Friday, March 13, 2009

How to enhance the wisdom of one...

The point of James Surowiecki's engaging book, "The Wisdom of Crowds" is that a marketplace - of ideas, goods, services, whatever - can make astonishingly accurate predictions of election outcomes, Oscar winners, etc. Herzog and Hertwig ask how a single individual might improve a best guess for an outcome and test a Hegelian process they call "dialectical bootstrapping." After making the first estimate, consider the reasons and assumptions underpinning that estimate (and how they might be off target), and then formulate a new, second estimate that harks back to somewhat different knowledge.

They tested the efficacy of this method by asking 101 students at the University of Basel to date a collection of 40 historical events (e.g., the discovery of electricity), 10 each from the 16th, 17th, 18th, and 19th centuries. Each participant was randomly assigned to one of two conditions. In both conditions, participants first generated their estimates without knowing that they would be asked later to generate a second estimate. In the dialectical-bootstrapping condition, participants (n= 50) were then asked to give dialectical estimates (while their first estimates were displayed in front of them) using a technique inspired by the consider-the-opposite strategy: First, assume that your first estimate is off the mark. Second, think about a few reasons why that could be. Which assumptions and considerations could have been wrong? Third, what do these new considerations imply? Was the first estimate rather too high or too low? Fourth, based on this new perspective, make a second, alternative estimate.

They found that the improvement in accuracy (in years) over the first estimate was twice as large for the dialectical average than for the repeat average, although averaging the first estimates from two random individuals worked better still.

4 comments:

gottschalk said...

Deric, am I understanding this right if I surmise these results by saying, When a single person can think as two people, they will come up with more accurate results than thinking on their own as one. But even a more accurate result is achieved when two actual individuals interact together.

Deric said...

That's how I read it, with the two actual individuals being better because they decide with more different starting assumptions than one person usually musters when trying to act as two.

jim said...

It's worth remembering that there are quite a few counter examples to the wisdom of crowds, and significant stuff too, for example, the re-election of GW Bush, the crash...

Deric said...

hmmmmm..... I think the 'wisdom' being referred to is in making accurate guesses at uncertain past or future facts, such as who is going to win the election or when is the next crash going to occur...not the judgment of who to vote for or whether to invest in a bubble.

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