Updates

  1. Person pages list letters, writing, profiles and links as sortable tables with filters, and show each person's companies as links; Fund letters show each letter's description in its own column.
  2. Experts show a checked job title and a short description of each person; 30 more people have photographs.
  3. Every company, fund, university and publication the experts work for has a page listing the people there.
  4. Fund letters show each letter's thesis and filter by it; 225 person pages list the essays, columns and newsletter issues the person wrote.
  5. Person pages list every essay and newsletter issue a person wrote, and their own books as a table in List view.
  6. Recommends shows the five largest kinds of book and the rest under More; browse pictures load sooner.
  7. Podcasts and talks link the original episode, filter by Audio and video or Press, and list each publisher once.
  8. Pages are wider, Recommends has List and Grid, and a filter clicked again turns off.
  9. Book cards sit in a ruled grid with Open Library and Goodreads links and each book's one-line note.
  10. Funds is now Investors; each investor's styles are buttons that filter the table.
  11. Podcasts and talks on a person's page filter by year and publisher and show as a list or a grid of pictures.
  12. Quotes show only people's own words: 472 summaries written by list sites are gone.
  13. Country pages open from Browse again, and every link on the shelf lands on a page.
  14. Subject and person pages show their sections as tabs, and each book appears once on a person's page.
  15. Book cards show the quote, who said it and the source; grids show five cards to a row.
  16. On a phone, a menu holds the sections, search, Updates, Feedback and dark mode.
  17. Feedback takes a screenshot of the page with no browser prompt, opens a screenshot full size when you click it, and clears itself once sent.
  18. Book cards are centred, search names the topic each book sits in, and any text cut short shows whole on hover.
  19. Search groups its results by kind: people, companies, geographies, subjects, topics, books, funds, fund letters and papers.
  20. The Books table lists who recommended each book by name, and the browser tab names the section you are in.
  21. Feedback can take a screenshot of the page, or one you paste or choose, and opens in the corner beside Updates.
  22. Each rail button reopens its section where you left it, and Browse, Table and People show on every book and subject page.
  23. Filters grey out choices that hold nothing instead of hiding them, and Books › People filters by authors or recommenders.
  24. Feedback takes a subject line and up to three screenshots.
  25. Biographies are grouped by the person they are about: 41 new pages, from Abraham Lincoln to Lee Kuan Yew.
  26. Sport splits into 23 sports, and Religion into one topic per faith.
  27. Book lists show as cards: the cover, one recommendation quote and every recommender by name.
  28. Seventeen subjects that had two or three pages under different names now have one page each.
  29. Every page lists its Experts as authors and recommenders, with a link to them on the Experts tab.
  30. Economics, Financial history, Financial panics and Accounting are subjects of their own, with one page per financial crisis.
  31. Book, person and subject pages open inside the app, so the tabs stay in view.
  32. 996 more book covers, and photographs or logos for 227 more people and companies.
  33. Books › Browse shows every subject as cards, and the rail holds Fund letters, Papers, Experts, Books and Funds.
  34. Every topic over 150 books splits into narrower topics, each with a page of its own.

Send feedback

What is it?
Screenshots, up to 3 (optional)
or paste one with Ctrl+V

We use your email only to reply to you.

The Wisdom of Crowds: Why the Many Are Smart

The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations

James Surowiecki
2004
T4 328 pages · about 5h 28m to read Open Librarygoodreads

Summary

Surowiecki argues that aggregated judgments from many people frequently outperform the judgment of experts, and specifies the four conditions required for this to hold: diversity of opinion, meaning members hold different private information; independence, meaning their judgments are not determined by others; decentralisation, meaning they can draw on local and specific knowledge; and aggregation, meaning a mechanism exists for combining the judgments into a collective one.

His opening example is Galton's 1907 observation that the median guess of nearly eight hundred people at a cattle weight was within one pound of the correct figure. He extends this to markets as aggregation mechanisms, to the search for the missing submarine Scorpion, and to prediction markets.

He divides problems into cognition problems with a definite answer, coordination problems where each participant must anticipate others, and cooperation problems requiring self-interested people to work together, and analyses each separately. The second half examines failures. When independence is lost, information cascades produce herding, in which each participant rationally follows the previous ones and the aggregate information disappears. He covers the Columbia shuttle disaster, stock market bubbles and committee dynamics as cases where the conditions failed.

The conditions are the book's contribution, since they specify when crowd judgment works and when it fails, which is the part most often dropped in popular use. The book is journalism rather than research and the cases are selected. The independence condition has become harder to satisfy as social platforms have made judgments visible before they are formed, which strengthens the book's warning rather than its optimism.

Key takeaways 8

  1. Aggregated judgments from many people can outperform experts, but only when four specific conditions hold.
  2. The conditions are diversity of private information, independence of judgment, decentralisation permitting local knowledge, and a mechanism for aggregation.
  3. When independence fails, participants follow each other and the aggregate stops containing any new information.
  4. Information cascades occur when each participant rationally infers from previous choices, which produces herding without anyone behaving irrationally.
  5. Adding more informed people to a group can reduce accuracy if it reduces diversity, because correlated errors compound.
  6. Markets function as aggregation mechanisms and fail when their participants stop forming independent judgments.
  7. Cognition problems, coordination problems and cooperation problems have different requirements, and the crowd result applies most cleanly to the first.
  8. Small groups can be worse than individuals, because deliberation produces convergence and amplifies the errors that members share.

Who should read it

Operators designing forecasting and decision processes who need to know when aggregating judgments helps and when it produces correlated error.

Who recommended it 5 · 2 direct

“Jim Surowiecki deftly articulated this line of thinking in his delightful book, The Wisdom of Crowds.”

Ev Williamsreported
Kevin Rosereported
Simon Sinekreported

Similar books 6

Chosen by shared topics, the entries that hold them, and the people who recommended both.

Nassim Nicholas Taleb · 2001

Why people mistake luck for skill, above all in markets.

“Fooled by Randomness is a serious, intellectually sophisticated book, well worth reading carefully. At times, the book is condescending. Nevertheless, there are some great insights.” — Barton Biggs

Source: Biggs on a sophisticated book worth reading carefully

Recommended by: Barton Biggs, Michael Mauboussin and 11 others

Gustave Le Bon · 1895

How individuals lose judgement in a crowd and how leaders sway crowds.

“The Crowd, written in 1895 by Gustave Le Bon, is probably the most instrumental book in framing my ability to go against the grain of conventional thought and not feel insecure.” — Frank Martin

Source: Martin on the book that let him go against conventional thought

Recommended by: Frank Martin, Mohnish Pabrai, Peter Cundill and 1 other

Eric Hoffer · 1951

Why mass movements of every kind draw the same frustrated people and use one method.

“My favourite book to recommend is The True Believer: Thoughts on the Nature of Mass Movements by Eric Hoffer. There is no discussion about investing, but it is extremely helpful in understanding…” — Joe Rosenberg

Source: Rosenberg on the book he most often recommends

Recommended by: Joe Rosenberg, Mohnish Pabrai and 6 others

Peter L. Bernstein · 1996

How people learned to measure risk, from early probability to portfolio theory.

“I think some of the books that are a must would be Peter Bernstein's book about risk, Against the Gods: The Remarkable Story of Risk.” — Charles de Vaulx

Source: De Vaulx naming Bernstein's book a must-read on risk

Recommended by: Charles de Vaulx, Jim Collins and 8 others

Malcolm Gladwell · 2004

How snap judgments work, when to trust them and when they mislead.

Max H. Bazerman · 1986

The biases that distort managers' decisions, with exercises that show them.

Where it sits in the reference 2

Investment philosophy
Mental models

Topics

Decision MakingSociology and CultureSocial behaviour and collective action