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Book Review of…

Book Review of…. The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations . Different types of Business and real life problems:. Cognition Coordination (The traffic problems) Cooperation (The Ultimatum Game)

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Book Review of…

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  1. Book Review of… The Wisdom of Crowds: • Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations.

  2. Different types of Business and real life problems: • Cognition • Coordination (The traffic problems) • Cooperation (The Ultimatum Game) • Solving the tax puzzle • The free riders (25% ): Tam their greed • Conditional consenters(50%): Give them incentive to pay tax • The Altruists: They are the good guys(n gals).

  3. Elements required for wise crowd • Diversity (Information Cascade, Social Proofing) • Independence (Groupthink) • De-centralization • Aggregation (9/11 attacks)

  4. Types of jury • Evidence based: Always looks for evidences • Verdict based jury: Jumps to conclusion and then looks for evidence. • The Columbia space disaster could have been thwarted if proper jury could have been formed, they jumped to the conclusion that space shuttle could not be saved

  5. The faulty hypothesis: • Experts are the need of the hour. • Human beings are rational Are crowds always wise? • The stock markets. • Search for the most beautiful face (growth stocks)

  6. Applications • Decision markets • Iowa Electronic Markets • Policy analysis market. • Sales analysis and forecasting(HP)

  7. Conclusion The Seer-Sucker theory: • “No matter how much evidence exists that seers do not exists, suckers will pay for there existence.” By: J. Scott. Armstrong

  8. THANK YOU

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