Average out your own estimates for a better result

In current Psychological Science:

The
Wisdom of Many in One Mind:
Improving Individual Judgments With Dialectical Bootstrapping
Stefan M. Herzog and Ralph
Hertwig
Groups are better than individuals at making
judgments about the future and other unknowns, because individual errors tend
to cancel out. Can the power of averaging that underlies this “wisdom of
crowds” be harnessed to improve individual judgments too? This study
shows that averaging an individual’s first estimate with one made later
fosters accuracy. A single mind can thus simulate the wisdom of many.

The Cult of Committee

The Cult of Committee by Barbara Kiviat in Time Magazine.

Interesting piece on group decision making in an investment firm.

• “There are a zillion independent variables, and it’s very hard for one person to think about them all.”
• “When an analyst thinks a company is something Dodge & Cox would be
  well advised to hold for five years, the analyst makes the case to an
  investment-policy committee.”
• “It’s not a strict vote…The process…is like
  taking the temperature of the room.”
• “That ability to make complex strategic decisions collectively requires
  an almost Benedictine devotion to corporate togetherness, starting with
  physical space.”
• “Dodge & Cox has also found there to be an important structural
  element to team decision making. “Committees react best to a specific
  proposition,” says Bryan Cameron, director of research and a member of
  the committees that pick domestic and foreign stocks. So when analysts
  make a presentation, they propose a particular course of
  action–increasing the percentage of Wal-Mart from 2% of the portfolio
  to 2.2%, say. The analyst advocates, and the committee
  meditates–somewhat like a jury.”

Powered by ScribeFire.