July 19, 2005  ·  Cass Sunstein

An initial thanks for the many excellent comments and emails, which I’m trying to absorb. We’ve been discussing several methods for aggregating views: markets a la Hayek, group deliberation, and wikis (with a brief mention of open source software). One emphasis has been on problems with group deliberation, because like-minded people usually end up thinking a more extreme version of what they thought before.

In his fun and illuminating book, The Wisdom of Crowds, James Surowiecki emphasizes another method of aggregating opinions: ask a lot of people and take the average answer. In many cases, this method seems to work magically well. If you put a bunch of jelly beans in a jar, and ask 200 people how many beans are in the jar, the average answer is likely to be eerily good. Often the average answer of a large group is right on the mark.

Surowiecki doesn’t explain why this happens, but the answer lies in the Condorcet Jury Theorem. If you have a group of people, and if each person is more than 50% likely to be right, the likelihood that the average answer will be right approaches 100% as the size of the group increases. (The math here is so simple that even we lawyers can almost understand it. For nonbinary choices with plurality voting, the math isn’t so simple, and this lawyer can’t even almost understand it, but there’s a result that explains why Condorcet’s basic insight applies there too.) Condorcet’s result has implications for many practices; it hasn’t been adequately exploited by people in business, law, and politics.

Here’s a problem, though. If group members are less than 50% likely to be right, the likelihood that the average will be right approaches ZERO as the size of the group increases. (I asked members of the faculty at the University of Chicago Law School to estimate the weight of the horse who won the Kentucky Derby, the number of lines in Antigone, and the number of Supreme Court invalidations of state and federal law. The group average did really well with the first question, pretty badly with the second, and horrendously with the third!) Condorcet was well aware of this point, and hence he emphasized that we can’t rely on the wisdom of group averages when most group members are likely to be biased or wrong.

Are group averages likely to be worse than what emerges from group deliberation? The answer is mixed. Sometimes deliberation does help to correct errors (especially when people are considering a “eureka” problem, where the answer is clearly right once identified). But sometimes deliberating groups do little better, and sometimes even worse, than predeliberation averages.

Are markets likely to do better than group averages? The simplest answer is yes, because participants have strong incentives to be right, and won’t participate unless they think they have something to gain.

July 18, 2005  ·  Cass Sunstein

Hayek’s big claim about the price system was that it aggregates widely dispersed information and tastes. For this reason, he said that it was a “marvel.” We’ve been discussing other ways of aggregating information, and it might be useful to start with Wikipedia, if only because Jimbo Wales refers to Hayek in his comments.

Wikipedia does aggregate dispersed information — amazingly so. In a general way, it’s definitely a Hayekian process. But there are at least two differences between Wikipedia and the price system. First, Wikipedia doesn’t rest on economic incentives. People aren’t participating because they’re getting a commodity or money. There are no trades. Second, Wikipedia generally works by a “last in time” rule. The last editor. and hence a single person, can do a lot. But in the price system, the last purchaser usually can’t have a huge effect. (Even if you buy 10,000 copies of each of Larry’s books, you won’t affect the price.) The upshot is that Wikipedia is different from the price system; it aggregates dispersed information in a distinctive and less reliable way.

Two qualifications. 1) Wikipedia nonetheless works, at least for the most part. 2) The price system doesn’t always work, in the sense that bad information, sometimes spreading like wildfire, can produce inflated and deflated prices. (So Hayek was too optimistic, as behavioral economists have shown.)

What is this discussion missing?

July 18, 2005  ·  Cass Sunstein

As recently reported, Republican-appointed court of appeals judges get significantly more conservative, and Democratic-appointed court of appeals judges get significantly more liberal, when they are sitting with judges appointed by a president of the same political party. But there are two areas where this does NOT happen — where Republican appointees differ from Democratic appointees, but where judges’ voting patterns are unaffected by the composition of the panel. Any guesses?

Affirmative action? No. Environmental protection? No. Gay rights? No. Campaign finance or commercial advertising or obscenity? No. Race and sex discrimination? No. The two areas are: Abortion and capital punishment. In those areas, Republican appointees differ a lot from Democratic appointees, but the rest of the panel doesn’t much matter.

July 18, 2005  ·  Cass Sunstein

Here at the University of Chicago, we have something called the Chicago Judges Project, by which we tabulate and analyze thousands of votes of judges on federal courts of appeals. One of our key findings thus far is this: In many controversial areas (eg, affirmative action, campaign finance, sex discrimination, disability discrimination, environmental regulation, and more), Republican appointees show especially conservative voting patterns when they’re sitting on 3-judge panels that consist only of Republican appointees. So too for Democratic appointees: They’re far more liberal, in their voting patterns, when sitting with two fellow Democratic appointees, than when sitting on a panel with at least one Republican appointee. In other words, Republican appointees look more conservative when they sit only with fellow Republican appointees, and Democratic appointees look more liberal when they sit only with fellow Democratic appointees.

This is real-world evidence, we think, of group polarization: the process by which like-minded people, engaged in deliberation with one another, typically end up thinking a more extreme version of what they thought before they started to talk. (So, for example, French people who distrust the US distrust the US even more after talking with one another.) Group polarization reflects a form of information aggregation, or at least opinion aggregation, that sometimes leads in unfortunate directions. It’s a big contrast to the price system, Wikipedia, and open source software.

Here’s a related phenomenon: hidden profiles. In a deliberating group, shared information (information held by many or most) usually has a much bigger effect than unshared information (information held by a few or just one). The result is that groups have “hidden profiles,” in the form of information that doesn’t get out, or that has less impact than it deserves. Some big mistakes by private and public organizations (including faculties!) are a result of hidden profiles.

Here again, the price system, Wikipedia, and open source software do a lot better. (Of course there are important differences among the three, as the terrific comments so far suggest, and on which more soon.) All this raises many puzzles. Here’s one: Are there ways to incorporate what we’ve been learning, from those three, so as to make group deliberation go better?

(originally posted 7/17/05)

July 18, 2005  ·  Cass Sunstein

This is from Cass Sunstein; I’m most grateful to Larry for inviting me to post on his blog for a bit. His kind invitation is a result of a naive and ignorant inquiry I sent him in the recent past, about information aggregation and its possible limits.

Background: A few years ago, a book of mine, Republic.com, emphasized the risks associated with echo chambers and self-insulation. I’m doing a new book, still inchoate, that continues to explore those risks, but that also stresses the excitingly general possibility that the Internet can allow widely dispersed “bits” of human information to be properly aggregated — as, for example, through open source software, wikis, prediction markets, and even blogging.

All this is pretty abstract, so let me try to focus it. One of the greatest arguments of the twentieth century is Hayek’s about the price system. In particular, Hayek claimed that any “price” is capturing the information and tastes of many people, in a way that will outperform the judgments of even the best experts. Hence prices do a lot better than any central planners. Here’s a puzzle: How close is the analogy between the price system on the one hand and wikis, open source software, and even the blogosphere on the other? Where does the analogy break down? When, in particular, will wikis and the blogosphere fail as mechanisms for aggregating dispersed information? I’ll venture some thoughts before long, but for the moment I’d just like to pose the question. I know that there’s a lot of information out there about all this; any help would be appreciated.

(originally posted 7/16/05)

July 18, 2005  ·  Lessig

So as I’ve mentioned before, the one promise I keep to my family is a month away, sans Internet, each year since my kid was born. This is year two. The month (or so) begins today. But I’ve lined up an incredible group to blog in my absence.

This weeks is Cass Sunstein. Cass is certainly the most influential law professor of our time (the only rival is Judge Posner, but he’s currently a judge (as you might have guessed)). In 2001, Cass published Republic.com, a brilliant if dark story about the costs of digital culture. Cass is in the first stages of a new book with the other side of the story — the good in digital community. I thought he could see something of that from the mix of sorts who live here.

Then beginning July 25, the kids from freeculture.org will blog for a week about the Free Culture Movement, and what students can do to advance it. As I’ve explained again and again, this is a movement begun far from my influence. But I am a strong supporter, and am honored they would spend some time here (during summer vacation, no less!).

Then for two weeks, beginning August 1, the extraordinary Jimbo Wales, founder of Wikipedia will have two weeks on this page. (He’s staying in my house with his family while I’m gone. You’ve heard about the high rents in San Francisco.) Jimbo has a project to figure out what things should be “free.” I suggested this might be a great place to explore that.

Finally, for the surprising close, beginning August 15, Hilary Rosen, former Chief Executive of the RIAA will visit this page. She has of course been a visitor in a different sense from the beginning of this page. I’m honored that she would spend sometime understanding and explaining here.

I’m sorry to be gone for such a long period of time. But with this lineup in my stead, you shouldn’t be. Thanks to these guests. Please be decent, however direct. And see you on the other side of a month repairing the bonds that distance has created.