HOA Group Think


Real Estate News

HOA Group Think


Written By: Richard Thompson
Wednesday, November 25, 2020

Homeowner associations are often portrayed as the detached governed by thankless volunteers. Its the blind leading the blind or rather the clueless in charge of those that could care less. So how should this union of the unwilling go about acquiring the wisdom it needs?

James Surowiecki makes the case that a group is smarter than the smartest individual in his book "Wisdom of Crowds." Surowiekis research indicates that the wisdom of answers from those with only general life experience exceeds the wisdom of world experts. Here are some excerpts from an interview:

How did you discover the wisdom of crowds?

"The idea really came out of my writing on how markets work. Markets are made up of diverse people with different levels of information and intelligence, and yet when you put all those people together and they start buying and selling, they come up with generally intelligent decisions. I realized that it wasnt just markets that were smart."

Could you define "the crowd"?

"A "crowd" is any group which can act collectively to make decisions and solve problems. So, big organizations like a company count as crowds and so do small groups, like a team of scientists working on a problem. But so are groups that arent really aware of themselves as groups, like investors in the stock market. They make up crowds, too, because theyre collectively producing a solution to a complicated problem: the choices of investors determine stock prices."

Under what circumstances is the crowd smarter?

"There are four qualities that make a crowd smart:

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Diversity. Group members are bringing different pieces of information to the table.

Decentralized. No one at the top is dictating the crowds answer.

Summarizes Answers. Combines all member answers into one collective verdict.

Independent. Individual answers are independently arrived at without worrying about what others think."

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And what circumstances can lead the crowd to make bad decisions?

"Bad answers are more likely when most of the group are biased in the same direction. When diverse opinions are squelched, groups tend to be dumb. It usually spells disaster when too much attention is paid to what others think. Stock market bubbles are a >

What kind of problems are crowds good at solving and what kind are they not good at solving?

"Crowds are best when theres a "right" answer to a problem. If there is a factual question, groups consistently provide the correct answer. Groups arent good at problems of skill -- for instance, dont ask a group to perform surgery or fly a plane."

Why are we not better off finding an expert to make all the hard decisions?

"Experts, no matter how smart, only have limited amounts of information. They also have biases. Its very rare that one person can know more than a large group of people, and almost never does that same person know more about a whole series of questions. Its actually hard to identify true experts."

How can the crowds collective wisdom help an individual?

"The principle works for individuals as long as the groups are diverse and individuals try to be as independent as possible."

Is the wisdom of crowds about consensus?

"No. The wisdom of crowds emerges from disagreement. Its the "average" opinion of the group, but not an opinion that every one in the group can agree on. Collective wisdom does not result from compromise."

In the final analysis, while its common to >

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Updated: Wednesday, November 25, 2020

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