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Wisdom of crowds vs. Wisdom of the few

The Washington Post has an interesting article about the wisdom of crowds vs. the wisdom of the few. The sites mentioned in the article are using social software to create communities on the net that harness deep smarts.

"The Top Pickers vs. the Pack"

"The notion of separating the best from the rest is heresy for those who advocate the wisdom of crowds. According to its proponents, a large number of diverse, independent individuals will typically outdo experts because even experts lack perfect information and make mistakes. But with a crowd, the many small pieces of information and perspectives held by individuals come together to form a more complete picture while the mistakes can cancel each other out.

Justin Wolfers, a business professor at the University of Pennsylvania's Wharton School, said collective wisdom -- reflected for instance in the stock prices set jointly by millions of knowledgeable investors in the open market, and in sports betting lines determined by large groups of avid gamblers -- is more likely to be accurate than Web sites claiming to feature experts. Someone must have a track record stretching back decades before it is statistically possible to conclude whether success results from talent or random chance, he said.

"Folks who look like experts today are very likely to be lucky," Wolfers said. "If they're conditioning it only on past history, it's likely to be a lost cause."

Academia studying collective intelligence.

The whole idea of collective intelligence or the wisdom of crowds is starting to get a lot of play on the academic level. MIT is one school delving into collective intelligence.

MIT Collective Intelligence

"While people have talked about collective intelligence for decades, new communication technologies especially the Internet now allow huge numbers of people all over the planet to work together in new ways. The recent successes of systems like Google and Wikipedia suggest that the time is now ripe for many more such systems, and the goal of the MIT Center for Collective Intelligence is to understand how to take advantage of these possibilities."

The irony here is that the blogosphere and the open source software communities continue to push out new ideas and possibilities everyday.