http://www.hinduonnet.com/2005/03/12/stories/2005031208552000.htm

The above article talks about the effect that walking has on world cricket. For those of you unfamiliar with the game, check out http://en.wikipedia.org/wiki/Cricket

In short, cricket is a game played between two teams where, much like baseball, there exists a batsman, a bowler who throws the ball at the batsman, and the fielders who try to prevent the batsman from scoring, while trying to get him out. Additionally, there is an umpire who has the authority to make decisions in the game.

Sometimes, a batsman may get out in a manner that is not evident. For example, when trying to hit the ball while batting, the batsman may accidentally only apply a slight nudge on the ball which is then caught by the wicket keeper. In such a situation, it is often difficult for the umpire to realize that the player has hit the ball and has therefore been caught out. In this case, most batsmen tend to wait for the umpire to make his decision. However, there are a handful of players who prefer to preserve their dignity and walk off the pitch when they know they are out.

“Of course, there is still a lot of heated debate in the cricket-playing world about the merits of walking. If you apply game theory to the issue, using something called the Prisoner’s Dilemma, walking is for losers. Winners should almost always stick to the crease until the finger goes up 22 yards in front of them.”

The article refers to a different form of the prisoner’s dilemma, in which the team batting second already knows the outcome of the decision made by the player in the team batting first, i.e. the players in the two teams do not make their decisions simultaneously. However, this does not affect the Nash equilibrium in anyway since players in both teams have a dominant strategy of not walking.

Consider the following payoff matrix for two teams A and B and let P(A) and P(B) denote players from A and B respectively. The two strategies available to players when they have just gotten out are walking (W) and not walking (NW).

A brief explanation for the payoffs:

1) (W, NW) implies that P(A) walks and P(B) does not. In such a situation, Team A would be down by a player and this would positively impact B’s chances of winning the game.

2) (W, W) implies that both P(A) and P(B) walk. In this situation, walking by a player in each team minimizes the impact on the outcome of the game. However, this honesty has a positive impact on how the players are viewed by supporters and therefore improve their public image. Thus both players receive a higher payoff than they would have had had they chosen (NW, NW).

From the above matrix, we can see that the dominant strategy for players from both teams is to not walk. Thus, if game theory were to have its way, the Nash Equilibrium for both players is to not walk and though most players do follow this strategy, the optimal outcome for both the game of cricket and the players themselves would be to follow the ‘walking’ example.

Throughout the course, I have enjoyed the fact that our social networks are compared to “harder” sciences (potential energy of an auction or the current of the “water cycle” of PageRank). As a biologist, I am more familiar with the concepts of physics and math than I am with those of economics or sociology, so it is helpful and satisfying to relate the “truths” that I have studied to other fields. I happened upon Jonah Lehrer’s article, The Future of Science … is Art?, and realized that science itself is a network of “truths” (nodes) that can all function together through some known (but mostly unknown) relationships (edges). The article argues that artists have their own network of truths from their careful observations, reflections, and metaphors, but that this network better explains the relationships and overarching ideas than specifics. Thus, only together can scientists and artists create a more complete network of human knowledge.

An example is given in the article about neuroscience and human consciousness. Neuroscientists have “reduced our sensations to a set of discrete circuits (p.3),” each of which could be considered a network of neurons (nodes) and their signals (edges). However, the “discrete circuits” have yet to be connected to each other, in a larger neural network of networks that will enhance our understanding of what’s going on in the brain overall. Lehrer argues: “What neuroscience needs is a new method, one that’s able to construct complex representations of the mind that aren’t built from the bottom up. Sometimes, the whole is best understood in terms of the whole (p.4)”. The network of information that neuroscientists have collected is essentially a bunch of components (the discrete circuits) that we know form a giant component, but we don’t yet know how. So, the future of neuroscience is determining the bridges between these components. Artists, on the other hand, look at life from the perspective of the individual to earn insight into how people react to their environment through direct observation. Therefore, an artist could be said to have a general idea of the network of human reactions to sensations, yet lacks the intricate details that a neuroscientist may understand. In order to fully understand the mind, perhaps neuroscientists should consider the science of the artist, somehow superimposing the two networks.

In a past homework assignment, we looked at the notion of a gatekeeper in a network. The intuition behind our definition was that a gatekeeper in a network–much like a literal one–is in an advantageous position with respect to information flow. However, when we looked at negotiations and power in networks of human subjects, we saw cases where gatekeepers were not necessarily endowed with much power. Still, it seems that this result is only a consequence of the rules of the experiment; that is, the network was not modeling paths along which there could be flow, but rather just the exchange relationships between the subjects. As it stands, we have not seen an example of a network modeling information flow that illustrates when gatekeepers are not necessarily powerful. Could it be, then, that gatekeepers are always powerful?

Consider the following thought experiment: in a small, sparse network, identify a gatekeeper (or even a local gatekeeper); does this node have power? The intuition is “yes,” since these are the kinds of examples that we have seen. Now, what happens as we increase the number of nodes and maintain the relative number of edges? We still have a sparse network, only it has become bigger; additionally, we can still probably identify gatekeepers (perhaps the local variety is now more common), so gatekeepers are still relatively powerful. However, consider what happens as we add more edges to the network while maintaining the number of nodes–it creates more paths along which information can flow. The intuition is now that gatekeepers are harder to find: nodes are generally more connected, able to bypass others more easily.

This thought experiment seems to suggest that the power of gatekeepers is inversely proportional to the connectedness of the network. As a concrete example, we can look at one of the most connected networks that we know–the internet.

A few weeks ago, the whistleblower site Wikileaks.org had been censored by a California judge, who enacted an order proposed by a disgruntled bank that saw some of its sensitive documents detailing fraud and other criminal activity appear on the site. This incident has been covered on various sites around the web, so I’ll defer the actual story to these links:

http://www.thenewfreedom.net/wp/2008/02/18/wikileaks-dns-entry-removed-by-us-district-judge/

For more links and a colorful discussion, see http://yro.slashdot.org/article.pl?sid=08/02/18/043211

What’s interesting is the method of censorship that was proposed (and ultimately enacted). The lawyers for the bank needed Wikileaks to be unreachable as quickly as possible, so they opted to delete its DNS (domain name system) entry. In order to understand how this decision ties in with the topic of this post, we need to look at the basic implications of the DNS paradigm. In very general terms (but find out more about DNS and root nameservers at Wikipedia), whenever you type in a domain name into your browser, it actually performs a lookup to translate the domain into an ip address. Traditionally, there are 13 well-known root nameservers that constitute the Internet’s “official” DNS. So unless you proactively use other DNS services (like OpenDNS, for example), then chances are that your requests are handled by these root nameservers.

The consequence of having these root nameservers is that they are very powerful nodes in the network. Just about everyone’s request for a website would need to go through them–they are the gatekeepers of the internet, in some sense. It’s reasonable, then, that this was the form of censorship the bank chose to pursue, but the question is, “was it effective?”

Recall the results of our thought experiment: in a highly connected network, the power of gatekeepers should be relatively low–this is indeed what happened in the case of the attempt at censoring Wikileaks through its DNS entry. As various other nodes on the internet (news sites, blogs, forums) realized what had happened, many provided links to the explicit IP address of Wikileaks, effectively bypassing the deleted DNS entry. Clearly it would be an impossible task to censor all sites which linked in this clever way to Wikileaks, and so the court order (later overturned) that tried leverage the power of gatekeepers was but a slight inconvenience for the motivated. This is of course only one example that supports the intuition and hypothesis for the power of gatekeepers in dense networks–other examples (or even counter-examples) are of course welcome as comments.

Finally, in the spirit of this post, should our glorious and most wonderful school website ever lose its DNS entry, you may find it at http://128.253.161.179 :)

http://www.innovations-report.com/html/reports/economy_finances/report-79659.html 

Research conducted at the University of Bath, UK, and University of St Gallen, Switzerland showed that many corporations are wasting millions of dollars by offering contracts to celebrities to appear in advertisements for their products.  The study showed that the use of ordinary people in advertisements is more effective than high profile, global superstars such as David Beckham.  When 298 students were shown two testimonials, one by a fellow student and the other allegedly by a celebrity, the subjects were more likely to be influenced by their peer’s statements than the celebrity’s, particularly when they had expressed the desire to impress others with the products they buy.   Essentially, people want to buy products that will be deemed cool or fashionable in their own social circle and with ordinary people like themselves.  Additionally, those who weren’t interested in gaining peer approval completely disregarded endorsements, and looked only to the quality of the product. 

 Early in the course we discussed some of the shortfalls of using graphs as representations of different types of networks.  In the case of celebrity endorsements, it can be said that the lack of a weight system causes corporations to overestimate the degree to which a celebrity’s star power influences ordinary people’s day to day buying decisions.  The fact that those around us, even people we can’t name or do not have any connection to, often have more “power” over what we choose to buy, wear, consume, and how we behave, than the likes of David Beckham do, is not an obvious conclusion that can be drawn from the extensive global name-recognition network of such superstars.   

What this study shows is that there is some intrinsic property of human behavior that causes what I would call, The Power of Proximity.  In any given social network, where people are represented by nodes, and their physical proximity is reflected in the graph, there is a gradation of power, or influence, that any node has over the nodes around it, that is independent of the presence of edges between them, and depends on the physical distance between the two people.  In other words, Madonna might decide to wear a space helmet to her next album signing.  And while I know who Madonna is, and while millions of people may agree that she is a legend, it is highly unlikely that I would wear a space helmet to the library as a result of her fashion statement.  The reason is that those who would be around me at the library, such a peers, staff, and professors, would probably make fun of me if I did.  Although I may not have any ties, weak or strong, to any of the dozens of people at Libe Café, when I am sitting there, doing work, their presence alone is something that I must consider when deciding what is appropriate attire and behavior.  The same can’t be said for Madonna or any other high profile celebrity. 

A new Australian online dating website utilizes the philosophy of “six degrees of separation,” which we previously discussed in class. This idea proclaims that everyone in the world is separated by only six other people. Contrary to many other online dating services, this new site (MeetMyFriend) “allows users to introduce their single friends to the single friends of others.” Because the service will provide an easier and safer way of meeting and dating people (as opposed to blind dating), it has the potential to become a world-wide hit. According to the website, friends can “nominate” their single friends for membership or single men and women can just join without the help of their peers. Once a person has joined, one of his or her friends creates a profile, and then friends can link each other in their profile home-pages to form a “virtual social network.” From here, “they can set their friends up, recommend potential partners to each other, or add new friends to their new online social network.”

This concept has great potential because of its relative simplicity and innovation. In the past, many relationships were started when two people would meet through mutual friends. This idea has been combined with the popular and ever-growing online social networking scene to create this new online dating service.

Most online dating services used in the U.S. allow people to meet based on criteria searches or matches of similar interests. MeetMyFriend uses these same principles but uses them more effectively. As we discussed in class, if two separate friends, B and C, of person A each have similar interests with A, then there is a large possibility that B and C also share common interests. This is known as homophily, which says friends tend to have similar attributes. MeetMyFriend makes use of this network idea by connecting people to others based on similar interests and attributes. Unlike other online dating sites, however, MeetMyFriend allows people to connect with others through mutual friends as opposed to randomly matching one’s own interest/attribute criteria to those of others.

http://www.news.com.au/entertainment/story/0,26278,23208511-5007185,00.html

In professional sports, free agency is the system under which players without a contract entertain offers from different teams. The player is free to sign the contract of their choice, usually the most lucrative… though occasionally a player may have criteria beyond his yearly salary, e.g. the contract’s length or the value of performance-based incentives. The process gives rise to a bidding war for the player’s services – provided that enough demand exists* – between the owners of the interested teams, resulting in a market that can (usually) be expressed as a simple bipartite graph. The results of free agency in the National Football League thus far are discussed in this article from the San Francisco Chronicle.

If there is only one desirable free agent (or if there is a significant gap in skill separating him from the others) at a given position, then free agency functions like an ascending bid auction. The bids are confidential (prompting comparison to the Vickrey auction that provides an identical outcome), but the “auction” allows for multiple rounds of negotiation. Because the winning team will pay its own bid, each will bid lower than its true value; the player may then apprise the losing teams that they have been out-bid, hopefully prompting them to raise their offers. The winning owner will pay a price incrementally higher than the true value of the second-highest bidder. The most recent benefactor of this sort of monopoly might be New York Jets’ left guard Alan Faneca, formerly of the Pittsburgh Steelers, who this spring became the highest-paid lineman in the NFL by signing a contract worth $40 million over 5 years.

If there are several available players of similar ability (as was the case at wide receiver this year after the New England Patriots re-signed Randy Moss; Bernard Berrian and the traitorous Javon Walker headlined a frighteningly inept (and now overpaid) group), then the free agency market can be shown by a bipartite graph that may or may not contain a constricted set. Each “buyer” (i.e. the owner of a given team) has her own value for each player, and each player has some minimum price that they associate with their abilities (so the initial prices are non-zero). Players’ asking prices rise until a set of market-clearing prices is reached; if the owners are rational, then the delay in processing bids/players signing a contract and leaving the market won’t affect the remainder of the bidding process, nor will their order. The scenario differs from those discussed in class because of several outside factors: first, because a player expects a certain amount of money, they can walk away from negotiations; second, there are legal safeguards to protect the players if they end up on the more populous side of a constricted set (allowing them to earn more money than they otherwise would, due to the disparity in supply vs. demand).

* All-time Major League Baseball home run record-holder Barry Bonds does not, evidently, fall into this category

http://www.nytimes.com/2008/03/09/business/09cell.html?_r=2&pagewanted=1&oref=slogin

The above article is titled “Text Generation Gap: UR 2 Old (JK)” and is from the business section of the NYTimes. The article’s publishing date is March 9, 2008.

As the title suggests, the article is about the function of text messaging and how it continues to impact and change our society. Specifically, the article focused on how children and young adults use texting to communicate with others and how distanced their parents tend to be from the way that they use their phones. Texting produces an “in” lingo between children tends not to be understood by their parents. The article mentions other examples like this—cases where parents and children are distanced due to texting—but it also mentions the few cases where parents feel closer to their children because of texting than they would otherwise. Still, the article discusses how kids who text with their parents tend to have to teach their parents how to use texting, and often parents still have trouble with it so that communication via text is not always fluid.

This article relates to class in myriad ways. First, and most obviously, texting creates a network among people who text that is distinct from the network of people who communicate with each other. These texting networks seem to function as something private and secretive between kids. As the article discusses, kids live on their cell phones, texting away with their friends all the time, and have therefore developed certain code phrases to use when their parents may be around and reading over their shoulders. This network of texting brings kids together in a way that is distinct from the kind of relationships kids have with their parents. The network is not open to just anyone to use; there is a certain amount of skill and understanding that is involved with text messaging and therefore with being involved in the network.

Second, text messaging changes the overall communication network between people, producing local bridges and structural holes between parents and kids. Assuming parents (and grandparents, other adults, etc) have a network of communication that relies on phone or email and assuming kids have a network that heavily relies on texting, bridging the two does not come naturally. The few parents who can text with as much ease as their children serve as local bridges between the younger generation and the older generation. Other properties like focal closure and triadic closure are also at work here. For example, if three kids are friends and two of them text each other constantly, chances are the third friend will be pulled into the world of texting, too.

In general terms, the article explains how text messaging on cell phones is changing social networks between the generations.

When one thinks Economics, one may think of concepts such as “supply and demand” and “utility curves”.  However, as “Playing ‘Games’ with Your Vote’ shows, game theory reigns may reign supreme in the heated primaries for our next presidential election.

An example of this can be spotlighted in the Wisconsin caucuses: each voter has one vote but have multiple choices.  A voter can cross over and vote Republican if he/she is a registered Democrat, and vice versa.  This voting law can lead to some game playing.  This example highlights the role of game theory in the democratic process - as the vote in this case is largely about choices and repercussions of that choice.

You see, the trick here is that supporters of McCain, a Republican candidate who has pretty much sealed his bid for the Republican ticket, can choose to cross over and vote for either Obama or Clinton in the hopes that they are voting for the weaker candidate should he/she go up against McCain in the national election.  This could work towards Clinton as the national polls show her to be losing steam (until recently).  The article also sites another case in history, that of Abraham Lincoln’s election, as another instance of Game Theory playing a key role in selecting our nation’s chief executive officer: http://www.foxbusiness.com/markets/industries/government/article/playing-games-vote_482985_18.html

In the previous example, the Game Theory payoff structure goes as follows:  If a Republican chooses to vote for Clinton, the payoff would be that he/she would enjoy an easier time for McCain in the national elections.  However, this would also mean one less vote for McCain in the primaries, and hence a higher chance of Romney winning the primaries in the short term.  Obama wound up winnin gthe Wisconsin caususes, but Game Theory has its uses beyond prisoners and confessions it seems.

How to participate in a low bid auction

Above is a short article I found interesting about low bid auctions. A low bid auction is actually an auction where the lowest bid wins… with one exception: the bid must be unique. So in theory you can bid one cent on an item, but if someone else bids one cent also, then both of those bids are nullified. Only the lowest unique bid wins. Take the example found in the article. Consider the bids:

$00.01, $00.03, $00.01, $00.02, $0.07, $0.90, $0.02, $0.03

$0.07 and $0.90 are the only unique bids. However, $0.07 would be the winning bid and price because it is the lowest of the unique bids.

I found the concept of low bid auctions to be very interesting because it seemed to be very different from the type of auctions that we discussed in class, where highest bidders have won the auctions. Can we however justify low bid auctions with game theory? How can these type of auctions possibly benefit the seller? What is the dominant strategy and can that strategy raise the selling price?

The caveat to the seemingly too-good-to-be-true bidding system is that your low bid must be unique. So while most will take initial strategy of trying to get the lowest price, they end up working against each other as the lowest of bids will all be nullified due to non-uniqueness. Bidders then have to bid higher and higher in hopes to bid a unique price. This is how the selling price is raised and eventually reach an equilibrium where no one else is willing to bid any higher. The equilibrium is not found at the lowest bids, but rather is found at higher bids where the bids are more unique. The strategy is thus to bid just a little bit higher than the rest of bidders, which actually amounts to the same as 2nd price sealed bid auctions.

So, low bid auctions aren’t in fact too-good-to-be-true. The results should end up being the same as a 2nd price sealed bid auction. However, the novelty of the system is attracting and  forces participation & active bidding (bidders want to make sure that no low price is left unique). Such novelty and participation are probably the main reason why low bid auctions have found some success.

Want to start bidding on car stock? Edmunds.com, a well renowned car enthusiast website has started with a beta service entitled CSX – namely car stock exchange.  The service is based on the idea of a prediction market. These markets are speculative, created for the basis of assigning a cash value to an event. In the case of CSX, the CSX$1 value translates into a prediction of 1,000 units of the particular car model being sold. This market is based on future models of cars – and the CSX dollar value represents the units sold within six months of car release date.  In addition to just buying stock, a user also has the option of “short”-ing a stock. This refers to the idea behind predicting that the stock value will go down and borrowing shares; selling them at current prices; returning them in the near future by buying them again at a hopefully lower price and pocketing the difference.

In this exchange, Edmunds.com acts as a trader in between and in the beta version operates with no trading fees. This is unrealistic compared to the real world where there is always a trading charge for a transaction – however small it may be. In addition, newly announced cars have IPO’s or initial public offering - which is defined by initial sale of company stock to the public.

Every new user is offered CSX$1,000,000 to start trading and prized are periodically awarded to the user with the largest portfolio. To date, only a handful of cars models have completed their IPO’s but a new car model is launched every week. For instance, by 1PM on March 7^th, 2008, the value of the 2009 Honda Pilot on this exchange hovered around $78.02. The current Honda pilot is being fully revamped for the 2009 model year. The current generation Pilot has being seeing declines in sales due to rising gas prices and increased competition from the smaller SUV market segment – such as its smaller sibling the Honda CRV. However, analysts predict that the 2009 honda pilot redesign will make the vehicle emerge once again as a market leader in its segment. The stock price for the 2008 smart fortwo hovered around CSX$72.61 at the same time. The smart fortwo is a two door mini car designed by the maker of Swatch watches and Mercedes Benz. The fortwo is only 106 inches in length – 3 inches shorter than the popular mini cooper. However, its 71hp engine and delivers more than 40 miles per gallon. This car has had great success in Europe and Canada but there are fears that launching it in the US – the land of pickup trucks and SUV’s would prove disastrous for a vehicle this size. However, the fortwo has done relatively well in government crash tests and now it is up for the average American to decide whether they are willing to buy such a small car.

This relates to several theories that we discussed in lecture. We spoke about a stock market in detail especially relating to the relationship between traders, buyers and sellers. This virtual stock market is in many ways similar to the concepts used in real stock exchanges like the NYSE, NASDAQ, etc. which are high volume, using real money and where the trader usually charges a fee for a trade.

I encourage all of you to register in the CSX and play the virtual game. It will give us a good idea of the real stock market.

Link: http://csx.edmunds.com/Main.php?do=csxmainlanding