There is a new search engine called Kosmix, which is putting a new spin on web searching. Their plan is to create a “Home Page for Every Topic.” What this means is making a web site that contains links to relevant information on that topic. Their website is organized in a set way containing relevant categories for the topic and results in those categories. As of yet they can only create these “home pages” for queries in three specific areas: travel, health, and autos. Their plan is to eventually spread into more and more categories.

The search engine is powered by an algorithm that categorizes pages and returns the most targeted content to the user. The entire process is done algorithmically, unlike other similar search engines like Mahalo which uses editors to help create the results. The main problem facing Kosmix, is that there are many more specialized sites that may have more pertinent information, simply because they focus on their topics exclusively.  

It seems like an interesting idea, but in order for it to work well, it seems like computer understanding of language needs to progress significantly. It is not that easy to categorize some web sites, and it frequently will be hard to actually get the pertinent information in the appropriate places.

The recent boom of social networking sites such as MySpace and Facebook have led to an obscene amount of discussion about where the future of sites like these lie. MySpace has been entrenched as the cream of the networking site crop, however sites like Facebook and Twitter are trying to take bites out of the pie.

The trend of the internet boom has been for upstart sites to gain popularity fast and then sell to established giants for millions. Companies such as Google and Yahoo routinely buy out fast-growing sites such as YouTube or they have launched competition for the growing medium of entertainment. With Rupert Murdoch securing the bid for MySpace and Mark Zuckerberg refusing to sell Facebook and the popularity of these sites growing, the giants have taken notice. They recognize the potential in selling ads and they system of selling advertisements through applications is an exploration of network effects in and of itself. The New York times article: http://bits.blogs.nytimes.com/2008/04/25/who-needs-another-social-network/#more-1092 looks at the saturation of the market for social-networking sites. The popularity of MySpace and Facebook raise a different issue than sites like YouTube because the allure lies in the social networks that are already there. There is essentially a cluster of such a high density in the current social-networking sites that other sites are unable to get enough new users to cause a cascade that would lead to a switch. The only way another site could break in is by provided better services, which is precisely what Google and Yahoo tried by creating their own networking sites. However, these have not gained widespread popularity, especially in the most prominent markets.

So how are Google and Yahoo going to dip into one of the fastest growing internet fads? They have decided to provide many of the same services to their users without changing the sites they visit. Google is intending to incorporate information about what videos, articles and social events their friends are interested in as well as allowing people to share photos, from their customized google home page. However, they are running into several problems. Trying to connect people is admirable as we have seen all year, the strength inherent in having many ties, be them strong or weak, but the companies have raised questions about privacy in broadcasting some of the information that they gather to other people.

All in all, it seems to be a fruitless endeavor to me. People are satisfied with the services provided by the current networking sites, so the payoffs to get people to switch must be very high. The best approach for sites like Google or Yahoo would be to target a specific, “sub-cluster”. Facebook broke into the market by specifying its site for college students and making it the best site for college students. This way, it could focus its resources and gain a niche before trying to expand and challenge MySpace. The less dense the cluster these sites focus on, the better their returns are going to be and the faster they are going to grow.

In class today we talked about strategies for garnering the most votes assuming we know the preference peaks of individual voters. We showed that the best thing to do is to adopt the median position, which will inevitably gain the most votes. A natural thought that follows is a reflection on the current state of politics in the United States; that is, are candidates truly adopting the median position? If this were the case across all issues then we should be unable to distinguish any difference between the candidates, since a best response to a candidate adopting the median position is to adopt the same median position.

The political preference space is rather complicated, however, so a simpler thought would be to consider a specific issue: should candidates be in favor of heavily taxing the richest and redistributing the wealth? We know that the United States has a very aberrant distribution of wealth compared to the rest of the world, namely that an extremely small percentage of the population controls nearly all of the nation’s wealth. Barring the abnormality of the situation when compared with the rest of the world, we can most likely rationalize this result in the context of the “rich get richer” phenomenon we saw earlier in the class. Still, the present state of wealth distribution seems to be ultimately at odds with the median vote: consider that voters, regardless of their income, all have one vote that is the same weight–a tenet of the American electoral process.

So if we assume (fairly reasonably) that those with lower incomes would like to have the wealth distributed while those with higher incomes would not, then clearly the median preference would not fall within the range of those favoring the maintenance of the status quo. Personally, I don’t think I’ve ever heard about presidential candidates touting how they plan on redistributing the wealth in the United States upon taking office (I believe this is called “political suicide”)–so why is the median vote not the best strategy for candidates in this situation? A little searching led me to the following paper, which concerns itself with the same question:

http://www.allacademic.com/meta/p_mla_apa_research_citation/0/6/0/7/7/p60779_index.html

In accordance with our intuition, the paper emphasizes that while the logic of the median vote holds, the context in which it is applied is also important. The three main points it makes are:

• Contrary to what may have been the ideals of our forefathers, not everyone votes nor does every vote carry equal weight. It is conceivable that those with lower incomes may not exercise their vote either due to apathy or a feeling that nothing will change. Furthermore, as we have seen with recent elections, candidates need to raise an inordinate amount of money to even hold a campaign, so donations from the wealthy become very important; thus, the wealthy are in fact adding weight to their votes.
• Not every one understands economics, and so the assumption that voters have preference peaks about wealth redistribution may be flawed. The paper notes that “the basic dimension of politics is not the objective fact of family income; it is subjective preferences about economic issues.” It is certainly plausible that many voters don’t consider an issue rationally or thoughtfully beyond how they “feel” about it; candidates can therefore take advantage of adopting positions that are apparently appealing to a class of voters but not necessarily beneficial for them when considered beyond their surface value.
• Finally, as was pointed out in class, sometimes candidates really only care about winning; this means that appealing to the global median of voters may not entail the best result, since our political system is bipartisan. The “relevant median,” as the paper calls it, will often be different from the global median because candidates would rather place themselves at the median of their own political party, as they are less likely to attract the votes for those affiliated with an opposing party anyway.

The conclusion we might draw from these insights is that adopting a median position is only a good idea if we truly understand how the overall system behaves. Suppose you are a candidate running for a student assembly position here on campus–should you appeal to the median voter? The answer is of course “yes,” but something you might consider is that the apathy rate on campus is rather large and that maybe only 10 percent of students actually vote. It might therefore be a good strategy to first find out what kind of people are likely to vote, and then sample their preferences on issues and adopt the median of those results. This is of course assuming that you only want to win and have really no ideals of your own that you want to represent. Whether this is in fact the case is left as an exercise for the reader.

So I came across a link from the Stanford Encyclopedia of Philosophy explaining that evolutionary game theory is… totally irrelevant. The million dollar question surrounding evolutionary game theory is “What does it explain about real life?” Well, Darwin’s Theory of Evolution is supposed to explain where we came from, so if we follow this path then evolutionary game theory should provide some explanation of how a social aspect was created. However, to me it seems like evolutionary game theory wouldn’t be the way to answer such a question, since we will never be able to duplicate conditions in our model to produce something as hair-trigger as evolution. Rather, it seems like it would be much better to do historical research and try to ascertain the events that led up to the aspect in question. Now, of course this could be difficult to do, or even impossible. However, we would only have a chance to run an evolution simulation for very recently occurring social aspects. To try and go back to 1800 and duplicate conditions would be impossible. And for anything more recent, we’d be better off going with a historical explanation.

Furthermore, if we were to use evolutionary game theory to simulate actual evolution, we’d be doing nature a huge disservice. The idea of (micro) evolution is based on environmental factors causing shifts in the percentage breakdown of alleles within a population. There is no game being played here. Rather the environment kills off those who were unlucky enough to have the wrong alleles, but no conscious choice as to which alleles are passed on is ever made.

http://plato.stanford.edu/entries/game-evolutionary/#4

Martin Wolf, Chief Economics Commentator for the Financial Times, posted an article back in August in which he examined the role of the Federal Reserve in saving both the economy and Wall Street. At that time Wolf described what he believed to be a market for lemons in the financial system that was being driven by “asymmetric information” mainly surrounding many of the structured products and associated derivative securities on the market. Buyers felt that sellers knew much more about the quality of the securities than the sellers did and the market then froze up.

 Wolf suggests that the solution with respect to Central Banks is merely “nothing”; Central Banks should stand by ready to provide liquidity and adjust interest rates but should not promote a market of lemons. In other words, Central Banks should avoid becoming a market maker of last resort at all costs. This would merely create a situation where Central Banks would be on the hook for securities they know nothing about – a clear violation of rational behavior. By refusing to act, sellers are then forced to turn their lemons into apples by being more transparent and reducing the asymmetric information in the marketplace. Put the onus on the marketplace to figure it out and let the Central Banks focus on preserving the health of the economy says Wolf.

 Nearly eight months have passed and while much has changed in the marketplace, there still exists a marketplace of lemons for many securities. Do to the complex nature of structured products and derivatives it is increasingly difficult for sellers to turn their lemons into apples.

 With respect to Wolf’s advice, the Federal Reserve has largely stuck to interest rate cuts as they try to restore confidence in the marketplace. However, on March 16 the Fed did exactly what Wolf warned not to do. In an effort to stop a market collapse, the Fed agreed to extend a line of credit in the amount of $30 billion to get the JP Morgan – Bear Stearns merger completed. However, the loan would be collateralized by $30 billion in these structured products in which the value of is still highly uncertain. While such emergency circumstances may have justified the extension of the loan, the damning precedent set by the Fed – that is, a market maker of last resort, is troublesome as it may serve to merely further postpone the inevitable “lemons-to-apples” transformation and extend the market for lemons in structured products.

In this election, the candidates have taken advantage of using social networking sites to promote their campaigns. With supportive groups on facebook (One Million Strong for Barack Obama) and some candidates like Mitt Romney getting an account himself, the candidates have sought a whole new area fight over: the internet. Using social networking sites allow them to get in touch with the adolescent population and receive voters by getting on their level and spread information about rallying events or their issues. Of course, as in any election, there is a downside to campaigning online—some candidates receive negative attention (One Million Against Hillary Clinton on facebook or the youtube video “Vote Different” which supports Obama over Clinton). However, the internet is the new way of easily sharing information concerning the elections; more information is spread faster through the use of social networking sites, news sites, bloggers, and video sites which will certainly make or break candidates in this and future elections.

To answer the question posed in the title of the article: no, I don’t think that the election will be won on Facebook. Most of the heavy users of facebook, myspace, and other networking sites are adolescents, and they wouldn’t necessarily be able to swing the election in their favor, especially considering that facebook is now open to high school students who wouldn’t be able to vote at all. We learned today in class about majority rule, and there is probably still a large portion of voters who get their election information through other sources such as newspapers or television. However, the internet has helped provide quick and easy information about all of the candidates and allows users to see debates and talks the candidates give. In a way, internet users can track and find out so much more about their favorite candidate than ever before, which will definitely help the candidates spread their views to more people.

Furthermore, it seems that, in regards to the primaries, that a lot of them are won based on cascades. This hasn’t shown through for the democratic candidates, necessarily, since they’re still trying to decide which candidate they want to represent their party. Some voters, though, are probably influenced by how some states voted in the primaries, and base their votes over the winning candidates.

http://www.cnn.com/2007/TECH/05/01/election.facebook/index.html#cnnSTCText

In class, we discussed the way “technologies” spread throughout a network via a system of adoption. In the model, nodes adopt a technology if a sufficient fraction of their neighbors has adopted the technology. Although not applied to social networks, the mathematics of models like this has been studied since the 1940s. During his study of self-replicating machines, John von Neumann invented a class of discrete models known as cellular automata.

In a cellular automaton, nodes take on one of several discrete states dependent on the states of their neighboring nodes. Time is divided into discrete increments so that each node’s state at time t is a function of its neighbors’ states at time t-1. Two-dimensional cellular automata can be represented as a grid Each space on the grid is a node, and nodes bordering each other on the grid are neighbors. The nodes’ states can be represented by colors. At each time step, the grid is redrawn according to some update rule, which is essentially some variant of the “switch to A if a q fraction of my neighbors have adopted A” rule we discussed in class. At each node, the rule is run against the grid’s state before any nodes are updated. Every node updates its state at the same time, so the pattern on the grid is dependent only on the grid’s state at the previous time step, not on the order in which nodes are updated.

Many different configurations and rules have been studied, but one known as the Game of Life has risen to especial prominence. Invented by John Conway in 1970, Conway’s Game of Life, the Game of Life, or just Life, is particularly relevant to our discussion because, to some degree, it simulates actual population growth and death. Life is “played” on a square grid, like ordinary graph paper, and each node, or cell, can take on one of two states: “dead” or “alive”. Each cell has eight neighbors. If a dead cell is surrounded by a sufficient fraction of live cells, it becomes alive. If, however, a live cell is surrounded by too many or too few other live cells, it dies from overcrowding or loneliness. Conway worked out the fractions carefully so that the population of cells will change unpredictably—neither dying out rapidly nor saturating the grid. The rules are as follows:

• a dead cell with three neighbors becomes alive
• a live cell with fewer than two neighbors dies
• a live cell with more than three neighbors dies
• a live cell with exactly two or three neighbors lives

A more thorough description of Life, as well as an interactive Java applet implementation, can be found at http://www.math.com/students/wonders/life/life.html.

The truly remarkable property of Life is that it exhibits emergent behavior. Conway did not design the rules of the game to produce a specific outcome, and the rules themselves do not explicitly code for any particular behavior. However, fairly trivial patterns exhibit striking behavior. The above page describes patterns known as oscillators, which repeat after some number of steps; gliders, which propagate themselves across the grid forever; and guns, which repeatedly produce gliders. When these and other basic patterns are strung together, they give rise to far more complex behavior. In fact, it has been proven that it is possible to construct an entire computer within a Life pattern, which is certainly not obvious from the game’s simple definition.

This article explores how the Syphilis evolved from different forms to become more evolutionary stable.

Syphilis was known to cause “Boils that stood out like Acorns, from whence issued such filthy stinking Matter, that whosoever came within the Scent, believed himself infected. The Colour of these was of a dark Green and the very Aspect as shocking as the pain itself, which yet was as if the Sick had laid upon a fire.”

Those with the acute form of Syphilis will not attract sexual partners, which will prevent the spread of the Syphilis bacterium. This behavior can be seen as evolutionary unstable as the bacterium will remain with host and never spread to healthy individuals. Therefore, Syphilis evolved to be less acute, which resulted in people having more sex. This became evolutionary stable as the bacterium was allowed to spread and reproduce.

What I found interesting was that, Syphilis was originally a skin ailment from South America. However, when it spread to Europe the disease evolved to be sexually transmitted, because physical contact was taboo. It is very interesting how Syphilis changed from the its original form into the form now, and then again into a more docile. The length of Syphilis’ survival shows why Syphilis evolutionary choices are stable.

http://www.nytimes.com/2008/04/29/health/29essa.html?_r=1&ref=science&oref=login

Scientists have found that the brain works like a social network or the internet. The brain carries information from one area to another in the same way that information is spread on the internet or through a social network. Information spreads through small networks of nodes and to get from one node to another only requires a few jumps, which makes the brain work very efficiently. Many nodes in the brain only had a few connections and only a few were connected to many different areas of the brain. Scientists suggest that the more we study network theory, the better we can understand how the brain works.

If the brain works as networks do, then it seems that networks are natural and not arbitrary relations between individuals. The better network models we observe in real-life can help scientists understand different brain diseases or simply how one individual’s brain differs from another’s. This can also be helpful because we could see if how one makes relations in the real-world depends on how their brain is wired.

Another topic of interest is Ron Burt’s idea of gatekeepers. There are few super-connected nodes in the brain that have connections to many different areas and act as hubs of information, not unlike search engines. One must then wonder if strong triadic closure or the strength of weak ties carries over to brain processes. Also relevant to this study of the brain is the idea of cascades—action potentials are cascades because it is an all-or-none reaction.

http://www.livescience.com/health/050104_brain_internet.html

hhttp://www.spectator.co.uk/the-magazine/politics/552986/budget-2008a-mortgage-market-for-lemons.thtml

During class, we discussed George Akerlof’s economic theory of “the market for lemons.” This Nobel Prize winning idea shed light on a major economic problem based on the asymmetry of information. This theory revolves around the fact that many transactions that involve the interaction of buyers and sellers have an imbalance of information–one side of the market, has more information about the goods or services being sold than the other side does. Akerlof applied this to the used-car, or “lemon,” market. In this market, sellers know more about the quality of the cars being sold than the potential buyers do. With no way of knowing whether he is purchasing a defective car, the buyer can only expect to get a car of average quality, which correspondingly makes him unwilling to pay more than the average price. In response, the used-car dealers remove the good quality automobiles from the market since this puts them at a loss–they are receiving an average price for a good that they know is worth more. This leads to a gradual removal of good quality used-cars from the market, leaving only the lemons behind. The average quality of the remaining cars thus declines, resulting in a cessation of buyers’ purchases since they are increasingly receiving bad products. The ultimate result is a collapse of this “market for lemons” in which both parties are clearly at a loss.  (Chapter 15 of Econ204 textbook)

Recent events have led to a seemingly parallel situation in the mortgage market. The article “Budget 2008: A Mortgage Market for Lemons?” by Ian Mulheirn introduces the ways in which the circumstances surrounding the purchase of homes in the UK are coming to resemble the purchase of second-hand automobiles.

The British housing market is under threat of collapse, which, according to the UK Treasury, is due to the problem of asymmetric information. Mortgage markets are frozen because risky debt is driving safe debt from the market by raising the price for all debt. To apply this to the Akerlof’s used-car analogy, the risky debts are the poor-quality goods while the safe debts are the good-quality goods. The balance of information in this case, however, is tipped towards the side of the buyers, since they hold more knowledge concerning their ability to repay than do the creditors. With questionable debt rising in numbers, interest rates are steadily climbing and lender confidence declining, putting the mortgage market in a precarious position.

The British government has therefore proposed several methods to solve this “lemon” problem and revive the housing market. Some suggestions are to reserve credit for home-buyers who borrow no more than 90% of the value of the house, or those who borrow only a low multiple of their annual income. This filtering of the mortgage “lemons” would finally allow for a return of cheap credit for safe borrowers, and save the housing market from the current slump.

The article states, however, that the government has failed to notice that this market for lemons is “yesterday’s problem.” Firstly, although Akerlof’s situation exists, in some cases, nothing can be done about it since many dealers consider their reputation with customers, which will affect future business. Should creditors consistently refuse potential “bad borrowers,” their public image and trust may suffer. Furthermore, businesses have found several ways around the “market for lemons” problem. Warranties, agencies such as Standard & Poor’s and Moody’s that help punters understand how risk their investments are, and increasing amounts of available information on the potential borrowers have all aided in this process.

If the asymmetry of information has been made somewhat balanced, what, then, is the problem? Why is the deterioration of credit continuing to persist despite the solution businesses have found for the mortgage market for lemons? The answer lies in investors’ behavior as they respond to the possibility of potential loss. Businesses are becoming increasingly concerned about complex processes involved in the relationship with the mortgager characterized by “impenetrable legalese and arcane financial vehicles.”

The article ends with the conclusion that the government’s solution to the mortgage market for lemons has come too late. Not only have businesses found their own methods of solving this economic issue, but another, more labyrinthine issue has emerged. To apply this to our discussions in class, it is clear that solutions to Akerlof’s market for lemons do indeed exist-it is possible to devise methods to avoid this situation. However, as the article illustrates, these solutions must be applied in a timely manner. While it might have been helpful for the British government to identify the “lemon” borrowers during years of reckless lending, current times call for more effective measures. As Mulheirn states, the British government’s proposals “might make [it] feel better to look like they’re doing something, but pointing and shouting isn’t going to help anyone now.”