October 31, 2013

Everything (of value) is for sale

There's a truism that bothers many (except economists): if there is a good or service that has value to some and can be produced at a cost below that value by someone else, there will be a market. This is disturbing to many because it is as true for areas of dubious morality such as sexual transactions, clear immorality (human trafficking and slavery) as it is for lawn mowing and automobiles.

Likewise for online activities, as I've documented many times here. You can buy twitter followers, Yelp reviews, likes on Facebook, votes on Reddit. And, of course, Wikipedia, where you can buy pages or edits, or even (shades of The Sopranos), "protection".

Here is an article that reports at some length on large scale, commercialized Wikipedia editing and page management services. Surprised? Just another PR service, like social media management services provided by every advertising / marketing / image management service today.

Posted by jmm at 09:47 AM | Comments (0) | Permalink »

April 21, 2011

New article characterizing crowdsourcing on the web

There is an article in the new issue of CACM on "Crowdsourcing systems on the World-Wide Web", by Anhai Doan, Raghu Ramakrishnan, and Alon Y. Halevy. In it they offer a definition of crowdsourcing systems, characterize them along nine dimensions, and discuss some of the dimensions as challenges.

It's a useful review article, with many examples and a good bibliography. The characterization in nine dimensions is clear and I think mostly useful.

I'm particularly pleased to see that they have given prominent attention to the incentive-centered design issues on which I (and this blog) have focused for years. Indeed, they define crowdsourcing systems in terms of four incentive problems that must be solved (distinguishing them from, say, crowd management systems that only address three of the questions). They define crowdsourcing as "A system that enlists humans to help solve a problem defined by the system owners, if in doing so it addresses four fundamental challenges:

The first and second are the "getting stuff in" (contribution) problem about which I write. How to get people to make effort to contribute something to the good of others? The fourth is the quality incentive problem, which I usually separate into "getting good stuff in" (positive quality), and "keeping bad stuff out".

Posted by jmm at 05:43 PM | Comments (0) | Permalink »

July 03, 2009

What do ICDers do when they grow up?

Here is a nice article in Wired about Googlenomics, featuring my co-author and friend Hal Varian. This describes a number of ways that Google has combined vast data mining resources with economics to do some incentive-centered design.

Hal is a micreconomist par excellence, who has made important contributions to both theory and empirical work. He was one of the first economists who took the study of the Internet and related phenomena seriously.

He was my colleague at Michigan, and involved in some of the early meetings in which a group of us developed the plan to create the School of Information. The year we launched, however, he departed for Berkeley, where a year later he was dean of their new School of Information (called SIMS at the time, but since renamed). For the past few years he has been on leave from Berkeley to be the Chief Economist at Google.

Posted by jmm at 03:06 PM | Comments (0) | Permalink »

July 27, 2008

"Web science": recognizing integral role of human behavior

Sir Tim Berners-Lee and his colleagues have been advocating for a field of "web science" for several years. They describe it as a multidisciplinary, systems science needed to understand and engineer the future Web.

I've not fully grokked what they are proposing: the research questions they suggest to define seem a bit vague, and I don't quite see what defines this "science" other than a set of topics (the semantic web prominent among them, natch) in which this group of people is interested. I'm not saying I think it's not science, I'm just not sure what field definition they are proposing (so that, for example, many universities could start offering courses, or even creating departments of web science) -- it feels like the space of current interest to a particular research center (and indeed, there is a Web Science Research Institute).

They have published another manifesto (also available from the WSRI site) (there have been several in the past few years), this time in the Communications of the ACM. Maybe I'm just paying more attention, but I think I'm starting to get parts of it. In any case, one thing seems clear to me: incentive-centered design (ICD) fits comfortably in their framework. It's a subset of their very ambitious agenda, but I think it's clearly a central piece of. Put another way, they are saying some of the same things our ICD group has been saying independently over the last several years.

For example,

We show there is significant interplay among the social interactions enabled by the Web's design....However, the study of the relationships among these levels is often hampered by the disciplinary boundaries that tend to separate the study of the underlying networking from the study of the social applications.

I agree, and this has been part of the ICD manifesto from the beginning. It is rather vague, but here's a clearer statement of the common starting point: "It is the interaction of human beings creating, linking, and consuming information that generates the Web's behavior."

They suggest, as do we, that this inquiry should rely (among other things) on the sciences of motivated behavior, such as economics and psychology. However, I think there is one way in which we diverge: for the most part, I have seen these authors talking about computer scientists and web engineers needing to understand how people behave so they will understand the consequences of web design decisions. But, I have not really seen much evidence that they recognize the role of incorporating motivated human behavior directly into the design loop, which is the essence of ICD: design incentives or motivations for the humans who will be interacting with and over the web in order to obtain desired consequences. What we propose is more a more central recognition of the malleability of human behavior, and the social (or commercial) value to be gained from designing for that malleability.

On the other hand, one large area of research (and not the only one) that the "web science" promoters claim that is not inside the boundaries of what we call ICD, is a micro-behavioral science of understanding and explaining observed macro web phenomena. For example, they point out that social network analysts (like my SI colleague Lada Adamic, U Mich's Mark Newman, or HP Labs's Bernardo Huberman) rarely explore or test the underlying human behavior that generates the macro phenomena they observe and characterize.

Posted by jmm at 11:38 PM | Comments (0) | Permalink »

July 08, 2008

Economics meets social psychology on incentive theory

In another June 2008 American Economic Review article, Ellingsen and Johannesson introduce a standard concept from social psychology into a standard economic model of incentives, and find that it helps explain some well-known empirical puzzles.

This is not at all the first article in the economics literature that explores the role of social motivations, and the authors provide a good discussion of prior work.

"In Pride and Prejudice: The Human Side of Incentive Theory", Ellingsen and Johannesson add two motivational premises to the standard principal-aget model: people value social esteem, and the value they experience depends symmetrically on who provides the esteem: they value esteem more from those who they themselves esteem.
Their main result is to show how an incentive that otherwise would have a positive effect on behavior can have a negative effect for some people because of what the incentive tells the agent about the principal. For example, they suggest this as an explanation for "the incentive intensity puzzle that stronger material incentives and closer control sometimes induce worse performance" (p. 990).

Posted by jmm at 09:06 AM | Comments (0) | Permalink »

ICD introductory readings from on high

Students often ask me what they can read to learn about ICD. I've not had a terribly good answer to that. On the one hand, the foundations -- especially mechanism design in economics, and game theory, and engineering design theory, and social psychology -- are ancient (well, a few decades old), and have very rich literatures. But I haven't seen (haven't really searched for) good intros. And, these are the building blocks of ICD, but the particular area in which we focus -- incentive-centered design for information systems -- and the particular multi-disciplinary approach we take -- is rather new. I don't know that folks have written any good overviews yet.

However, three quite nice articles just appeared in the American Economic Review that are a step in the right direction. They are focused on mechanism design and microeconomics (not social psychology, computation theory, nor specifically applications to information system design). But they are accessible, short, and written by giants in the field; in fact, they are revised versions of the Nobel lectures given the by three laureates recently cited for creating the foundations of mechanism design theory: Leonard Hurwicz, Eric Maskin and Roger Myerson.

Maskin's overview, "Mechanism Design: How to Implement Social Goals", doesn't require any math. He introduces implementation theory, "which, given a social goal, characterizes when we can design a mechanism whose predicted outcomes (i.e., the set of equilibrium outcomes) coincide with the desirable outcomes" (p. 567).

Myerson's article, "Perspectives on Mechanism Design in Economic Theory", begins to introduce some of the basic modeling elements from the theory, so it has a bit more math, but it's not heavy going for those who have had an intermediate microeconomics class. He introduces some of the classic applications from economics: bilateral trade with advsere selection (hidden information), and project management with moral hazard (hidden action).

Posted by jmm at 08:49 AM | Comments (1) | Permalink »

March 29, 2008

Presentation at Yahoo! Research on user-contributed content

Yahoo! Research invited me to speak in their "Big Thinkers" series at the Santa Clara campus on 12 March 2008. My talk was "Incentive-centered design for user-contributed content: Getting the good stuff in, Keeping the bad stuff out."

My hosts wrote a summary of the talk (that is a bit incorrect in places and skips some of the main points, but is reasonably good), and posted a video they took of the talk. The video, unfortunately, focuses mostly on me without my visual presentation, panning only occasionally to show a handful of the 140 or so illustrations I used. The talk is, I think, much more effective with the visual component. (In particular, it reduces the impact of the amount of time I spend glancing down to check my speaker notes!)

In the talk I present a three-part story: UCC problems are unavoidably ICD problems; ICD offers a principled approach to design; and ICD works in practical settings. I described three main incentives challenges for UCC design: getting people to contribute; motivating quality and variety of contributions; and discouraging "polluters" from using the UCC platform as an opportunity to publish off-topic content (such as commercial ads, or spam). I illustrated with a number of examples in the wild, and a number of emerging research projects on which my students and I are working.

Posted by jmm at 10:02 AM | Comments (0) | Permalink »

February 05, 2008

ICD: A 5-step program?

Bob Gibbons presented an intriguing framework for an incentive-centered design program during a talk he gave to our STIET seminar on 31 January. He wasn't thinking about information system design problems, but organizational design. But his fundamental concern was the same: an organization's performance depends on the incentives and how agents respond to them. Like us, he took an explicitly multidisciplinary perspective.

Before I summarize his framework,I'll mention that his multidisciplinary lens is somewhat different than what my group of colleagues and students and I usually do. Our focus so far has been on the interaction between economics (rational choice theory) and computation (information processing). We've talked for a while, and a few of us are starting to integration social psychology perspectives as well (especially to think about non-monetary and intrinsic incentives). We also see a role for personality psychology, and maybe cognitive.

Bob, like me, starts from the foundation of economics. (By the way, Bob was hired by MIT as an assistant professor in Economics while I was there as a grad student, so we got to know each other a bit -- as he reminded me the other day, we played basketball together. He's now a full professor in the business economics group of the Sloan School of Management at MIT.) But then he moves into politics and complex systems perspectives. In particular, he relies on March's approach to control and hierarchies in organizations, and on Winter's work that predicts path dependence.

On to Bob's 5-step program:

  1. The formal is flawed
  2. The relational is required
  3. The formal and relational interact
  4. Institutional design
  5. Building & changing relationships

These suggest a way of explaining why cross-disciplinary approaches are important for ICD, and a framework for moving forward. I can barely do these justice in a short note; Bob gave a detailed 80-minute talk with this outline. I'll try:

Formal is flawed. Formal models that rely on a few narrowly drawn incentive instruments are incapable of doing a very convincing job of describing complex incentive problems. For example, for the standard price model, Bob poses this challenge: "Find an employee with fabulous incentives created solely by a formula." Formulae are not enough: there are too many measurement problems, contingencies, etc.

Relational is required. A quote from Leamer (2007) summarizes the point better than I can: "Most exchanges take place within the context of long-term relationships that create the language needed for buyer and seller to communicate, that establish the trust needed to carry out the exchange, that allow ongoing servicing of implicit or explicit guarantees, that monitor the truthfulness of both parties, and that punish those who mislead.�? A point that Bob made is that most organizational interactions are more like long-term repeated games than they are like one-shot strategic interactions. As a general matter, long-term relationships can lead to a wide variety of outcomes (cf. the Folk Theorem). And, another general implication of repeated games is that the "shadow of the future" is pivotal, so investing in and respecting the relationship is crucial.

Formal and relational interact. The way that relations are structured can have a strong (even dispositive) impact on the effectiveness of the formal incentives. For example, because of the shadow of the future, it can make sense to include a subjective bonus in a compensation plan (that is, the principal says something like "trust me to honestly assess your performance and pay you an ex post bonus based on it" -- trust because the performance is not verifiable by a court and thus not contractible).

(Intermediate summary: Some prices can be chosen, but not the right ones because of gap between performance goals and contractible measures. Relationships help, but not enough. Reliance on relationships affects the desired structure of formal incentives.)

Institutional design. Cyert and March (1963): An organization "is basically a coalition without a generally shared, consistent set of goals. Consequently, we cannot assume that a rational manager can treat the organization as a simple instrument in his dealings with the external world. Just as he needs to predict and attempt to manipulate the ‘external’ environment, he must predict and attempt to manipulate his own firm.�? And here's where politics, authority and control come in: Pfeffer (1981): "it is necessary to understand who participates in decision making, what determines each player’s stand on the issues, what determines each actor’s relative power, and how the decision process arrives at a decision.�? Gibbons' conclusion: Choose the formal to facilitate the relational. He didn't spend much time on this idea, but one of his examples is that the best allocation of control for spot conditions may not be best for relational decisions.

Building and changing relationships. The driving point here is that seemingly similar organizations experience persistent performance differences. Bob explains this as a consequence of path dependence. The paths may differ in (among other things?) the extent to which they rely on formal and on relational incentives. He suggests a stylized, extreme case, in which a concave possibilities frontier between a very controlled firm and a very decentralized firm is traced by relational restructurings, whereas primary reliance on formal incentives carves out a path convex and far inside the frontier. Where the firm ends up, then, depends on the mix of formal and relational incentive structures it employs. (See his slides 49 and 50.)

This is all a bit vague, largely because I don't have a good grasp of the ideas yet. I'll follow Bob's work and see if I can make it more concretely useful for the ICD research programme.

Posted by jmm at 12:26 AM | Comments (0) | Permalink »

December 16, 2007

Bridging the behavioral - computational gap

The Washington Post today ran a fluffy piece about academics studying social computing. It appears the author, Monica Hesse, mostly wanted to make fun about the silly academics, but she raised an issue at the beginning that is squarely in the space in which we incentive-centered design folks have been playing:

Who will own the study of the social networking sites? Is it computer science or behavioral science? Is it neuropsychology or artificial intelligence?

A big part of what ICD is about is bridging the gap between behavioral and computer sciences (including psychology and artificial intelligence). We've been pioneering that here at Michigan since the late 1990s, and we're getting traction (and there are now good people at most other universities trying to do something similar, though not under the ICD label, which we just started promoting a couple of years ago).

Our basic theme is that the performance of modern information systems depends critically on the behavior and choices of humans interacting with the system, but in particular, using the system to interact with each other. So the humans are smart "devices" and part of the system. But humans are autonomous and motivated: they can't be programmed. Necessarily, good design and management increasing requires bringing the sciences of motivated behavior to bear.

Posted by jmm at 03:52 PM | Comments (0) | Permalink »

CAPTCHA farms in the courts

As soon as a screen is developed to protect a valuable activity, the incentive is on the table to work around it. Screening works by demanding a test or task that is more costly for the undesirables to perform (the technical requirements are a bit more subtle than this). If it is too costly to perform as well as a desirable, the undesirables are identified and can be blocked (or charged a different price, etc.)

Incentive designs spawn incentive designs (I also wrote about this in May 2006). If the service or product or information the undesirables want is sufficiently valuable, it is worth it to them to invest in circumventing the screen to get the cost of performing as well as a desirable low enough.

CAPTCHAs, developed by Luis von Ahn and his colleagues at Carnegie-Mellon, are one such screen for keeping undesirables -- in this case software bots -- out of certain valuable information services (like free webmail accounts). Or, in the case of Ticketmaster, from robotically buying large numbers of hot tickets.

Ticketmaster has sued RMG (preliminary injunction) for its business selling PurchaseMaster software, which allegedly enables ticket brokers to score large numbers of desirable tickets in the first few minutes the events go on sale. One of Ticketmaster's protections against bots is a standard CAPTCHA. RMG, in its defense, has publicly stated that it is using one of the now standard low-cost ways of circumventing the CAPTCHA: the bots are hiring low-wage humans (in India in this case) to break the CAPTCHAs, so the bots can get on with their business. (The Matrix is coming.)

RMG answered Ticketmaster’s Captchas — the visual puzzles of distorted letters that a customer must type before buying tickets— not with character recognition software, he said, but with humans: “We pay guys in India $2 an hour to type the answers.? (NY Times, 16 Dec 2007)

Another way bots hire humans to do their CAPTCHA work for them is with porn bribes: set up a site giving free access to porn as long as the human solves a CAPTCHA or three, and feed them CAPTCHAs thrown up by other sites to block the bots entrance.

Posted by jmm at 11:03 AM | Permalink »

December 01, 2007

UCC: Hyperlinking the world's books

Last year Kevin Kelly wrote a long New York Times Magazine article about Google Books and other massive-scale digitization projects. The Google Books project, for example, is working on scanning over 10 million university (and New York Public) library books in just a few years. One of the main sites is the University of Michigan Digitization Project, at which Google is working on scanning all 7 million volumes.

In the middle of his article, Kelly writes about the opportunities for user-contributed content to operate on these "universal library" digital collections:

In recent years, hundreds of thousands of enthusiastic amateurs have written and cross-referenced an entire online encyclopedia called Wikipedia. Buoyed by this success, many nerds believe that a billion readers can reliably weave together the pages of old books, one hyperlink at a time. Those with a passion for a special subject, obscure author or favorite book will, over time, link up its important parts. Multiply that simple generous act by millions of readers, and the universal library can be integrated in full, by fans for fans.

In addition to a link, which explicitly connects one word or sentence or book to another, readers will also be able to add tags, a recent innovation on the Web but already a popular one.
When books are digitized, reading becomes a community activity. Bookmarks can be shared with fellow readers. Marginalia can be broadcast. Bibliographies swapped. You might get an alert that your friend Carl has annotated a favorite book of yours. A moment later, his links are yours. In a curious way, the universal library becomes one very, very, very large single text: the world's only book.

To build successful user-contributed content projects start on top of digitized book collections, we must attend to the incentive-issues, hopefully learning lessons from first-generation UCC projects. For example, as soon as one can annotate, how long will it be before someone starts annotating books with ads offering to sell college students pre-written term papers for sale related to that book? And of course, even sooner we will see Viagra ads.

What about the trustworthiness of annotations? What motivations are provided to encourage people to write (good) annotations at all, and why should they share these with others rather than keep a private collection of marginal notes?

Posted by jmm at 03:01 PM | Permalink »

October 15, 2007

Nobel prize to three for incentive-centered design

Today the Royal Swedish Academy of Sciences awarded the Nobel Prize in Economics to Roger Myerson, Eric Maskin and Leonard Hurwicz for their (independent) contributions to the theory of mechanism design, which is the theoretical branch of economics that provides a good bit of the intellectual foundation for incentive-centered design. Here is a copy of the NYT article announcing the award.

Myerson, among other things, is credited with formalizing the Revelation Principle, on which we rely heavily to solve analytically for desirable mechanisms. He is also co-author of the famous Myerson-Satterthwaite paper in which they prove the impossibility of a mechanism that is guaranteed to simultaneously satisfy budget balance, individual rationality, and voluntary participation for a vast class of interesting problems (basically, anything that involves bilateral private information).

Maskin (a teacher of mine when I got my Ph.D. at MIT), among other things, is co-author (with Drew Fudenberg) of the formal proof of the famous "folk theorem" which demonstrates that almost any Pareto efficient outcome (including fully collusive outcomes) is an equilibrium in an infinitely repeated game if the rate of discounting is high enough. He also has made important contributions to auction theory, such as his 1984 paper with John Riley in which they solved for revenue-maximizing auction designs for monopoly sellers.

Hurwicz is widely regarded as the founder of mechanism design theory, starting with his 1960 paper in which he set out the formal definition of a mechanism. In 1972 he was the first to introduce the formal concept of incentive-compatibility, which is of course central to incentive-centered design.

This is not the first time the Nobel has been awarded for contributions to incentive-centered design. James Mirrlees and William Vickrey were awarded the prize in 1996 for their independent contributions to "the economic theory of incentives under asymmetric information", which is the central problem addressed by mechanism design (and both of their cited contributions were specifically mechanism design solutions to the problem: Mirrlees with tax system design, and Vickrey with auction design). Also, in 2001 Akerlof, Spence and Stiglitz shared the prize for their independent contributions to the economics of asymmetric information.

Posted by jmm at 12:25 PM | Comments (0) | Permalink »

April 11, 2007

Incentives for bookmarking

My Ph.D. student, Rick Wash, together with Emilee Rader, has a new paper on incentives for bookmarking in del.icio.us. This paper will be appearing, after some revision, in ASIST 2007, as "Public Bookmarks and Private Benefits: An Analysis of Incentives in Social Computing".

In this study, based on in-depth field interviews of del.icio.us users, they conclude that

metadata reflecting who bookmarked a webpage better supports information seeking than free-form keyword metadata (tags). We explain this finding by describing differences in the way that the design of del.icio.us motivates users to contribute by providing personal benefits for bookmarking and tagging.

Posted by jmm at 01:27 AM | Comments (0) | Permalink »

Incentives and tagging (Library Thing vs. Amazon)

Rick Wash pointed me to an interesting blog article about a comparison of book tagging on LibraryThing and on Amazon. The basic fact asserted: tagging is wildly successful on LibraryThing, and has barely had any meaningful usage on Amazon.

The more interesting point for us: why? The author suggests that the incentives are aligned much better at LibraryThing. At some level, that's tautologically true, but what we might learn from is what the incentives are.

The rather obvious, but important point the author makes (but here in the pithier words of one of the commenters on the post):

people do stuff on the Internet that is useful to them, not out of the desire to make a nifty tagsonomy.
The result may be that a very valuable public good is created (which is true at LibraryThing), but it usually created because the individuals contributing were getting enough value for themselves. This is the compelling logic behind the private provision of public goods.

On LibraryThing, people are cataloguing their own book collections, for their own purpose. Tagging creates organization, that can be used for sorting, reporting, finding. This same motivation is at work on flickr (photos) and del.icio.us (bookmarks).

On Amazon, people are searching to buy books they haven't read: what gain to them from tagging them? (Some suggest tags can be used to create complex categorized wish lists, but how much value do they add to the flat wish list, when few people realistically keep more than a dozen or two items on their wish list (and tagged structures are not easily viewable by potential gift givers).)

Of course, as striking as this example is, and apparently compelling the logic, it is not so easy to explain all user-contributed content. One obvious relevant example: Why are people spending so much time writing book reviews on Amazon? Surely not primarily to create a set of notes to jog their memory later about what they thought about a book?

Posted by jmm at 01:25 AM | Permalink »

March 19, 2007

Research paper on economic and social motivations for contributing effort to Google Answers

13 March, 2007
New Paper Examines Social Motivation and Google Answers

USC Annenberg Center

Posted by jmm at 05:18 PM | Permalink »

January 06, 2007

ICD for information security

Rick Wash and I published a paper at the USENIX Hot Topics in Security Workshop in August 2006 titled "Incentive-Centered Design for Information Security". From the abstract:

Humans are "smart components" in a system, but cannot be directly programmed to perform; rather, their autonomy must be respected as a design constraint and incentives provided to induce desired behavior. Sometimes these incentives are properly aligned, and the humans don't represent a vulnerability. But often, a misalignment of incentives causes a weakness in the system that can be exploited by clever attackers. Incentive-centered design tools help us understand these problems, and provide design principles to alleviate them. We describe incentive-centered design and some tools it provides. We provide a number of examples of security problems for which incentive- centered design might be helpful. We elaborate with a general screening model that offers strong design principles for a class of security problems.

I will start posting some short examples from this position paper concerning thoughts about the relevance of ICD to a variety of information security problems.

Posted by jmm at 11:37 PM | Comments (0) | Permalink »

November 30, 2006

Yelp: Local reviews via social networking site: why contribute?

So, reviews of local businesses written by local patrons are popular. Why not? Newspapers have always done well running "Best of ___" or "Reader's Choice" contests. Now we have Yelp.com, Judy's Book, Intuit's Zipingo, Insider Pages, and offerings from Yahoo!, Microsoft Live and other players. Even our small city (Ann Arbor, MI) has about 250 businesses reviewed by the newest entrant, Yelp:

And the venture capitalists are giving the new players some dough.

But, why? These sites will make revenues if they sell ads, which should work if there are eyeballs since the eyeballs will be looking specifically for businesses in the local area so advertising on the page should have a good return. But to get eyeballs, these sites have to get volunteer labor to enter ratings and write reviews. And those volunteers come from a diffuse group of local business patrons, many of whom don't know from Web 2.0, and even fewer know about Yelp.com. And even if they know, what's in it for the volunteers?

It's possible that these Web 2.0 companies are simply using Incentives 1.0: They could hire paid reviewers who at least seed the site with reviews on a number of popular businesses in each city. Yelp and the others claim that they don't do this: "real reviews from real people" (I guess we're supposed to assume that paid employees are not real people). But how would users know if they did? What forfeitable bond is Yelp posting to convince us they are trustworthy? Or if they bribed "real people" to do reviews by sending a salesperson to the establishments and handing out bling in exchange for promises to enter a review?

There's another old-school way to get review content generated, too: tell the business owners about your site, and they'll take the initiative to write their own reviews (the "Amazon" problem). And so that they look popular -- not just loved by one critic -- they ask their mothers and cousins to submit reviews too. Again, how could we tell?

Posted by jmm at 01:46 AM | Permalink »

November 29, 2006

Research presentation: Web 2.0 and ICD

On 20 Nov 06 I gave an invited plenary Association Lecture at the Southern Economic Association Annual Conference in Charleston, SC. The title was "Getting the good stuff in, keeping the bad stuff out: Incentives and the Web". Here are the slides (not PowerPoint!).

In this talk geared to professional economists I explained the user-contributed content explosion that is one characteristic of so-called Web 2.0, and showed that this is happening through all phases of information production, organization, retrieval and use. I then discussed three fundamental economic issues that arise with user-contributed content: getting the good stuff in (private provision of public goods); keeping the bad stuff out (pollution); and evaluating the stuff (signaling, reputation). Familiar topics to the hordes who read this blog!

I finished with a simple elaboration to illustrate how ICD methods could be used to design mechanisms for dealing with these problems. The model is based on an event that occurred last spring on Digg.com.

Posted by jmm at 11:33 PM | Comments (0) | Permalink »

August 02, 2006

Placeholder: ICD isn't perfect, but...

Fact is, incentive-centered designs in general won't be "perfect", but that's not a fundamental flaw: solutions to any interesting humanoid problem generally won't be "perfect".

What's really nice is that ICD happens to have a clear and useful way of explaining most solutions can't be perfect. Here's the brief version: when private information is valuable, and its asymmetric distribution is costly to social welfare, it is generally necessary to "pay" or provide incentives to the information owner to share it or behave in a way that reveals it: we want the information get improve social outcomes, but it costs something to get it.

I plan to write a longer entry on this fundamental issue later.

Posted by jmm at 12:48 AM | Comments (0) | Permalink »

May 19, 2006

Volunteer grid computing projects

Most people have heard of SETI@Home, the volunteer distributed grid computing project in which computer owners let software run on their machine when it is idle (especially at night) that helps search through electromagnetic data from space in an effort to find communications from extra-terrestials. But this is only one of many such projects; over a dozen are described in "Volunteer Computer Grids: Beyond SETI@home" by Michael Muchmore, many of them devoted to health applications.

Why do people donate their computer cycles. At first glance, why not? These programs, most of which run BOINC (Berkeley Open iNfrastructure for Networked Computing), are careful to only use CPU cycles not in demand by the computer owner's software, so the cycles donated are free, right? Well, sort of, but it takes time to download and install the software, there is some risk of infecting one's machine with a virus, many users may perceive some risk that the CPU demands will infringe on their own use, etc. Most users will believe there is some amount of cost.

With certain projects, volunteers may get some pleasure or entertainment value out of participating: for example, the search for large Mersennes primes is exciting to those who enjoy number theory; searching for alien intelligence probably provides a thrill to many.

I suspect a related motivation is sufficient for most volunteers: the projects generally have a socially valuable goal, so people can feel like they are helping make the world a better place, at a rather small cost to themselves. For example there are projects to screen cancer drugs, search for medications for tuberous sclerosis, and help calibrate the Large Hadron Collider (for physics research). As Muchmore writes, "a couple of the projects—Ubero and Gómez—will pay you a pittance for your processing time. But wouldn't you feel better curing cancer or AIDS?"

These projects appear to attract a lot of volunteerism. Muchmore reports estimates of participation that range from one to over five million computers at any given moment. According to the BOINC project, volunteers are generating about 400 teraflops/second of processing, far more than the 280 tps that the largest operational supercomputer can provide.

Posted by jmm at 03:29 PM | Permalink »

April 08, 2006

Spam economics: Private stamps vs. repudiable bond payments to recipients

After years during which everyone talked about economic incentives to better sender and receiver interests in unsolicited email, we may finally be seeing the dawn of the incentive-centered design era for email.

AOL and Yahoo! this winter announced they were adopting the Goodmail system to create a special class of incoming mail: senders that paid the Goodmail fee per message would have their mail placed directly in user inboxes, with no server-side filtering or blocking by the ESP (email service provider, AOL and Yahoo! in this case). Mail without the Goodmail stamp will receive traditional treatment, being filtered and possibly placed in the user's spam folder.

A rather loud debate immediately followed, focused primarily on one concern: AOL and Yahoo! would tighten the filtering screws on unstamped email, eventually shoving so much of it into the spam folder that everyone would be "forced" to pay for the Goodmail stamp or likely have their mail discarded, unopened by users (or users would be forced to treat their spam folder as a regular inbox, and lose the benefits of the filtering). Nonprofits in particular howled because, they claimed, their mail is valuable, but they are too poor to pay for the stamps. (If members of non-profits aren't willing to pony up $0.25 per email in member fees, just how valuable are the millions of pieces of mail that non-profits want to send?)

But rather than get into that debate right now (see "Backlash to sender-pays email incentives"), I want to discuss the economics of two different but related approaches to using financial incentives to economically filter spam: the private stamp (Goodmail) approach, and the use of recipient-repudiable bonds ("stamps" vs. "bonds" for short).

The bond approach is similar to stamps, with critical differences. The sender pays for a (digitally-signed) stamp; mail with that stamp goes directly into the reader's inbox, unfiltered. However, after opening the message, the reader can either keep the stamp (push a button in the mail client to "deposit stamp"), or relinquish it back to the sender, which can be interpreted as a message that "I valued this mail, you can send more like it in the future."

How do the differences matter? First, an implementation issue: it is relatively easy for a third-party provider like Goodmail to implement a payment deposit system; it is not nearly so easy, at least right now, for individual email users to receive a micropayment attached to every email and deposit it. Email clients aren't programmed for this, and in any case, the necessary micropayments infrastructure just doesn't exist (yet) at that level of granularity.

Assuming that technical detail can be solved in the near future, how else are the two different? One of the most important differences is the very limited role for recipient preferences in the private stamp approach. A stamp of, say, $0.01, will discourage senders from sending email that is worth less than $0.01 for the sender. But the threshold is being set by the third party (Goodmail, perhaps together with an ESP like AOL), not by individual users, and thus does not directly reflect the value to the recipient of receiving unsolicited email (or not). Arguably, competition between ESPs would push the stamp price to about the right average level over time, but it would not reflect heterogeneity in user preferences.

A bond system could with little or no cost allow each user to set their own threshold for the required size of bond, thus allowing recipients to customize their own mail preferences.

Another problem with the stamp approach is that that goes through this channel pays for a stamp. For mail that both sender and recipient agree is desirable, that incurs unnecessary expense. But perhaps more important, it will prevent some desirable mail from being sent. Suppose the stamp is $0.01, and a sender has mail to send that the sender values at only worth $0.005 if delivered, but the recipient also values at $0.02 if received. The sender won't be willing to buy the stamp, and the mail won't get sent. With a repudiable bond, however, the sender might send a trial message, and if the recipient repudiates the bond, the sender will know the recipient values the mail and will allow similar messages to arrive without a bond payment in the future.

Why won't recipients always keep the bond payment? Well, first, this would just make the system work the same as stamps (except that users get the money, not a third party), so that's not a reason why bonds are worse. However, it also doesn't make sense in the example above. If I want to receive, say, an electronic catalog, but I keep the bond, then the sender may stop sending to me, and I lose out.

This is a very quick review of the two approaches, and yes, of course the issues can be more subtle. See Loder et al. for a scholarly discussion of the two.* Vanquish Labs, a vendor of a bond system, has an online article that critiques the Goodmail stamp approach (February 2006 : CertifiedMail = Certified Disaster).

*Thede Loder, Marshall Van Alstyne, and Rick Wash. "An economic solution to unsolicited communication". Advances in Economic Analysis and Policy, 6 (1), 2006.

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Principal-agent problem in action

Having trouble getting your employees to do the work you want them to do?

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February 04, 2006

What is Incentive-Centered Design (ICD)?

ICD is the science of designing systems or institutions that align participants’ (individual) incentives with overall system (social) goals. Incentive-centered design is fundamental for modern information systems because performance of distributed and collaborative systems depends critically on the strategic choices users make when interacting with the system and with each other, yet mismatch between individual interests and system goals is pervasive. Careful attention to individual incentives can lead to vast improvements in systems and institutions. This approach necessarily builds equally on the social sciences that address motivated human behavior, cognition and group processes, and on the engineering sciences that address computation and communications system design. We take a broad view of individual motivations for strategic behavior, drawing on economic, psychological, and sociological theories, and combine these with the design and engineering sciences of artificial intelligence, software, operations research and networking.

We apply ICD to

ICD in various forms it is gaining interest from many overlapping research communities. Nevertheless, as a coherent field ICD is still quite young, and its potential as a multidisciplinary foundation for research on information system problems has not yet fully developed.

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Blogging ICD

For the past several years, I've been one of the leaders of a group of faculty and students at UM (and beyond) developing "incentive-centered design" (ICD) as a core intellectual field for information science.

I'm going to experiment with keeping a blog to express thoughts I have about ICD, gather links to relevant stories in the websphere, point to research projects, etc. I doubt that I am going to try to attract a lot of readers, or to create a lot of content. Low volume, and I hope high quality, or at least things that will be useful to a small coterie of fellow travelers.

Whoami: Jeff MacKie-Mason (or Jeff Mason in my non-professional persona), jmm.

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