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June 23, 2006

The Hive Mindset: Group Think or Not

Umair at Bubblegeneration pointed out Nicholas Carr's controversial Wikipedia post and while I missed the initial discussion, here was the point about the hive mindset (or the wisdom of the masses) that I thought was the most interesting insight from Umair:

"The real question this school of thought should be asking is: is the hive, on average, smarter than the (average) individual?

Of course, they don't want to ask this question. Why? Because, in many cases, on average, the hive is very much smarter than the individual. Unfortunate, perhaps, but true.

Don't believe it? Think about a world without financial markets for a second, and you will instantly understand what I'm saying."

Interesting but don't believe it? Well, let Umair and Hayek (I was a econ/poli-sci major in college) take it a little further:

Hayek's great insight wasn't simply that "markets are efficient". It was far more subtle, and that was why it was so momentous. It was that markets - the hive mind, if you like - work despite the fact that individuals "suck" - despite the fact that individuals have less than perfect information, and they make silly choices. The genius of markets is that they can create not just order, but often, efficiency from decentralized, local anarchy."

And just in case you haven't noticed, I've finally taken the leap to real blogging platform and am slowly migrating my blog from Tripod to Typepad. Please be patient while I transition but I want to take this to the next level and I need a professional platform to do that, which was becoming increasing difficult with Tripod (although i liked their price).


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