The Wisdom of Crowds, Flappy Birds, Tulip Mania, and The Tyranny of Herds

Tulip Fields - popular with tourists
Tulip Fields – popular with tourists

“Decisions made by crowds aren’t uniformly good” a quote from Dave Snowden that doesn’t quite fit with some views of crowdsourcing.  The prevalent idea is that if you ask large crowds of people to solve a problem, provide a view or give an answer (usually via the internet), they will do a better job than any individual or small group of experts.

This however isn’t universally the case. This article by Dave, ‘bad titles and the need for theory to inform practice’ gives a helpful explanation of the theory behind the wisdom of crowds.  I’ll come back to the wisdom of crowds later, but first, who’s heard of Dutch Tulip Bulb Mania?

1637 Tulipmania Pamphlet
1637 Tulipmania Pamphlet

Tulip Bulb Mania and Flappy Birds.  Tulip Bulb Mania occurred in the 1630’s and has been cited as one of the first examples of an economic bubble. Tulips had been introduced to Europe years earlier and became so popular that people would trade the bulbs during the winter time. Speculation on the future price of tulips and bulbs became extreme, with many individuals became involved in the ‘mania’, planning to get rich quickly. It was reported that at one point the price of single bulb reached 10 times the annual earnings of a skilled worker (sounds familiar?).

The bursting of the Tulip Mania economic bubble was detailed by Charles Mackay in his 1841 book ‘Extraordinary Popular Delusions and The Madness of Crowds’. The book explained a number of examples of the ‘delusions and madness of crowds’ which included: Witch Hunts, Alchemy, The Crusades and other economic bubbles like the 1840’s Railway Mania. The book remains in print and has been referenced in writing about the 2008 economic crisis. This BBC article about economist Hyman Minsky gives a good explanation of how financial institutions and investors continued to deal in sub-prime mortgages with the belief that property prices would continue to increase. An example of ‘popular delusion and the madness of crowds’?

It was just another Mario Brothers wannabe to me….
It was just another Mario Brothers wannabe to me….

Flappy Birds. Bringing things right up to date (and demonstrating that I am totally down with the kids), you could easily apply a bit of ‘madness of crowds’ behaviour to the recent Flappy Birds episode.

Flappy Birds (a game for your phone) became incredibly popular. You can make your own mind up on how good people’s judgement was in engaging with a highly addictive low tech  video game it in the first place…. but that’s not the story.

The game developer decides to withdraw the game due to pressures of the fame it brought him. The ‘crowd’ goes a bit manic at the the prospect of a Flappy Birds ‘scarcity’. Indivdual crowd members start doing almost anything to get a copy of Flappy Birds on their phone. The result is stories of second hand phones with Flappy Birds on them selling for over £2000…… in Swansea of all places!

Now then, who still believes that crowds are wise all of the time?

The ‘real’ Wisdom of Crowds. The 2005 book, The Wisdom of Crowds by James Surowiecki has several examples of where ‘crowdsourced’ solutions have provided a better result than what could be done by an individual. These include farmers estimating the weight of cattle at a county fair and guess the number Jelly Beans in the Jar exercises.

What seems to get quite often ignored when crowdsourcing is mentioned, is that Surowiecki clearly stated that specifc criteria are required to form a wise crowd (rather than an irrational one). Here are the (slightly modified) criteria:

  1. Expertise/Diversity – individuals are able to draw upon local knowledge or their personal expertise. People with diverse relevant views need to contribute as well as deep experts.
  2. Independence of others – the contribution of each person is made independently of others. If you have knowledge of what others have said or done; it will influence your contribution.
  3. Decentralised decision making -decisions are not made within the group of people contributing to the ‘crowd’. Someone else, looking at the ‘big picture’ makes the decisions.

These criteria are important if you want the crowd to be wise. If they aren’t in place, there is a risk of the crowd behaving irrationally and making bad decisions.

Crowdsourcing to Measure Services. An area where I think this is important relates to how crowd sourced opinions are used to decide how well a public service is performing. The ‘Trip Advisor’ for the Public Services approach is good at getting hold of the lived experience of public service users, no argument there. However, how do you make sense of what is uploaded? How do you make sure that vociferous individuals aren’t trying to shift opinion in one direction or the other? Also, who makes decisions as a result of gathering the evidence, the crowd or some carefully chosen individuals?

So what’s the PONT?

  1. Crowds can do wise things, they can also do irrational things.
  2. Understanding the nature of your crowd and what you want it to do is essential.
  3. Before you mobilise your crowd, make sure you have a few checks and balances in place to make sure you don’t end up with an irrational crowd, the tyranny of the herd or even worse an angry mob.

Finally a bit more research. An article from The Atlantic online, the stupidity of the crowd, which reports on Ant colonies, who apparently make worse decisions as a crowd than individually.

About whatsthepont

The things I’m currently interested in are: 1.How people learn and share knowledge; 2.Social Media, Web2.0 whatever you want to call the world of the internet; 3.Better public services.

5 Responses

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s