How wise are crowds?

By melding economics and engineering, researchers show that as social networks get larger, they usually get better at sorting fact from fiction. The rise of the Internet has sparked a fascination with what The New Yorker 's financial writer James Surowiecki called, in a book of the same name, 'the wisdom of crowds?: the idea that aggregating or averaging the imperfect, distributed knowledge of a large group of people can often yield better information than canvassing expert opinion. But as Surowiecki himself, and many commentators on his book, have pointed out, circumstances can conspire to undermine the wisdom of crowds. In particular, if a handful of people in a population exert an excessive influence on those around them, a 'herding' instinct can kick in, and people will rally around an idea that could turn out to be wrong. Fortunately, in a paper to be published in the Review of Economic Studies , researchers from MIT's Departments of Economics and Electrical Engineering and Computer Science have demonstrated that, as networks of people grow larger, they'll usually tend to converge on an accurate understanding of information distributed among them, even if individual members of the network can observe only their nearby neighbors. A few opinionated people with large audiences can slow that convergence, but in the long run, they?re unlikely to stop it. In the past, economists trying to model the propagation of information through a population would allow any given member of the population to observe the decisions of all the other members, or of a random sampling of them.