The Freakonomics Blog is also now talking about truth markets (is it information market day or something?):

An excerpt, which they excerpt from a letter:

I think the guy who talked about having a trustworthiness rating for individuals is on the right track. Except, anything that distracts users from making immediate changes (such as logging in, or a notion that I have to build my reputation to have an equal voice) could be the death of wikipedia. My approach to improve wikipedia would be to include an “information liquidity” metric along with each page, similar to a stock’s trading volume. Pages could be grey-scale coded based on the page change history, with high-volume pages appearing darker, more solid. Of course this can be gamed, but here gaming has visible artifacts. As far as accuracy goes, I think this would solve Stephen’s objection because the informational backwaters—pages with lower liquidity—would appear visually distinct from the heavily modified. In machine learning there’s a construct called a Boltzmann Machine (aka simulated annealing machine) which describes the dynamics of systems like wikipedia, but it requires a metric like volume/liquidity/energy. An alternative approach to social networking for solving accuracy/trust problems is this one, which I’m very intrigued by, but the system isn’t big enough yet to bear out the promises.

Categories: Incentive Centered Design, Information Asymmetries, Information Economics, Information Markets, Social Software
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Online prediction markets have made it to Slate on the same day that my class on Information Aggregation and Predictions Market started.
From Bruce Reed on Slate:

After Bush signed the bill [banning online gaming] earlier this month, the online gaming giants shut down their American operations almost overnight. Sportingbet Plc, a British company, took a $391 million loss and sold its U.S. arm for $1.

Other companies are betting the law won’t stick. Trade Exchange Network, an Irish firm that runs Tradesports.com and Intrade.com, continues to welcome American customers. But here’s the real irony: At the same time the Republican Congress is trying to throw them out of the American market, the briskest business at Tradesports and Intrade is taking bets on whether Americans will throw out the Republican Congress.

In other news, I start the semester down $500 class bucks due to bad information about the Tigers’ victory prospects.

Categories: Information Asymmetries, Information Economics, Information Markets, Politics, Social Software
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Jon Udell at Infoworld is decrying the rise of for-profit blogging, in which market share defines success, and profit comes by delivering eyes. Once bloggers have to deliver the readers, they’ll sink to the lowest common denominator, churning out garbage just to get page views.

I think Udell’s concern is a little unfounded. Blogs are becoming like any other information good that people expect for free or with extensive subsidies - TV, newspapers, magazines, driving directions. Because nobody wants to pay for it, but all want to see it, they go to advertisers for support. What’s going to happen, though, is that marketers are soon going to realize it’s not enough to just get a lot of views, you want to target them. That’s where the relationship between the customer (reader) and blogger becomes important. The blogger needs to know what his customers want, and who they are, so he can sell their eyes to advertisers. As blogging matures, segmentation and the long-tail will become more important, and the race to the bottom will become a race towards specialization.

When I saw Jon speak a few weeks (months?) ago at the STIET seminar, he discussed a different incentive for blogging, a sort of personal advertising. Bloggers are managing their online presence, giving away a sense of who they are, in order to bring in business, make themselves more valuable to their current employers, or meet new friends. The incentive to create quality content isn’t to monetize it, it’s to improve their personal brands.

That being said, Bloggers are just like any other content creator dealing with information-induced change, they need to understand their customers or audience, talk to them, and learn how to connect with them. Dworin Consulting can help organizations understand their stakeholders and build relationships with them, whether its to create a more valuable pitch for advertisers, organically grow the customer base, or just to tailor products and services to better meet customer needs. On that note, I agree with what Jon said in his talk - blogs are a great way to advertise yourself and your services.

Categories: Information Economics, Social Software
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I’m organizing a panel at the Business School’s Futurtech conference on users as partners in the product development process. Here’s a draft of my proposal:

The internet has transformed the way user communities organize themselves. Firms can directly interact with their customers, gauging interest, getting feedback on early betas, and seeking direct input for product features. For better or worse, customers and users are now much more integrated partners in the product development process, and how a firm interacts with their user communities has a direct impact on their success or failure.

Some industries have been dealing with these issues for a long time. Software platform vendors, like Sun, Microsoft, and Apple, have a long history partnering with their developer communities to ensure a rich application eco-system and benefit from network effects. Others, like video game publishers, are realizing the importance of monitoring user activity as their products become more social and their users more organized. Many studios, like Bungie, Nintendo, and Blizzard have seen major product shifts based on community feedback, and have dedicated community managers who interact with, excite, empower, and pacify users regularly. Finally, there are those who are new to this level of customer involvement in the creative process. Movie studios have recently started to produce films based on on-line petitions (serenity), change scripts based on internet buzz (Snakes on a Plane), and even solicit input for upcoming films (Transformers).

All of this brings up a number of questions. What is the roll of the user in the creative process? How can firms keep hardcore users happy without alienating the vast majority of customers? Who owns community-generated product contributions? What can companies do to empower their user community? How can they control them when they run amok? What is the best way to track what’s on the community’s mind?

Any comments, suggestions, or criticisms are welcome. Feel free to drop me an e-mail or leave it in the comments.

Categories: Futurtech, Incentive Centered Design, Information Economics, Social Software, Users as Partners
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From the paper referenced in this post, the partcipation constraint of associates in large profit-maximizing partnerships:

Categories: Equation of the Week, Matching Mechanisms
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Via Tyler Cowen at Marginal Revolution:

Our argument can be briefly summarized: Attorneys are “knowledge workers,” who differ from other employees because they essentially carry around key firm assets in their brains. The knowledge assets these lawyers control—an understanding of the needs and interests of clients—are obviously of greatest value when used with specific clients. This specificity gives individual attorneys considerable leverage over their employers. By threatening to “grab and leave” with an important client, attorneys can leverage an increased share of their firm’s revenues. The up-or-out partnership system found in large law firms has evolved over time as a workable resolution to this particular problem. By forming partnerships and firing experienced attorneys who are not promoted to partnership positions, law firms limit the opportunity for experienced attorneys to grab and leave with the firm’s valuable clients. Grabbing and leaving is more important in legal partnerships than in conventional firms because law firms cannot readily establish property rights over the knowledge essential for serving particular clients.

He also has a different exerpt.

The argument applies to most professional services firms, like large management consulting firms. In these types of firms, partners handle client relationships - especially sales - while the actual work is left to the lower level associates. Partnership is the carrot at the end of the stick as well as a method for keeping experienced and talented associates from breaking out on their own. The up-or-out model keeps the number of partners small, their quality high, and incentivises low level associates.

Organizations in knowledge industries need to realize how fluid their customer relationships are, and how important it is to manage those relationships. Dworin Consulting helps firms and non-profits identify their stakeholders’ needs and develop customized strategies for engaging them. In addition, Dworin Consulting helps organizations design incentive schemes, like up-and-out promotion, to align employee motivations with group goals.

For those interested in the full paper, it’s available here, or here.

Categories: Careers, Incentive Centered Design, Information Asymmetries, Information Economics, Law, Matching Mechanisms
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First Post! LOL!

The phenomenon is largely confined to sites that have reached a high degree of popularity, such that users are genuinely surprised to see an article without any associated comments. In its original form, a first post was a light-hearted expression of the poster’s excitement at being the first person to write a comment. However, it is now more widely intended as a means of annoying other site users (see Internet troll), with the aim of provoking a negative reaction (see Flamebait). There is also the necessary condition that comments are displayed in chronological order (meaning the first message is the most prominently displayed). It is prevalent among user-commentary sites and does not often appear on conventional webboards, community journals, etc.

Categories: Ephemera
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