I am sure that everyone has heard, seen and even experienced the recent hikes in oil prices. It is so hard to believe that the United States, once an economic powerhouse that had the “last say” on almost everything, no longer is the main “driver” in determining oil prices. This is because the United States is no longer the single strongest market for oil prices. Also, the US has been experiencing a recession. These factors have allowed other developing countries, whose economy is growing at a much faster rate, to “step forward” and keep the prices relatively high, even with market clearing prices to help limit demand.

As I read CNN’s Article, Oil Muscles past faltering US economy, I started thinking about the Network Exchange Theory. The US, for quite a considerable amount of time, can be seen as central center of a social network. Thus, the US enjoyed the benefits of being the “center of the world.” If we apply the theory to the US when it was at its prime (in terms of economy), we can see that the US would have been the central node; it would have had the most power out of all the other nodes. The four major principals of the theory also applied to the US.

• Dependence: It can be said that some countries depended on the US as a source of value. One example is how the some countries depended on the US for resources.
• Exclusion: The US had the power to choose who it wanted to “be friendly” towards. It was to a country’s advantage to be on friendly terms with the US and it was probably devastating to be excluded by the US.
• Satiation: The US definitely made use of this principle. Many times, the US will only be interested in trading or doing business with another country if there was a major benefit for the US. The value of the deal was usually unequal and probably not as fair for other countries.
• Betweenness: Being the “center” of the world made the US a unique access point between many paths from other countries. That gave the US even more power and allowed the US to impose restrictions between other nodes if need be.

Now, due to a weak economy, the US seems to be losing its power in the social network because it no longer has the most power over the prices of gas. The US may have become less powerful in the social networks of nations, but only time will tell if the US will fall from being the central node of the world in the future.

The article discussed in this blog was from CNNMoney.com. The title was: Oil muscles pas faltering U.S Economy. It was written by Steve Hargreaves. A link to this article can be found at: http://money.cnn.com/2008/02/20/news/economy/oil_economy/index.htm

At the beginning of the semester, we discussed the concept of homophily – its pervasiveness in social networks and its role in triadic closure (the idea that if two people have a mutual friend they are more likely to become friends themselves at some point). Simply by examining our close friendships we can verify that homophily often holds up in real life. That is, our friends tend to be similar to us in terms of basic characteristics such as ethnicity, interests and life experiences. This occurs both because we are attracted to people with whom we share things in common and because, over time, we become increasingly more similar to our friends. Thus, our immediate social networks tend to be composed of people who are like us. What might be the implications of homophily for certain social networks?

A 2004 study by Levendosky, Bogat, Theran, Trotter, von Eye and Davidson (see website below) used social networks data to study pregnant female victims of domestic violence. A major aspect of their investigation involved examining the relationship between the homophily of the women’s social networks and the quality of the social support they received. In the study, a woman with a high homophily index possessed a social network that was heavily composed of friends who had also experienced domestic violence. The results suggested that women with higher homophily indexes received less emotional support. Perhaps, the authors suggest, homophilous friends have a diminished capacity to provide psychological support due to their own history of abuse. The study also found that a greater presence of non-homophilous supporters (friends who had not experienced domestic violence) within one’s social network was associated with better mental health.

It seems like abused women would be more likely to be socially isolated than women who are not abused. Here, social isolation is defined as having few supporters within one’s social network. We could think of social isolation as being equivalent to having few strong ties to others or possibly few connections to others at all. In fact, the researchers in this study found that battered women did not experience a higher level of social isolation compared with non-battered women; there was no significant difference between the two groups.

Maybe when someone is in a situation as complex and psychologically stressful as domestic violence, it’s not about how many people you know, but rather, the types of people you know and the quality of support that they can offer. It may be extremely important for victims of domestic violence to form “edges” to people in different social circles (or components), who may be able to expose the victim to non-violent social norms and more sturdy sources of psychological resilience. As the researchers propose, these non-homophilous connections could be facilitated by agencies, which could help battered women become involved in various social groups outside their immediate social network. These agencies would effectively be creating new bridges and local bridges. As we learned in class, homophily is a powerful force in social networks; but perhaps it can and should be countered by social intervention…especially when the consequences are negative.

The Social Networks of Women Experiencing Domestic Violence (Levendosky et al 2004) was published in the American Journal of Community Psychology. The abstract and full article (if you have access) can be found at http://www.springerlink.com/content/w87627452795731g/

Juicy campus is a relatively new website that gives students ability to anonymously start posts about whatever they desire.  Unfortunately this website has brought about many controversial, mean spirited threads posted all of the website. In terms of our class, the article reveals how a website that connects to so many different networks of people, thus serving as a social networking website, is more deleterious, than beneficial.

The main idea here is how websites are so powerful because of their widespread reach and ever growing networks, that few realize how harmful they can be. The websites motivation and reason for introducing the service was in good standing, yet the outcome, at least for many students, was not nearly as beneficial as intended.

Who wouldn’t want to have a website to discuss freely what you want. You could use it to learn more about that campus from other students, learn about classes and professors, and enhance your knowledge on the social scene at school. With this, there exist posts displaying the “meanness of a middle school playground.”

The article simply displayed the controversy that has been recently surrounding Juicycampus.com and a number of universities nationwide. In these cases many schools are calling for a ban of the website, but as they have said,  “… we’re surprised that any college administration would be against the free exchange of ideas.”

The context of the article at hand can be correlated to some ideas of triadic closure and ties between people, as well as structural balance within a network.

First off, the website allows any person with Internet access to learn about certain people and discuss any issue about anyone. Therefore, it is common for people to learn about someone else and learn of a common friend they may have. This information alone is able to prompt a relationship or acquaintance with that person, allowing for triadic closure. This website does not allow people to message each other, so it does not display triadic closure in that regards, but it can increase the likelihood of numerous triadic closure circumstances by allowing other people to read about other people with common friends.

The website also allows networks of people to be grouped into categories labeled by what they search and comment on. There are many different listings, whether it is about sports, school, classes, etc. These groupings are bridged together by people who view multiple listings. All in all, the website creates many distinct networks through their service. What is interesting is that although networks and ties usually try to symbolize a good relationship, or good aspects of society, yet in this circumstance, many networks indicate people who post nasty things about others, and the people who read these violently refuted claims. Therefore, the network association is not in support of something good. The site also allows for both balanced and unbalanced networks to exist. Visitors of people who post items can all be friends and have a balanced network, yet there can also be a network that exists where three people who don’t like each other interact and post about them. There can be a scenario also where one person who has two friends who don’t like each other interacts and posts on a blog. Therefore, this website allows for these aspects of networks by allowing people of any orientations with one another to communicate and voice their opinions, which as this article explains, many people are trying to decide is right or not. 

Adjunct faculty play a significant role in the success of American college institutions. As can be seen in the following article, http://mtprof.msun.edu/Win2000/Wickun.html, when college budgets are cut, adjunct faculty are often brought in from industry to teach courses the school may not otherwise be able to afford. There are several benefits to this. For example, the adjunct faculty member is very likely working in the field in which they have been chosen as an instructor. They will be able to convey a realistic and practical interpretation of the course material, and provide students with concrete examples from industry. They will also be able to inform students of current trends in the marketplace, which may shape the courses students elect to take, and careers they plan to pursue.

In this manner, adjunct faculty act as a local bridge between the students they teach and the industries in which they work. The students are exposed to information they may not otherwise encounter, which has the potential to make them more valuable to their future employers. Companies in the industry in which the faculty member works may also benefit from this relationship. The adjunct faculty member may spot an especially talented student, and put them in touch with a company that is looking for someone with their skill set. In this example, the flow of information is bi-directional, and is made possible by the adjunct faculty. Colleges, students and industry all stand to benefit from this type of relationship.

“Product Liability and Game Theory: One More Trip to the Choice-of Law Well” by Michael Krauss applies many of the issues addressed in class to product liability law. The original article is found in the Brigham Young University Law Review and the link is at the bottom of the page. The article addresses many aspects of laws, rules, and judicial interpretations. Hopefully this analysis sparks some interest; though the article is long, it really expounds upon the topics of the class and applies them in a novel manner. The main issue of the article is that of the Prisoner’s Dilemma. As we learned in class, the prisoner’s dilemma results when each individuals rent seeking behavior leads to a “Pareto Inferior” outcome for the whole. This is exactly what occurs in the field of product liability law and adjudication. Here’s a quick background on product liability law. There is no federal product liability law; therefore in attempt to maximize surplus for their home territory, states will select a product liability law that favors plaintiffs rather than manufacturers. This “beggar-thy-neighbor” approach was not prevalent in the past when product liability cases would include a hometown plaintiff and a hometown defendant. However, now that many products are purchased from different states and even different nations, the incentive of opportunistic behavior increases greatly. The state will enact a law that to predominantly pro-plaintiff to bring money into the home state at the expense of an alien manufacturer. Such a legal regime would not be an issue is the product in question was poorly made. The manufacturer would have to “eat” the cost of the poorly made product and either improve the product or exit the industry. The manufacturer could not raise prices in a competitive industry because consumers would just purchase the other products of the competitors. This aside highlights the necessity of competition to obtain a social optimum as shown in the trader’s network discussed in chapter 8. Now, the problem arises when products all already optimally made. Manufacturers will have to add costly and unnecessary safety features that will raise the price for all products offered in that industry. The key here is that the increase in price is not borne solely by the state with the Pareto inferior product liability law. It is borne by all persons in the United States. This fact leads to the retaliatory nature discovered in the constant iteration repeat prisoner’s dilemma. Firstly, we can construct a payoff matrix to conclude that the best response for any judge to choose a plaintiff-friendly product liability law and therefore the welfare-reducing legal regime is a dominant strategy. Krauss asks us to consider two states A and B. He demonstrates that no matter what B’s product liability rule is, A’s best response is to have a pro-plaintiff product liability rule rather than a neutral rule. Furthermore, he states that B’s best response is in choose a pro-plaintiff product liability rule no matter what A’s action is. Therefore, both have a dominant strategy of pro-plaintiff and the Pareto inferior result in the bottom right of the matrix will occur. Social welfare will be reduced.

A

B Neutral Pro-plaintiff

Neutral 40,40 -10,55

Pro-plaintiff 55,-10 5,5

The application of the prisoner’s dilemma in this context is also reminiscent of Braes Paradox. The road network example in class showed that when individuals attempt to maximize their own surplus in a network dependent on others, an external cost will be created for the whole. In class, each individual wanted to use that shortened road because he or she wanted to reduce his or her own travel time. However, by doing so each driver created a congestion externality imposing a higher cost for the system as a whole. In regards to product liability cases, each judge and state in pursuing their own state’s interests pass the cost on to consumers as a whole in higher product costs or even the loss of products that would be introduced into the market if product liability risks and payouts were not so high. The latter reduction to welfare is currently seen in the drug market for AIDS and HIV medications. The prisoner’s dilemma of product liability is exacerbated because judges are fully cognizant of other judges’ rulings, interpretations, and the externalizations of the costs of those interpretations. The reasoning is along the lines of: “Well if my state residents have to bear the costs of your inefficient legal rule, your residents should bear the cost of my equally inefficient legal rule” (my quote not from the article). The article more thoroughly dissects the subtleties of this prisoner’s dilemma and some questions that might be lingering in your mind such as: why would producers just not locate in pro-producer states thus taking away the some of the incentives for pro-plaintiff legislation? Much of the answer to this question lies in the fact that most product liability law is governed by a rule of Lex loci delictus (that the state’s law that the injury actually occurred governs product liability suits) as well as an interest doctrine by which states can interject their own law if they have a “compelling” interest. Beyond the investigation of the prisoner’s dilemma of product liability, the article addresses possible solutions and avers that a federal regulation of a choice of law rule would result in the Pareto Superior solution. Krauss considers various choice of law rules and concludes that the “Law of first retail sale” is the most efficient rule. This rule says that the product liability law that will prevail will be the one of the state where the good was purchased. As discussed by the article, this internalizes much of the costs of inefficient product liability laws on the states that introduce them. Furthermore, the article discusses that this law brings in a competitive element from the retail sector found lacking in other legal regimes. Though Krauss does introduce a strong caveat to this law: product liability cases for third parties of products purchased in another state, the reform’s strengths outweigh this weakness. The first retail sale rule allows competition among tort laws and as Krauss asserts “allows a state’s product liability and general tort rules to ‘network’ as they should (pg. 25).”

http://www.lexisnexis.com/us/lnacademic/search/homesubmitForm.do

http://findarticles.com/p/articles/mi_qa3736/is_200201/ai_n9069421

A USA Today article, On Ebay, it pays to snipe, talks about the strategy of “sniping,” which is described as “waiting for the very last second to submit your bid” for an item. Ebay has a form of auctioning called Second Price auctions. Second price auctions have a dominant strategy for bidders where it is strategically rational for a bidder to ALWAYS bid their true value. In a second price auction, the bidder should always place his/her optimal bid.

This article discusses how timing plays a role for placing bids and how this can be used as a rational strategy to win. The article talks about “sniping” as a rational and effective strategy to win in an auction, which is not a consideration in a second price sealed-bid auction. Ebay is more unique than a typical second price auction because there are deadlines for bidding, which has created a rise in “sniping.” Tom Campbell, president of eSnipe, and Mark Schwartz, CEO of Auctiva, which runs a service called Auction Sniper, claim “sniping is almost exclusively an eBay phenomenon, aided by the site’s large user base and fixed time limits on auctions.”

Harvard economist Alvin Roth makes an important point that points out important concepts learned in class about second price auctions. He suggests that each bidder should form a value for an item so they will not be affected by the “bidding war” and end up paying more than they actually value the item. Ultimately, if a bidder wins with a bid higher than his value for the item, he is at a loss. The bidder wants to win when the amount he pays is less than his value, NEVER more. This emphasizes the point that bidders should always be bidding their value, which is a bidder’s dominant strategy. He goes on further saying “if they know what proxy bid they want to submit, it won’t hurt them to submit it very near the end.” The analysis by South Korean physicists explicitly shows that “the winning strategy is to bid at the last moment as the first attempt rather than incremental bidding from the start.

Timing can be an important factor in Ebay auctions. There are even hosted services, which include Esnipe and AuctionSniper, and services that offer software to place bids seconds before the auction ends, such as Auction Sentry. Furthermore, there are services allowing snipers to place bids on the same item in multiple auctions. When a sniper wins one auction for the item, the bids in all other auctions are canceled.

Timing can however be unimportant. For example, assume all bidders are rational so all bidders place a bid equivalent to how much they value the item. If I value an item for $5 and another bidder values the same item at $10, it would not make a difference for me to place the bid 5 hours before the auction ends or placing the bid 5 seconds before the auction ends. Once that second bidder places his bid, I will no longer be the winner of the auction because I only value the item at $5 and nothing more. In this case, it doesn’t matter if sniping has occurred. The second bidder will be the winner of the auction once he places his bid (assuming there are only two bidders).

Article link 1: http://www.usatoday.com/tech/science/columnist/2006-06-25-physics-of-ebay_x.htm

Article link 2: http://www.wired.com/techbiz/media/news/2002/09/55204?currentPage=all

http://www.usnews.com/blogs/daves-download/2008/02/19/sonys-blu-ray-beats-toshibas-hd-dvd.html

http://gear.ign.com/articles/852/852769p1.html

On January 19^th Toshiba officially conceded victory in the two year war between its own HD-DVD and Sony’s Blu-ray. Just a few months ago it seemed that HD-DVD and Blu-ray were dead even. Toshiba had acquired the exclusive support of both DreamWorks and Paramount and had a considerable price advantage over Blu-ray. However, the downfall of HD-DVD was imminent after the January 5^th announcement by Warner Brothers that it was going Blu-ray exclusive, giving Sony the exclusive support of over seventy percent of major movie studies. Shortly afterward, Netflix revealed that it would be dropping the HD-DVD format from its video library, while both Best Buy and Wal-Mart threw their support behind the Blu-ray format.

The decision of Toshiba to withdraw the HD-DVD format from the market, as well as its previous decisions can be explained using game theory. Previously, the game would have appeared as it does in Scenario 1. It is a dominant strategy for both Sony and Toshiba to continue production of their formats because they would make zero profit if they ceased production no matter what the other company does. Therefore, the Nash equilibrium is at (C,C) with both companies making a profit of 1 with the hopes that in the future the other company will withdraw their product, increasing the profit to 10. However, after the announcement by Warner Brothers and the events that followed the game would appear as it does Scenario 2. If Toshiba continuous to produce the HD-DVD format they will lose money due to decreased demand for their product as represented by the -1 in the new game. Since Toshiba knows that Sony’s dominant strategy is to continue production Toshiba must choose to withdraw their format in order to minimize their loses and the new Nash equilibrium becomes (C,W).

C = Continue Production

W = Withdraw Product

http://tech.yahoo.com/blogs/patterson/12764/blu-ray-trumps-hd-dvd-the-aftermath

The use of HD-DVD players is coming to an end. As prices of HD-DVD players decrease and more companies move toward selling Blu-Ray one can only determine that HD-DVD players are on its last leg. The long awaited rise of Blu-Ray disc as an industry standard backed by Sony has begun.

Toshiba an early supporter and main driving force and manufacturer behind HD-DVD has discontinued the development of HD-DVD players and moved toward developing and selling Blu-Ray disc. Universal Studios also has moved towards creating Blu-ray new releases and catalog titles. This soon enough will prompt DreamWorks and Paramount to move from HD-DVD only supporters. Amazon has also jumped on the bandwagon and now predominately promotes Blu-ray hardware and software. As more and more major companies in the move toward Blu-ray disc, a tipping point will occur if it hasn’t already.

It is much like an epidemic as mentioned in lecture and our reading “Tipping Point” where consumers will do away with their old DVD players and begin buying up Blu-ray. Much like when DVD’s took the place of VHS tapes the same will happen with a move toward Blu-ray disc. A small group or a few companies has had a dramatic impact on Blu-ray becoming an industry standard and therefore becoming the standard DVD player in consumer’s homes. This is similar to a social epidemic where HD-DVD is dieing out and Blu-ray is spreading due to a few companies adopting it. This small adoption has lead to a dramatic increase of companies manufacturing Blu-ray. This in-turn has had the same affect on consumers of the DVD industry where Blu-ray was picked up by a few consumers and now is beginning to reach the masses at rapidly as the manufacturers and studios push this format.

In the Wall Street Journal Yesterday there was an interesting article about a network company Google may buy that makes wireless networks by sending up transceivers into the stratosphere via balloons. The company, Space Data Corp., releases 10 balloons a day in the southern U.S. to support telecom systems for truckers and oil companies. These ballons rise up about 65,000 to 100,000 feet, and each one is supposively able to cover the same range as 40 cell towers. They only last 24 hours, but they are very cheap produce and maintain. Google is most likely looking to buy the company to support a network that will run on the new 700 MHz spectrum just recently auctioned by the FCC. One of the more profitable markets for these balloons is rural areas of America where it costs a lot of money to build cables and cell towers for a very small user base. At a cost of $50 per balloon, $1500 per transceiver, and a $100 finder’s fee for recovered transceivers, It’s easy to see why there would be a preference over a $100,000 cell tower. These balloons essentially could act like the gatekeepers mentioned in Homework 2. In the future, They will provide a connection between a main network, like the internet, and small network such as a low populated rural area. It will be interesting to see if this idea catches on because I could lead to a large network that could potential expand anywhere at anytime.WSJ

Link: http://www.businessweek.com/technology/content/aug2007/tc2007085_238273.htm

In class, we discussed online social networking sites like MySpace and Facebook that are used to keep people connected though they may physically be thousands of miles apart. LinkedIn, a professional networking site, serves a similar pupose for job recruiters and those seeking employment. In the linked article above, blogger Jeff Pulver discusses his reasons for deleting his LinkedIn account to focus solely on professional and social networking through Facebook. One of his biggest grievances with LinkedIn was the fact that connections to people were often entirely virtual. That is, people would send him “Connect me” requests without ever having met face-to-face. And while requests like these have certainly occurred on Facebook (pre-Orientation anyone?), within a certain community, like Cornell for example, you’ve likely met most if not all of your “Friends.”

LinkedIn was probably created with Granovetter’s “strength of weak ties” theory in mind. But this article got me thinking about how Granovetter’s theory applies to virtual networks in which connections can be made without any personal contact. These ties appear to be the weakest of the weak and cause large networks to break apart when people, like Pulver, who had accumulated professional contacts over four years, decide to leave due to a lack of real connectedness. Not only that, but the blogger’s departure caused a ripple effect in this particular online community, effectively creating some structural holes in the network.