The Wisdom and Foolishness of Crowds
America depends upon the wisdom of crowds. When voting, we rely on the masses to pick the best politicians. When investing in stocks, we assume that, over time, people will gravitate toward the best companies. Even our culture is increasingly driven by the collective: Just look at "American Idol."
The good news is that the wisdom of crowds exists. When groups of people are asked a difficult question—say, to estimate the number of marbles in a jar, or the murder rate of New York City—their mistakes tend to cancel each other out. As a result, the average answer is often surprisingly accurate.
But here's the bad news: The wisdom of crowds turns out to be an incredibly fragile phenomenon. It doesn't take much for the smart group to become a dumb herd. Worse, a new study by Swiss scientists suggests that the interconnectedness of modern life might be making it even harder to benefit from our collective intelligence.
Jonah Lehrer on the Wisdom and Foolishness of Crowds | Head Case - WSJ.com