A bit more wisdom of crowds

Here’s a link to a good article about Wikipedia – it’s in Atlantic Monthly which I’ve never been able to get access to without subscription on line before. Perhaps they’re ‘getting it’ as we like to say smugly in the ‘online community’ and they’re publishing more open articles these days. In a bit of a Smithian (and to a lesser extent Hayekian) twist it illustrates something of the importance of social skills to the development of the market. In the case of Wikipedia, and also GNU/Linux, success came when an autocratic mode of production was given up on and someone was at the apex who tried to keep a community of co-operating people happy rather than impose authority on them.

And here’s a bit more of the traditional ‘wisdom’ of crowds’ courtesy of Slashdot:

BusinessWeek takes a look at the use of prediction markets to forecast business success. These markets have been taking the form of games online¢â¬âthe Hollywood Stock Exchange, for example, allows players to bet on the success of movies. Hollywood is currently one of the largest consumers of prediction market data, in part because movies’ broad appeal leads to a large number of players, but also because the markets have been surprisingly accurate–92% in picking Oscar winners over the last three years. Because of this success, other industries are taking a look; pharmaceutical and tech storage businesses are currently working to set up their own markets.

This entry was posted in Economics and public policy, Uncategorised. Bookmark the permalink.
Notify of

Newest Most Voted
Inline Feedbacks
View all comments
17 years ago

The open IP movement has a very long history (although the name is quite recent). Software was free in the early years of the computer industry and there was outrage when IBM started charging for it around 1972. The Unix movement in Bell Labs and elsewhere picked up the tradition that everyone shared their IP around and nobody charged for it.

This emerged into the mainstream with Linux.

However Eric S Raymond’s seminal essay, “The Cathedral and the Bazaar”, first drafted in 1997, did for the open software movement what Jack Kerouac’s On The Road did for the Beat generation.

The Atlantic Monthly article mentioned the work, but one section is worth quoting:

The Linux world behaves in many respects like a free market or an ecology, a collection of selfish agents attempting to maximize utility which in the process produces a self-correcting spontaneous order more elaborate and efficient than any amount of central planning could have achieved. Here, then, is the place to seek the “principle of understanding”.

The “utility function” Linux hackers are maximizing is not classically economic, but is the intangible of their own ego satisfaction and reputation among other hackers. (One may call their motivation “altruistic”, but this ignores the fact that altruism is itself a form of ego satisfaction for the altruist). Voluntary cultures that work this way are not actually uncommon; one other in which I have long participated is science fiction fandom, which unlike hackerdom has long explicitly recognized “egoboo” (ego-boosting, or the enhancement of one’s reputation among other fans) as the basic drive behind volunteer activity.

Linus [Torvalds], by successfully positioning himself as the gatekeeper of a project in which the development is mostly done by others, and nurturing interest in the project until it became self-sustaining, has shown an acute grasp of Kropotkin’s “principle of shared understanding”. This quasi-economic view of the Linux world enables us to see how that understanding is applied.

We may view Linus’s method as a way to create an efficient market in “egoboo”–

Steve Edney
17 years ago

I think he is saying this blog is not monetised and an example of the type of thing economists are blind to.

17 years ago

Thanks Steve. Yes, I was, although badly expressed.

Indeed I should have qualified it as “some economists”.