of the crowd don't know all the facts or choose, individually, to act irrationally. "Wise crowds" need (1) diversity of opinion; (2) independence of members from one another; (3) decentralization; and (4) a good method for aggregating opinions. The diversity brings in different information;independence keeps people from being swayed by a single opinion leader; people'serrors balance each other out; and including all opinions guarantees that the results are "smarter" than if a single expert had been in charge. Surowiecki's style is pleasantly informal, a tactical disguise for what might otherwise be rather dense material. He offers a great introduction to applied behavioral economics and game theory."

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As a personal note, if you teach economics or finance, you probably do want the book for the cool examples if nothing else!

VERY GOOD!

Also for the new readers: Risten is my word for listing to audio books. I do it all the time!