The Wisdom of Crowds


Surely Crowdfunding is far riskier than following the advice of a professional? Anyone considering Crowdfunding could do worse than reading James Surowiecki’s acclaimed book The Wisdom of Crowds.

In summary Surowiecki says:

“Under the right circumstances, groups are remarkably intelligent, and are often smarter than the smartest people in them. Groups do not need to be dominated by exceptionally intelligent people in order to be smart. Even if most of the people within a group are not especially well-informed or rational, it can still reach a collectively wise decision. This is a good thing, since human beings are not perfectly designed decision makers. Instead, we are what the economist Herbert Simon called ‘boundedly rational.’ We generally have less in formation than we’d like. We have limited foresight into the future. Most of us lack the ability – and the desire – to make sophisticated cost-benefit calculations. Instead of insisting on finding the best possible decision, we will often accept one that seems good enough. And we often let emotion affect our judgement. Yet despite all these limitations, when our imperfect judgements are aggregated in the right way, our collective intelligence is often excellent.”



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