Extraordinary Popular Delusions and the Madness of Crowds or The Wisdom of Crowds ?
These are two of my favorite books :
In 2004 , James Surowiecki ( an American Journalist ) published a book called “ The Wisdom of Crowds “ which talked about the aggregation of information in group , resulting in decisions that often better than it could have been made by any single member of the group.
The Wisdom of Crowds is generally traced back to an observation by Charles Darwin’s cousin Francis Galton in 1907. Galton pointed out that the average of all the entries in a ‘guess the weight of the ox’ competition at a country fair was amazingly accurate – beating not only most of the individual guesses but also those of alleged cattle experts. This is the essence of the wisdom of crowds: their average judgement converges on the right solution.
On contrary , this book “ Extraordinary Popular Delusion and Madness of Crowds “ by Charles MacKay wrote about the crowd psychology that drive numerous “ National Delusions, “ Peculiar Follies “ and “ Psychology Delusions” , mentioning among others manias like “The Tulip Mania “, The South Sea Company Bubble. “
“In reading the history of nations, we find that, like individuals, they have their whims and their peculiarities; their seasons of excitement and recklessness, when they care not what they do. We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first...Money, again, has often been a cause of the delusion of multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper... Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one”
The quotation is taken from its preface. If it sounds amazingly relevant to our current economic situation, it's because it is. It may be the most relevant book you will ever read.
Crowd psychology can create an emotional feedback loop whereby we may just want to hear only what we want. For MacKay, crowds were never wise, they were never even reasonable and collective judgement were doom to be extreme.”
The wisdom ( or stupidity ) of crowd may also be determined by the result which “the crowd “ desired and wanted to see.
Do you think that the voting of Donald Trump as 45th President of US as “Wisdom of Crowd “ or Dow 20,000 as “Extraordinary Popular Delusions and Madness of Crowds “ ?
“Regardless of what we believe about the motivations for individual behavior , once we become part of a group , we cannot be sure what to expect . “ by Philip Ball in his book “ Critical Mass “
Some of the pictures I like the most in illustrating the “ Madness of Crowd “ :