black swans

Black SwanBill sent me this article that describes how voters have a systematic bias regarding some economic effects. The article questions the fact that voters in general have a bias for anti-market, anti-foreign, anti-efficiency loss of work and a pessimistic outlook. This systematic bias of course would lead to bad decisions since the errors do not even out. The stupidity of the crowds.
Though I think part of the bias is not completely false due the following reasons:
Not all companies are rational too. Look at some of the big mergers in the world where the merger is probably more driven by the ego of the winning CEO than by economical motives. Most large mergers fail

  • Not all market are markets where demand and supply have a more or less balanced power. Once one side creates a invincible power and becomes a monopoly the market stops. Look at Microsoft or the cartel of energy companies in the Netherlands. Health is also an example where it is very hard to impossible to establish a fair market because it involves your health…
  • Markets are driven by the opportunity to get ahead, to gain more money than the guy next to you (or more women, more free time, whatever makes you tick). But the amount extra that you can gain is not linear connected to the increase of wealth it gives to society at large. Therefore a redistribution of wealth for the automated weaving factory to compensate Ludd for the loss of his job can be done at little cost to the economy.

But still, there certainly is a tendency to underestimate the power of the unexpected. I recently have read a book called the Black Swan. A black swan is something that can not be predicted (expect the unexpected). The analogy is based on the fact that before Australia was discovered everybody (except the Aboriginals) thought that all swans are white. But the discoverers found to their amazement that in Australia there is a swan like bird that is black. In general people are not prepared for completely unexpected things to happen.
It is a bit like being a turkey. Everyday you get a nice meal so after some time you expect the future to be like all the previous days, however conspiracy driven turkey you are. So Christmas really comes as a surprise.
Crowds are often are bad at taking these unexpected events into consideration. But these unexpected events often create big changes in society. Of all the technology that is of major importance 20 years from now we only see about 50%. The other 50% we can not take into account since it does not yet show on our radar screen.
For the design of iCrowds this has big implications. On the one hand it shows that there is a limit to the intelligence of crowds and on the other hand how information sharing across the network is important.
A community of turkeys may find out that some of their cousins are mysteriously disappearing and will expect the unexpected …

A thousand lies

This is such an interesting example of how our new production of information can go wrong:This is an interview with Christine Boutin, the French minister of housing, about the conspiracy that George W Bush is behind the attack on the WTC towers on 9/11. A small translation of the first part goes like this:

I think that it’s possible. I think that it’s possible… I think it is possible. I think it more especially as I know that the sites that speak of is problem are the sites that have the greatest numbers of visits….And so, I tell myself, I who am extremely sensitive…to the new techniques of information and communication, that this expression of the mass of the people cannot be without any truth. I’m not telling you that I adhere to that position, but let’s say that, nevertheless, I’m questioning myself a bit on this question

Some time ago I talked about the fact that due to ease of copying information of the Internet it is possible for an item of information to multiply rapidly. And a thousand lies remain a thousand lies.
This I think is an excellent example why we have to rewire the way we interpret information due to change that Internet brings us.