January 13, 2009
In current Psychological Science:
Wisdom of Many in One Mind:
Improving Individual Judgments With Dialectical Bootstrapping
Stefan M. Herzog and Ralph
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.
August 2, 2007
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
- “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
- “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.”
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