Comments on: The Wisdom of Crowds http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/ Seattle's Leading Resource for Real Estate Information Fri, 12 Mar 2010 02:06:26 -0800 http://wordpress.org/?v=2.8.4 hourly 1 By: Synthetik http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21506 Synthetik Wed, 11 Oct 2006 08:53:23 +0000 http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21506 Seattleeric: it sounds like the matrix has you... Seattleeric: it sounds like the matrix has you…

]]> By: seattleeric http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21234 seattleeric Mon, 09 Oct 2006 19:46:16 +0000 http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21234 I'll never do away with considering fascinating potential, they are just words, after all. When it comes to action, I tend to stick more closely to the conservative side of the 'what ifs'. A line from the second Matrix movie comes to mind, to paraphrase: <em>"Hope..it's at the same time both man's greatest strength and his greatest weakness"</em> I’ll never do away with considering fascinating potential, they are just words, after all. When it comes to action, I tend to stick more closely to the conservative side of the ‘what ifs’.

A line from the second Matrix movie comes to mind, to paraphrase:

“Hope..it’s at the same time both man’s greatest strength and his greatest weakness”

]]> By: ARDELL http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21231 ARDELL Mon, 09 Oct 2006 19:28:01 +0000 http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21231 "Fascinating potential" is what gets a lot of investors into trouble :-) Drop that phrase from your vocabulary, and deal more in the realm of "worst case scenario". It's a more tried and true method to success. “Fascinating potential” is what gets a lot of investors into trouble :-) Drop that phrase from your vocabulary, and deal more in the realm of “worst case scenario”. It’s a more tried and true method to success.

]]> By: seattleeric http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21229 seattleeric Mon, 09 Oct 2006 19:22:28 +0000 http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21229 Good snark! And you're right, I'm still new to the game of investing, and with each deal, learn to avoid the same mistakes. I blog warts and all. Some readers will revel in my mistakes, for sure. But my goal is that others might learn from the mistakes I made. Also, note my use of the conditional tense in the last paragraph of my post. By no means do I see myself as an expert forecasting the impact of the housing futures market (I'll leave that to the crowds :), rather, the potential is fascinating, and that is what I wanted to highlight....the 'what if' factor. Good snark! And you’re right, I’m still new to the game of investing, and with each deal, learn to avoid the same mistakes. I blog warts and all. Some readers will revel in my mistakes, for sure. But my goal is that others might learn from the mistakes I made.

Also, note my use of the conditional tense in the last paragraph of my post. By no means do I see myself as an expert forecasting the impact of the housing futures market (I’ll leave that to the crowds :) , rather, the potential is fascinating, and that is what I wanted to highlight….the ‘what if’ factor.

]]> By: jcricket http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21218 jcricket Mon, 09 Oct 2006 16:57:55 +0000 http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21218 I think I've read enough on the various sides of the argument to know that I'm a "wisdom of the crowds" non-believer, mainly in the sense that the premise argues true crowds are wise. All the examples of crowds that "work" seem not to be crowds in any meaningful sense. Again, I'm not arguing that single individuals are the best holders of knowledge, just that the overall premise of crowd behavior doesn't seem widely applicable, and has far too many expections (even by the author's own admission). I also read this sellsius article for a more in-depth review along the lines of "a confederacy of dunces": http://blog.sellsiusrealestate.com/a-confederacy-of-dunces-the-madness-of-crowds/ Also I question how it's really valid to think that a housing futures market would bring about wholesale change in the RE industry like you seem to think. There are futures markets for lots of things, but they are as prone to manipulation and swings as any other kind of market. And plenty of smart people could buy puts and calls to protect their equity market positions, but don't. Where's your thinking on that? Besides, to get a snark in, while you obviously have years of successful experience in Interenet advertising, your blogged-about experience in RE so far doesn't seem to have been particularly economically fruitful. I think I’ve read enough on the various sides of the argument to know that I’m a “wisdom of the crowds” non-believer, mainly in the sense that the premise argues true crowds are wise. All the examples of crowds that “work” seem not to be crowds in any meaningful sense. Again, I’m not arguing that single individuals are the best holders of knowledge, just that the overall premise of crowd behavior doesn’t seem widely applicable, and has far too many expections (even by the author’s own admission). I also read this sellsius article for a more in-depth review along the lines of “a confederacy of dunces”: http://blog.sellsiusrealestate.com/a-confederacy-of-dunces-the-madness-of-crowds/

Also I question how it’s really valid to think that a housing futures market would bring about wholesale change in the RE industry like you seem to think. There are futures markets for lots of things, but they are as prone to manipulation and swings as any other kind of market. And plenty of smart people could buy puts and calls to protect their equity market positions, but don’t. Where’s your thinking on that?

Besides, to get a snark in, while you obviously have years of successful experience in Interenet advertising, your blogged-about experience in RE so far doesn’t seem to have been particularly economically fruitful.

]]> By: ARDELL http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21197 ARDELL Mon, 09 Oct 2006 02:10:08 +0000 http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21197 I'm with you Cricket. I wouldn't want to base anythng on what people who click on banner ads do :-) The first, last and ONLY time I clicked on a banner ad, I ended up divorced from a 20 year marriage :-) But then, I'm staying out of this discussion. Crowds to me are mindless...and I don't deal in mindless behaviors. I’m with you Cricket. I wouldn’t want to base anythng on what people who click on banner ads do :-) The first, last and ONLY time I clicked on a banner ad, I ended up divorced from a 20 year marriage :-)

But then, I’m staying out of this discussion. Crowds to me are mindless…and I don’t deal in mindless behaviors.

]]> By: Kevin http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21192 Kevin Sun, 08 Oct 2006 23:10:05 +0000 http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21192 I have to say, I was also skeptical about the premise of Surowiecki's book at first. After reading it, I'm much more of a believer in the whole concept. Surowiecki lays out a number of very compelling examples, describes what crowd characteristics lead to the best outcomes, and also acknowledges circumstances in which crowd behavior most emphatically does <i>not</i> lead to good outcomes. Two real-life working examples of the concept are the <a href="http://www.biz.uiowa.edu/iem/" rel="nofollow">Iowa Electonic Markets</a>, which trades in economic and political futures, and the <a href="http://www.hsx.com/" rel="nofollow">Hollywood Stock Exchange</a>, which helps predict the success of movies and stars. A more recent startup is <a href="http://www.casualobserver.net/" rel="nofollow">Casual Observer</a>, which has a fairly active political market going. In the <a href="http://www.casualobserver.net/stockprofile.php?conid=1022" rel="nofollow">California gubernatorial race</a>, for instance, the Governator is currently ahead of Angelides by a 3:1 margin. One of key differences between these sorts of prediction markets and the sorts of polling that we're more familiar with is that prediction markets ask, "What do you <i>believe</i> is going to happen?" and not "What do you <i>want</i> to happen?" If you enjoyed Malcolm Gladwell's books <i>Blink</i> and <i>The Tipping Point</i> then you'll definitely enjoy book. I have to say, I was also skeptical about the premise of Surowiecki’s book at first. After reading it, I’m much more of a believer in the whole concept. Surowiecki lays out a number of very compelling examples, describes what crowd characteristics lead to the best outcomes, and also acknowledges circumstances in which crowd behavior most emphatically does not lead to good outcomes.

Two real-life working examples of the concept are the Iowa Electonic Markets, which trades in economic and political futures, and the Hollywood Stock Exchange, which helps predict the success of movies and stars.

A more recent startup is Casual Observer, which has a fairly active political market going. In the California gubernatorial race, for instance, the Governator is currently ahead of Angelides by a 3:1 margin.

One of key differences between these sorts of prediction markets and the sorts of polling that we’re more familiar with is that prediction markets ask, “What do you believe is going to happen?” and not “What do you want to happen?”

If you enjoyed Malcolm Gladwell’s books Blink and The Tipping Point then you’ll definitely enjoy book.

]]> By: Kevin http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21191 Kevin Sun, 08 Oct 2006 22:58:00 +0000 http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21191 I think more likely users of the Shiller/Case housing futures market would be financial companies with large mortgage portfolios. While a ton of individuals feel comfortable buying and selling stocks, futures and options markets are significantly harder to understand and trade. Perhaps insurance companies could start selling "home price insurance" to new home buyers, and hedge their risk using this market. I think more likely users of the Shiller/Case housing futures market would be financial companies with large mortgage portfolios. While a ton of individuals feel comfortable buying and selling stocks, futures and options markets are significantly harder to understand and trade.

Perhaps insurance companies could start selling “home price insurance” to new home buyers, and hedge their risk using this market.

]]> By: seattleeric http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21182 seattleeric Sun, 08 Oct 2006 20:16:40 +0000 http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21182 Jcricket: Given you haven't read the book, and given that your only exposure to this concept is my very minimal post on the subject, I can understand your skepticism. Crowds is a loaded word in our culture. A better term (but not as catchy on a book title) might be critical mass intelligence (maybe not :). When trying to grasp this concept as individuals, we load up our biases in how it's perceived. For example, if you're like me, you probably ignore and never click on those annoying banner ads online. However, these companies running these ads sell products day in and day out through this advertising channel. There are people out there who click and buy. In the same way, with a large enough and diverse enough 'crowd', the group intelligence rises to the top. I highly recommend you read the book to get a better understanding on the topic than I can give. Also, the reason he spoke at our client summit (I worked for a large, publicly traded digital marketing company) was the relevance to marketing, and how tapping into the 'crowds' can lead product development down the right path, thereby saving millions by making the right decisions. Jcricket:

Given you haven’t read the book, and given that your only exposure to this concept is my very minimal post on the subject, I can understand your skepticism.

Crowds is a loaded word in our culture. A better term (but not as catchy on a book title) might be critical mass intelligence (maybe not :) . When trying to grasp this concept as individuals, we load up our biases in how it’s perceived. For example, if you’re like me, you probably ignore and never click on those annoying banner ads online. However, these companies running these ads sell products day in and day out through this advertising channel. There are people out there who click and buy.

In the same way, with a large enough and diverse enough ‘crowd’, the group intelligence rises to the top.

I highly recommend you read the book to get a better understanding on the topic than I can give. Also, the reason he spoke at our client summit (I worked for a large, publicly traded digital marketing company) was the relevance to marketing, and how tapping into the ‘crowds’ can lead product development down the right path, thereby saving millions by making the right decisions.

]]> By: Galen http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21179 Galen Sun, 08 Oct 2006 20:03:42 +0000 http://raincityguide.com/2006/10/07/the-wisdom-of-crowds/#comment-21179 I haven't read the book, but I assume he states that some sort of benefit (either community standing or financial) has to be involved for crowds to make good predictions. If not, markets becomes a game of what people want to happen instead of what they think will happen. Here's Google's take on markets:http://googleblog.blogspot.com/2005/09/putting-crowd-wisdom-to-work.html No actual money trading hands, but you can bet that people who predict well are rewarded. I haven’t read the book, but I assume he states that some sort of benefit (either community standing or financial) has to be involved for crowds to make good predictions. If not, markets becomes a game of what people want to happen instead of what they think will happen.

Here’s Google’s take on markets:http://googleblog.blogspot.com/2005/09/putting-crowd-wisdom-to-work.html
No actual money trading hands, but you can bet that people who predict well are rewarded.

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