There is significant evidence that DAOs, dependent on open decisions, often make inaccurate judgements. In her paper, Decisions in DAOs - What Causes the Pain, Drea, found that often, closed decisions were perceived as more successful; that DAOs with complex goals have resorted to small groups of leaders making operational decisions most of the time. [11] Why? Because there are so many pain points in open decisions.
Yet, DAO leaders crave the Wisdom of the Crowds.
This paper is a response to this craving. How can we, as leaders, harness the Wisdom of Crowds? The paper offers a checklist of criteria to enact in a disciplined manner that will free the power of Wisdom of crowds. Making better decisions with increasing conviviality.
In his book, Noise-A Flaw in Human Judgement, Daniel Kahneman writes an explanation as to why judgements and decisions have unwanted variability (Noise).
A proven way to reduce noise is to average several independent judgements, which yields a new judgement. This is Basic Statistics. Evidence suggests that the combination of multiple, independent judgments is often more accurate than even an expert’s individual judgment. [4}. This includes the most difficult of problems as a study’s findings suggest that the wisdom of crowds could be applicable to complex problem-solving tasks [7]
Below is The Wisdom of Crowds Checklist. When designing, implementing and improving Decision methods please sign off on these checklist criteria. It is proven that the resulting decisions will be more accurate.
| Criteria | Yes | N/A | No |
|---|---|---|---|
| 1. Independent Judgement | _______ | Y/N only | _______ |
| 2. Aggregation (averaging) methods (pre-committed) | _______ | Y/N only | _______ |
| 3. Egalitarian Networks - Everyone same influence | _______ | Y/N only | _______ |
| 4. Simple Algorithms (not Complex Algorithms) | _______ | ___________ | _______ |
| 5. Structured / Sequenced decision protocols (Intuition Delayed until end) | |||
| 5a. Delphi Method (Estimate - Talk - Estimate again) | _______ | ___________ | _______ |
| 5b. Egalitarian Network Method | _______ | ___________ | _______ |
| 5c. Example of a multi-assessment protocol | _______ | ___________ | _______ |
There is a immense Social Cost when DAO Communities encourage decision making and comparison of opinions within open forums. As opinions differ within the communities, people’s core beliefs are challenged. Upon being challenged, they react by being less openminded and respectful of other’s points of view. Collaboration is stymied. The compounding effect leads to disagreement and unfairness creating environments which are sometimes toxic or shutdown (anger).
In confirmation of the social cost, Brad DeWees, in his publication “The Right Way to use the Wisdom of Crowds” provides a study of compared of opinions:
We asked 401 U.S. adults to form a judgment before seeing the judgment of another participant selected at random from a prior study. Some participants saw peer judgments that were in close agreement with their own, and others saw estimates that differed dramatically. We then asked them to evaluate the quality of both judgments. We found that, as disagreement increased, people evaluated others’ judgments more harshly – while their evaluations of their own judgments did not budge. Our participants interpreted disagreement to mean that the other person was wrong, but not them. [4]
To remedy the social cost of open forums, structured Wisdom of Crowds methods must first mandate Independent Judgements. This means that participants provide their responses, opinions and beliefs in writing before they are shared with the group.