How to improve group decisions
Unfortunately, the history of the human species suggests that all too often groups fail to live up to their potential. Many groups turn out to be foolish; they bet on products that are doomed to failure; they miss out on spectacular opportunities; they develop unsuccessful marketing strategies; their investments and strategies go awry, hurting millions of people in the process, according to Cass Sunstein and Reid Hastie in their book Wiser: Getting Beyond Groupthink to Make Groups Smarter.
Whereas in theory groups should be smarter than individuals, they often end up making worse decisions than would have been made by the average individual in the group. In the first part of the book, the authors identify four different ways in which this can occur:
- When the group amplifies rather than corrects the individual errors of its members
- When the group members follow the leader instead of revealing their own opinions and knowledge
- When the group tends to become more extreme as a result of internal discussions
- When group members concentrate on shared information and ignore critical information that only one or a few people have.
The second part of the book provides a number of suggestions for reducing the risk of group failure, focusing on group deliberation and how to make it more effective, the importance of separating the process of generating possible solutions from the process of selecting a preferred solution, ways in which combining information from multiple group members can result in statistically better decisions, the role of experts, and the use of tournaments and prediction markets.
Unfortunately the authors sometimes stray from their area of expertise, describing the two-stage process of indentifying then selecting ideas as “Darwinian evolution”, whereas in reality there is no natural selection or multiple generations involved, so that the process is more akin to a beauty contest, still subject to the preferences and prejudices of the judges. Nonetheless, the book does provide a very useful resolution of the differences between those who argue for the wisdom of crowd and those who argue that the popular decision is almost always the wrong one, and it provides some very helpful ideas for optimizing the group decision-making process.