And, by idiots we mean not that people are of low intelligence necessarily but people who fail to leverage the knowledge and intelligence of others.
Via Robin Hanson
Next, we look at the final round where information about disagreement is made public and, under common knowledge of rationality, should be sufficient to eliminate disagreement. Here we find that individuals weigh their own information more than twice that of the five others in their group. When we look separately at those who err by disagreeing in round 1, we find that these people weigh their own information more than 10 times that of others, putting virtually no stock in public information. This indicates a different type of error, that is, a failure of some individuals to learn from each other.
This is potentially – maybe some people have worked this out carefully – a serious source of co-ordination problems.
Everyone knows the classic rhetorical: If all your friends jumped off the Brooklyn Bridge would you?
The problem here is that there is general agreement that the answer is no, but in a world of rational people the answer is yes. If a bunch of people show a high degree of confidence that jumping off the bridge is the right thing to do that is a sign that they know something you don’t.
So, why is the answer no?
This experiment would suggest that the probability that all your friends are idiots who have happened to stumble on a bad idea is higher than the probability that jumping off the bridge is in fact a good idea.
In an ideal world agreement wraps around the world, so that you get information from your friends who have gotten from their friends who have gotten it from their friends and so on until the entire population is connected into a giant hivemind, through which information is rapidly transmitted.
Idiots degrade the signal and mean that information does not flow very far and wide disagreements are possible, especially between people who do not share broadly similar social networks.
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Thursday ~ March 15th, 2012 at 11:49 am
Lord
What did those buying housing in the boom know that others did not? How valid was that knowledge? Were the others idiots or just contrarian? Some were probably idiots who were always contrarian and wrong most of the time but some just have superior information.
Thursday ~ March 15th, 2012 at 1:14 pm
Axel
One problem about your example is that it doesn’t distinguishes between behavior and rational statement/judgement.
It happens that we behave irrationnaly, and herd behaviour is a well documented ‘irrational’ behavior. This means, people rushing to jump from the bridge did not ask themselves: should I go or should I not, pondering probability about being right or wrong? they just felt attracted to do follow the crowd/their friends etc.
This is precisely why/how contrarian point of view (especially in a market) are valuable: when they express their contrarian view they send 1) a signal perturbation and 2) a wake up call signal to ‘trend followers’ showing they are following a trend.
This second signal is valuable as it should trigger a rationalization effort about your behavior. Meaning, it can transform an irrational jumper into a rational jumper – which greatly improves coordination.
At the end of the day, financial markets seems prone to bubbles and herd behaviour anyway. So this ‘signal effect’ is not enough to stabilize the equilibrium there.
I don’t know how these effects balance each other in politics or in other markets (Windows vs Linux/MacOS / iPhone vs other smartphones/ generaly winners takes all markets …) as you have to take into account cost functions & scale effect as well. But at least you have a cost/benefits analysis there.
Thursday ~ March 15th, 2012 at 1:41 pm
Feed Purge
[...] There are idiots [...]
Thursday ~ March 15th, 2012 at 2:20 pm
Jeff Johnson
“So, why is the answer no?”
We don’t all have to jump off the bridge at the same time. We can allow our friends to be early adopters, and then we can learn from their results.
Friday ~ March 16th, 2012 at 6:31 am
reason
Very good answer – but of course it depends on whether we can continue to communicate with them AFTER they jump.
Friday ~ March 16th, 2012 at 11:52 am
Lord
The man that jumped off a 100 story building reported everything was fine after 99 stories.
Thursday ~ March 15th, 2012 at 6:30 pm
JazzBumpa
Idiots degrade the signal and mean that information does not flow very far and wide disagreements are possible, especially between people who do not share broadly similar social networks.
You’re putting the whole thing in a (ideally correct and rational} information flow frame. In contrast, Axel makes a lot of good points. Plus – what about radially different world views and information processing protocols among self-selected groups?
Once a person makes an emotional investment in some concept, it becomes extremely difficult to penetrate the bubble. Even without that, there is a significant subset of the population that is simply immune to facts and data. They can become what are known as “useful idiots.”
From almost any person’s perspective, these are the others. ‘Cuz, we’re all above average – right?
Why would anybody value their “information”? Give that, you’re mother’s advice about not following them in the leap to death was actually quite sound.
Cheers!
JzB
Friday ~ March 16th, 2012 at 6:30 am
reason
Surely,
the Brooklyn Bridge story shows that it is just as important to know and understand the reasoning behind a decision, as it is to know what the decision is. Otherwise, we would all think Lemmings are incredibly intelligent.
Friday ~ March 16th, 2012 at 10:14 am
Exasperated
Every test I have ever taken indicates that I am in the 99th percentile of the population, intelligence-wise.
Therefore, at least 100 people have to disagree with me on a subject before I will consider the possibility that I might be wrong based on the sheer number of people who have a different opinion.
Of course, it only takes *one* rational argument, but you apparently want to count noses and call it relevant data. In that case, bring a lot of noses.
Friday ~ March 16th, 2012 at 1:41 pm
Arthur
69 people would give a more then 0,5 chance of one of them being smarter than you
Saturday ~ March 17th, 2012 at 11:46 am
Links 17 Mar « Pink Iguana
[...] Behavior, Experiments Confirm: There are Idiots, here. ”And, by idiots we mean not that people are of low intelligence necessarily but people who [...]