TESTING THE WISDOM OF CROWDS : Investigating whether the smartest group actually performs better than other groups

In his book, “The Wisdom of Crowds”, James Surowiecki argues that a group becomes “smart” and makes better decision than an individual if the group satisfies the four conditions-diversity of opinion, independence, decentralization and aggregation. This thesis intends to investigate whether groups that have higher diversity of opinion, independence, decentralization and aggregation perform better than the groups that don’t. Ideally, the groups should perform better when they satisfy the four conditions better. A research was conducted on the groups that participated in the week-long annual event organized by Oulu University of Applied Sciences called Innoweek. There were two sets of groups that worked on two different tasks. The participants were asked to score how they themselves performed in the group based on the four conditions. They were asked to score the degree to which they satisfied the four conditions using a Likert scale. These scores were then compared with the actual results of Innoweek to explore any correlations that existed. The results showed that one set of groups followed The Wisdom of Crowds hypothesis while another set of groups, working on a different task, did not. Both sets of groups however performed better when they had higher diversity of opinion. The results of the study can be optimized by repeating the research with different sets of data and on a larger scale. A more scientific approach should be taken towards the collection and assessment of the data