Monday, October 10, 2005

Truth By Consensus

The recent "tipping point" in the power of wiki's highlight has only solidified one of my hypothesis--given a large enough sample size people will reach more rationale decisions because their individual predilections and cognitive biases cancel each other out, much like a simple math equation (-x + x = 0, where 0=truth)

As those following the development of economics, over the past twenty-five years, the traditional economic assumptions of man as homo economicus, a rational utility maximizing, has been eroded by insights from psychology and other social sciences. Economists (and legal scholars) such as Herbet Simon, Amos Tversky, Daniel Kanheman, Richard Thaler, Cass Sunstein, and Christine Jolls have helped paint a more realistic picture of the human mind. People do not have the ability to order and optimize infinite streams of information; instead, people have bounded rationality.

Bounded rationality refers to the fact that people have limited cognitive abilities. People rely on shortcuts and rules of thumbs to help make sense of the world. Moreover, people are endowed with various different cognitive biases, such as over-optimism, the confirmatory bias, and the implicit hindsight bias (best evidenced by the Monday morning quarterback, which dominate sports talk radio).

The existence of these cognitive biases draws into questions whether humans are capable of rational decisions. However, I think there is a solution to this conundrum, in the idea of "truth by consensus"

This idea is not novel, as evidenced by James Surowiecki's Wisdom of Crowds, which makes the observations that crowds can reach fairly accurate decisions if proper mechanism's are in place. However, Surowiecki's insights lack a theoretical reason why such accuracy is reached by crowds.

My hypothesis, which will be eventually worked into a paper, is that crowds make rationale decisions because each individual's cognitive biases and heuristics, which cloud an individual's ability to make a rationale decisions, are cancelled out when the number of people making a decision are increased.

This idea is fairly implicit in today's society, especially in the construction of law. For example, this could provide a justification for decisions reached by a democratic (or even a representative republican) government. This could provide justification for the existence of juries (why do we have a system where judges do not simply rule on the facts? Could it be that 12 people might be able to reach a more accurate decision then one judge with his/her own biases and heuristics).

This observation may also explain simple colloquialisms, such as why do "opposites attract." Why do men and women (or a similar same-sex arrangement) of opposing decide to enter into the sacred bonds of marriage? Could it be that the other cancels out the heuristics and cognitive biases of the other? Or the wisdom of "Ying and Yang"


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10/10/2005 07:42:00 PM  

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