Monday, July 9, 2007

Swarm Intelligence

In essence, the study of government is the study of how groups make collective decisions--at least those that are legally binding. Democracy rests on the idea that the individual decision maker is the central unit in the governing structure and that collective decisions are only as good as the individuals making those decisions.

The premise underlying the decision to require you to take two government classes is that the more you know the better governmental decisions will be.

Now come researchers who study the behavior of ant colonies, schools of fish, and flocks of birds and argue that the collective unit itself has its own unique intelligence that goes beyond the capabilities of any one ant, fish or bird. simple creatures following simple rules, each one acting on local information. ". . . no ant sees the big picture. No ant tells any other ant what to do. Some ant species may go about this with more sophistication than others. Even complex behavior may be coordinated by relatively simple interactions." Applications have been made to human endeavors which promise to upend theories of how groups decisions ought to be made. The distribution of goods seems to be most responsive to these theories. Algorithms developed based on any behavior are helping determine where gas is purchased and planes are flown.

I'm pretty sure that economists and urban planners would state that they have each long held that markets and cities create environments where such decisions are made. The conclusion one peron made of bee behavior sounds familiar: "—seek a diversity of options, encourage a free competition among ideas, and use an effective mechanism to narrow choices. " A good rule of thumb for any decision. These studies seem to fit into a larger range of research focused on the biological determinants of human behavior, a growth area from what I can tell.

Here's an extended quote:

"In fact, almost any group that follows the bees' rules will make itself smarter, says James Surowiecki, author of The Wisdom of Crowds. "The analogy is really quite powerful. The bees are predicting which nest site will be best, and humans can do the same thing, even in the face of exceptionally complex decisions." Investors in the stock market, scientists on a research project, even kids at a county fair guessing the number of beans in a jar can be smart groups, he says, if their members are diverse, independent minded, and use a mechanism such as voting, auctioning, or averaging to reach a collective decision.

Take bettors at a horse race. Why are they so accurate at predicting the outcome of a race? At the moment the horses leave the starting gate, the odds posted on the pari-mutuel board, which are calculated from all bets put down, almost always predict the race's outcome: Horses with the lowest odds normally finish first, those with second lowest odds finish second, and so on. The reason, Surowiecki says, is that pari-mutuel betting is a nearly perfect machine for tapping into the wisdom of the crowd.

"If you ever go to the track, you find a really diverse group, experts who spend all day perusing daily race forms, people who know something about some kinds of horses, and others who are betting at random, like the woman who only likes black horses," he says. Like bees trying to make a decision, bettors gather all kinds of information, disagree with one another, and distill their collective judgment when they place their bets.

That's why it's so rare to win on a long shot."

The article's conclusion is noteworthy. Group dynamics are only as good as the information provided by its members, which requires members to pay attention and participate. Voting, volunteering, recycling--not free riding in general--suddenly become more important not just for their own merit, but for the information it conveys to others about how they should behave.