Beneficial and Detrimental Effects of Group Decision Making
In the BBC article, “’The Wisdom of the Crowd’: The Myths and Realities,” writer Philip Ball discusses both the accuracy and inaccuracy of the judgment of the crowd when it comes to making decisions. Ball investigates evidence from many sources including James Surowiecki’s book, The Wisdom of Crowds, in which the author justifies that the decisions of a group can be surprisingly accurate if the decisions of the masses are independent from each other.
However, if a group influences one another’s decision, there is a very good chance the predictions and decisions members of the group make will be similar, or the same and in many instances, lead to wrong or inaccurate decisions or predictions. He supports this with findings made by a team from the Swiss Federal Institute of Technology which gives examples from past financial crises (ie. Black Tuesday) and deems this “copycat behavior” even more harmful when people are poorly informed and when there is no objectively correct answer. Ball half jokes, half criticizes, adding, “…which perhaps explains how democratic countries occasionally elect such astonishingly inept leaders.”
Thankfully, not all group decision making is detrimental. Ball cites researchers from Loyola University whose study concludes a group of people can make collectively better guesses if the group is diverse, as opposed to high-performing. A professor and his team from the University of Missouri presented at a conference on Collective Intelligence, supporting the diversity theory and adding that bringing in individuals whose thoughts are “negatively correlated,” or strongly difference from the rest of the group can lead to wiser and more accurate decisions.
Ball’s article relates to the in-class topic of information cascades. Decisions are often dependent on external influences, whether it’s an informational effect in which you decide based on what others before you decide because you believe they know something you don’t or a direct-benefit affect in which you benefit by aligning your behavior or decision with others’. Similar to the urn problem discussed in class, Ball talks about an experiment the Swiss team performs in which they get a group of people with little knowledge of Swiss geography or crime rates to make guesses about the two, with a monetary reward as an incentive. As people received more information about the other participants’ guesses, the range of guesses became narrower until the guesses leaned towards the same but incorrect answer. This is like the urn problem because in both scenarios, the people with knowledge of other’s guesses make their own guess base on that knowledge. Both examples are examples of an informational effect.
http://www.bbc.com/future/story/20140708-when-crowd-wisdom-goes-wrong