Judging the weight of an ox is hardly a complex task. But, as I suggested above, collective intelligence can be brought to bear on a wide variety of problems, and complexity is no bar. in this book, I concentrate on three kinds of problems. The first are what I’ll call cognition problems. ‘Fhese are problems that have or will have definitive solutions. For example, “Who will win the Super Bowl this year?” and ‘How many copies of this new ink-jet rinter will we sell in the next three months?” are cognition problems. So, too, is “How likely is it that this drug will he approved by the FDA?” Questions to which there may not he a single right answer, but to which some answers are certainly better than others—such as, “What would be the best place to build this new public swimming pool?”—are cognition problems, too.
The second kind of problem is what’s usually called a coordination problem. Coordination problems require members of a group (market, subway riders, college students looking for a party) to figure out how to coordinate their behavior with each other, knowing that everyone else is trying to do the same. How do buyers and sellers find each other and trade at a fair price? How do companies organize their operations? How can you drive safely in heavy traffic? These are all problems of coordination. The final kind of problem is a cooperation problem. As their
name suggests, cooperation problems involve the challenge of getting self-interested, distrustful people to work together, even when narrow self-interest would seem to dictate that no individual should take part. Paying taxes, dealing with pollution, and agreeing on definitions of what counts as reasonable pay are all examples of cooperation problems.
A word about structure. The first half of this book is, you might say, theory although leavened by practical examples. There’s a chapter for each of the three problems (cognition, coordination, and cooperation), and there are chapters covering the conditions that are necessary for the crowd to he wise: diversity, independence, and a particular kind of decentralization. The first half begins with the wisdom of crowds, and then explores the three conditions that make it possible, before moving on to deal with coordination and cooperation.
The second part of the book consists of what are essentially case studies. Each of the chapters is devoted to a different way of organizing people toward a common (or at least loosely common) goal, and each chapter is about the way collective intelligence either flourishes or flounders. In the chapter about corporations, for instance, the tension is between a system in which only a few people exercise power and a system in which many have a voice. The chapter about markets starts with the question of whether markets can be collectively intelligent, and ends with a look at the dynamics of a stock-market bubble.
There are many stories in this book of groups making bad decisions, as well as groups making good ones. Why? Well, one reason is that this is the way the world works. The wisdom of crowds has a far more important and beneficial impact on our everyday lives than we recognize, and its implications for the future are immense. But in the present, many groups struggle to make even mediocre decisions, while others wreak havoc with their had judgment. Groups work well under certain circumstances, and less well under others. Groups generally need rules to maintain order and coherence, and when they’re missing or malfunctioning, the result is trouble. Groups benefit from members talking to and learning from each other, hut too much communication, paradoxically, can actually make the group as a whole less intelligent. While big groups are often good for solving certain kinds of problems, big groups can also he unmanageable and inefficient. Conversely, small groups have the virtue of being easy to run, but they risk having too little diversity of thought and too much consensus. Finally Mackay was right about the extremes of collective behavior: there are times—think of a riot, or a stockmarket bubble—when aggregating individual decisions produces a collective decision that is utterly irrational. The stories of these kinds of mistakes are negative proofs of this books argument, underscoring the importance to good decision making of diversity and independence by demonstrating what happens when they’re missing.
Diversity and independence are important because the best collective decisions are the product of disagreement and contest, not consensus or compromise. An intelligent group, especially when confronted with cognition problems, does not ask its members to modify their positions in order to let the group reach a decision everyone can be happy with. Instead, it figures out how to use mechanisms —like market prices, or intelligent voting systems— to aggregate and produce collective judgments that represent not what any one person in the group thinks but rather, in some sense. what they all think. Paradoxically the best way for a group to be smart is for each person in it to think and act as independently as possible.