The Wisdom of Crowds

Chapter 5 Shall We Dance?

Ch 5 was all about coordination problems.

Coordination Problems-problems that don’t have a “correct” answer, but instead are the idea of coordinating your actions with the rest of the group’s actions.

Examples:

  1. Driving on the highway-You coordinate your speed and actions around the other drivers. You drive at a certain time of day to avoid traffic.
  2. What time do I leave for work?
  3. Where do we want to eat tonight?
  4. How do we allocate seats on the subway?
  5. Fundamental questions the economic system has to answer like: how much should my factory produce?
  6. How can we make sure the people get the goods and services they want?

Page 86 ” In order to solve a coordination problem, a person has to think not only about what he believes the right answer is but also about what other people think the right answer is. That’s because what each person does affects and depends on what everyone else will do, and vice versa.”

Bar example:

If the bar is too crowded, then no one has a good time. If the bar is too crowded, no one wants to go. If everyone thinks the bar will be crowded, then few people will go and therefore it will be empty and anyone who goes will have a good time. How can there always be the perfect amount of people at a bar? SOLUTION: an all-powerful central planner, an uber-doorman who tells people when they can go to the bar.  Even if this WAS possible, it interferes too much with the freedom of choice.

There is no guarantee that groups will come up with smart solutions. What’s striking though is just how often they do.

SCHELLING POINTS (be aware if your first instincts or thoughts while I explain this experiment)

From page 90/91: Schelling asked his students to imagine a scenario: 1. You have to meet someone in NYC. You don’t know where you’re supposed to meet and there’s no way to talk to the other person ahead of time. Where would you go? Majority of the students said the info booth at Grand Central Station. When will you show up at the information booth? Just about all of the students said noon. In other words, if you dropped two law students at either end of the biggest city in the world and told them to find each other, there was a very good chance that they’d end up having lunch together.

Experiments where an individual’s success depends on how well you coordinate your response with others:

If 60% of the answers are similar, it’s a Schelling point. People can typically reach beneficial results not only without centralized direction, but also without even talking to each other. Schelling points are beneficial because a lot of times large groups of people are unable to converse. Howard Rheingold argues that with new technologies, large collections of people can easily communicate.

Smartphone app examples: Yelp, Foursquare, Waze(GPS where strangers help each other on the road by telling the app where on your route there is a police officer, an accident, a traffic jam or any other type of driving obstruction).

 

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