June 17, 2007

Infotopia

Filed under: Books,Incentives,Observations — admin @ 5:50 pm

Cass Sunstein writes

Participants in the blogosphere usually lack an economic incentive. They are not involved in any kind of trade, and most of the time they have little to gain or to lose. If they spread falsehoods, or simply offer their opinion, they do not sacrifice a thing.

I’m not certain I totally agree. Bloggers sacrifice time or attention. They have an opportunity cost and, thus, choose to forgo other opportunities to blog. Most importantly, they forgo making money. I suspect as information increases in accessibility opportunity cost will increase. In other words, individuals will be more selective in what they contribute because there so many other things they could have been doing.

June 11, 2007

The Economics of Gift Cards and Irrationality

Filed under: Books,Market,Observations,Public Choice — admin @ 6:56 pm

This is Josh Hendrickson commenting on Jennifer Pate Offenberg’s article about gift cards in the Journal of Economic Perspectives.

Essentially, this welfare loss arises from the stigma of giving cash. I have always been fascinated with the fact that giving cash is viewed as inappropriate, yet gift cards are somehow more acceptable. The gift card, as Offenberg points out, is simply a cash gift with a restriction on where the gift can be spent.

An explanation of the aforementioned observation occurred to me while currently reading “The Myth of the Rational Voter” by Bryan Caplan. Caplan explains that voters are more willing to make irrational decisions as the cost incurred from the decision decrease. Because voters face practically no cost for believing whatever makes them feel good (rational or not) they are more likely to pick bad policies.

Possibly gift cards are way of gifting the the psychological benefit of irrationality to recipients. Here, enjoy some extra coffee or a book from Borders that you would not normally buy because you act rationally in the market. In addition, the restrictions ensure that the gift card cannot be spent on something more useful (e.g. gas for the car).

Read more:
The Economics of Gift Cards « The Everyday Economist

June 6, 2007

Incentives Matter: The Role of User-Generated Content in Advertising

Filed under: Incentives,Observations — admin @ 6:04 pm

I found this quote to be well… not surprising.

Recently, MasterCard ran a fairly structured, fill-in-the-blank consumer-created “Priceless” campaign. And even within the structure of the program “we were hard-pressed to find a lot of good ads,” she said.

What incentives do consumers have to create advertising that is effective in generating clicks, leads, sales, or whatever. A payment scheme linked to something measurable (e.g. clicks) would be more effective in inducing a consumer to create something of value.

The article:
Advertising Age – Digital – Video Report:The Role of User-Generated Content in Advertising

June 4, 2007

VISP Visualization 0.2

Filed under: Portfolio,Projects,VISP — admin @ 4:16 pm

Website Fact Visualization

This is the first draft of a visualization for the VISP project being conducted by Lada Adamic, Suresh Bhavnani, and Dale Hunscher. Each larger circle represents a webpage, the circles inside represent facts, and arrows represent hyperlinks. The intensity of the outer circle indicates the amount of traffic it receives from a search engine (i.e. darker is more traffic). The size of the inner circle represents the amount of space a page dedicates to a given fact.

There are two noteworthy things. First, while it only calls one data set currently, it is designed to be read in any properly formatted XML data set. That means that it could be extended to include any webpage and search queries. Second, you may notice that the circles seem to jiggle around. It’s not purely for aesthetic reasons, honest. Because any data set could have n number of facts at any given size, it is difficult to write an algorithm for all scenarios. It is much easier (as in this case) to simply treat facts as autonomous agents with a strategy, get as close to the center as possible. What we see are the fact circles trying to find more compressed configurations.

The visualization can be seen here. Be sure to copy and paste this path “data/melanoma_com.xml” to the data set in the text field and simply press the “get dataset” button.