Daily Archives: January 19, 2009

SI301 – Homework 2 – Wisdom of Crowds

Reading: Chapters 5-8 Wisdom of Crowds by James Surowiecki
Describe the difference between a coordination problem and a cognition problem.
Give an example of a coordination problem that you have experienced that was not used in the book. Come up with something where some non-trivial decisions were needed (i.e. avoid – everyone needs to find a chair in a room).
How do norms and conventions help us solve large-scale coordination problems?
Give a clever example of a cooperation problem – where the participants needed to avoid pure self-interest to achieve the greater good. How did the participants know to make the right decisions?
Describe the experiment with the Capuchin monkeys and its conclusion. What does its outcome potentially tell us about ourselves?
Often capitalism is described as being “heartless” and “every one for themselves”. Describe how in some ways, honesty, trust, and considering the long-term impact of choices is seen by some as an essential underpinning of successful capitalism.
Why is the “Good Housekeeping Seal of Approval” valuable? Have you ever used the seal to get your money back? Why not?
In the Fehr / Cachter experiment there are generally three types of people when it comes to their approach to free-rider problems. Describe the three types and the approximate number of each type we might find out of 100 people.
When the free rider experiment is run many times, on average what percentage of people are free riding at the beginning of the experiment and what percentage of people are free riding at the end of the experiment?
Define “Strong Reciprocity”. Give an example in your live where you have seen strong reciprocity and an example where you have not seen strong reciprocity.
I also include my rough reading notes from the Chapters below:

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