Tentative Schedule and Readings (Subject to Change)
Lecture slides will be available here at the beginning of lecture.
Many of the assigned readings are licensed by the UC Berkeley Library, and can be accessed from a computer with a campus IP address. You can also access these materials from off-campus by using the library's proxy server.
Reading assignments will be adjusted throughout the course of the semester.
Week 1. Introduction; Economics of information goods, services, platforms
January 21: Course Overview
January 21: Assignment 1 posted
January 23: Economies of Scale and Scope
- Read: McAfee, P. Introduction to Economic Analysis, Version 2, 2009. Section 10.2 on "Economies of Scale and Scope". [This book is released under a CC 3.0 license. It serves as a good microeconomics reference at the introductory/intermediate level.]
- Optional: Luenberger, D. Markets, Chapter 7 of Information Science, Princeton University Press, 2006. [Brief intro/refresher of basic microeconomics concepts]
- Optional: John Perry Barlow, The Economy of Ideas, Wired 2.03, 1994. [Visionary of his time.]
Week 2. Economics of information goods, services, platforms
January 28: Economic Modeling and Analysis
January 28: Assignment 1 due; Assignment 2 posted
January 30: Network Effects and Switching Costs
- Read: Shapiro, C. and Varian, H. Network Effects, Notes to accompany Information Rules: A Strategic Guide to the Network Economy, Harvard Business School Press, 1998.
- Read: Briscoe, B., Odlyzko, A., and Tilly, B. Metcalfe's Law is Wrong. IEEE Spectrum, July 2006, pp. 26-31.
- Optional: Sundararajan, A. Network Effects, part of the Industrial Organization of Information Technology Industries web site.
- Optional: Varian, H., Section 6 "Switching costs and lock-in" in Economics of Information Technology. Mattioli Lecture at Bocconi University, Milan, Italy, 2001.
Week 3. Business Strategy
February 4: Business strategy: strategic pricing
February 6: Versioning and Bundling
February 6: Assignment 2 due; Assignment 3 posted
- Read: Shapiro, C. and Varian, H. Versioning: The Smart Way to Sell Information Harvard Business Review, 1998.
- Read: Bakos and Brynjolfsson, Aggregation and Disaggregation of Information Goods: Implications for Bundling, Site Licensing and Micropayment Systems, in Varian and Kahin, Eds. Internet Publishing and Beyond: The Economics of Digital Information and Intellectual Property, MIT Press, 2000.
- Optional: Shapiro, C. and Varian, H. Versioning, Notes to accompany Information Rules: A Strategic Guide to the Network Economy, Harvard Business School Press, 1998.
- Optional: Chuang, J. and Sirbu, M., Optimal Bundling Strategy for Digital Information Goods: Network Delivery of Articles and Subscriptions. Information Economics and Policy 11(2):147-176, 1999.
Week 4. Business Strategy
February 11: Price Conditioning
February 13: Economics of Free
- Read: Loveman, G., Diamonds in the Data Mine, Harvard Business Review, 2003.
- Read: Acquisti, A., Varian, H., Conditioning Prices on Purchase History, Marketing Science 24:3, 367-381, 2005.
- Read: Anderson, C., Economics of free: Free! Why $0.00 Is the Future of Business. Wired 02.25.08.
- Read: Gladwell, M., Priced to Sell: Is Free the Future?, The New Yorker, July 6, 2009.
- Optional: Smith, M. D. and Telang, R., Competing with Free: The Impact of Movie Broadcasts on DVD Sales and Internet Piracy, April 2008.
Week 5. Business Strategy
February 18: Competition Models
February 18: Assignment 3 due
- Read: McAfee, P., Introduction to Economic Analysis. Sections 17.1 - 17.2 on "Cournot Oligopoly".
- Optional: Tirole, J. The Theory of Industrial Organization. Cambridge, MA: MIT Press, 1988, Chapter 5 "Short-Run Price Competition", pp. 133-152. ISBN: 9780262200714.
February 20: Game Theoretic Models
February 20: Assignment 4 posted
Week 6. Business Strategy and Industry Structure
February 25: Complements and Substitutes
February 27: Platforms and Two-Sided Markets
- Read: Cusumano, M., Technology Strategy and Management: The Puzzle of Apple, Communications of the ACM, September 2008.
- Read: Eisenmann, T., Parker, G., Van Alstyne, M., Strategies for Two-Sided Markets, Harvard Business Review, 2006.
- Read: Eisenmann, T., Parker, G., Van Alstyne, M., Platform Envelopment, Strategic Management Journal, 2011.
- Optional: Rochet and Tirole, Platform Competition in Two-Sided Markets, Journal of the European Economic Association, 2003.
- Optional: Armstrong, M. Competition in Two-Sided Markets. RAND Journal of Economics, vol. 37(3), pages 668-691, Autumn 2006.
Week 7. Industry Structure
March 4: Loci of Competition
March 4: Assignment 4 due; Assignment 5 posted
March 6: Market Power
Week 8. Industry Structure
March 11: Vertical Control
March 13: Regulation & Network Neutrality
- Read: U.S. Department of Justice, Non-Horizontal Merger Guidelines, June 14, 1984.
- Optional: Tirole, J. The Theory of Industrial Organization. Cambridge, MA: MIT Press, 1988, Chapter 4 "Vertical Control", ISBN: 9780262200714.
March 13: Assignment 5 due; Assignment 6 posted
- Read: Peter Eckersley, Fred von Lohmann and Seth Schoen, Packet Forgery By ISPs: A Report on the Comcast Affair, Electronic Frontier Foundation Whitepaper, Nov 2007.
- Read: Peha, J., The Benefits and Risks of Mandating Network Neutrality, and the Quest for a Balanced Policy. Telecommunications Policy Research Conference (TPRC) 2006.
- Optional: N. Economides, J. Tag. Network neutrality on the Internet: A two-sided market analysis, Information Economics and Policy, June 2012.
- Optional: A. Odlyzko. Network Neutrality, Search Neutrality, and the Never-ending Conflict between Efficiency and Fairness in Markets, Review of Network Economics, March 2009.
- Optional: A. Odlyzko. The delusions of net neutrality, Telecommunications Policy Research Conference, Sep 2008.
- Optional: Tim Wu, Network Neutrality, Broadband Discrimination, Journal of Telecommunications and High Technology Law, Vol. 2, p. 141, 2003.
Week 9. Economics of Information
March 18: Value of Information
March 20: Information Asymmetries
- Read: Carter, M.P., The valuing of management information. Part I: The Bayesian approach. Journal of Information Science, 10:1, 1985.
- Optional: Berger, J. O., Statistical decision theory, The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008.
- Optional: Eeckhoudt, L., Godfroid, P., Risk Aversion and the Value of Information, Journal of Economic Education, 2000.
Week 10. Spring Break
March 25: No Class
March 27: No Class
Week 11. Patterns: Long Tail
April 1: Long tail, search, and recommendation
April 1: Assignment 6 due
- Read: Anderson, C., The Long Tail, Wired 12.10, Oct 2004.
- Read: Brynjolfsson, E., Hu, Y. J., Smith, M. D., From Niches to Riches: The Anatomy of the Long Tail. Sloan Management Review, 47(4) 67-71, 2006.
- Optional: Easley, D. and Kleinberg, J. Networks, Crowds, and Markets. Reasoning about a Highly Connected World. Cambridge University Press, 2010. Chapter 18, "Power Laws and Rich-Get-Richer Phenomena".
- Optional: Adamic, L., Zipf, Power-laws, and Pareto - a ranking tutorial, 2000.
- Optional: Gabaix, Xavier. "power laws." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008.
- Optional: Mitzenmacher, M., A brief history of generative models for power law and lognormal distributions, Internet Mathematics, 1:226-251, 2003.
- Optional: Brynjolfsson, E., Hu, Y. J., Simester, D., Goodbye Pareto Principle, Hello Long Tail: The Effect of Search Costs on the Concentration of Product Sales , MIT Center for Digital Business Working Paper, (December 2006).
- Optional: Brynjolfsson, E., Hu, Y. J., Smith, M. D., Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers, Management Science, 2003.
April 3: Long tail, search, and recommendation
Week 12. Patterns: Epidemics
April 8: Network cascades and social epidemics
April 10: Network cascades and social epidemics
- Read: Easley, D. and Kleinberg, J. Networks, Crowds, and Markets. Reasoning about a Highly Connected World. Cambridge University Press, 2010. Chapter 19, "Cascading Behavior in Networks".
- Optional: Salganik, M., Dodds, P., Watts, D., Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market, Science, Feb 2006.
- Read: Easley, D. and Kleinberg, J. Networks, Crowds, and Markets. Reasoning about a Highly Connected World. Cambridge University Press, 2010. Chapter 16, "Information Cascades".
- Read: Easley, D. and Kleinberg, J. Networks, Crowds, and Markets. Reasoning about a Highly Connected World. Cambridge University Press, 2010. Chapter 21, "Epidemics".
- Optional: Szabo, G. and Huberman, B. Predicting the popularity of online content, Communications of the ACM, August 2010.
- Optional: Joseph, Shetty, Chuang, Stoica, Modeling the Adoption of New Network Architectures, ACM CoNEXT, 2007.
- Optional: Sinan Aral, Lev Muchnika, and Arun Sundararajan, Distinguishing influence-based contagion from homophily-driven diffusion in dynamic networks, PNAS, 2009.
Week 13. Patterns: Networks; Peer Production
April 15: Network structure, network formation
April 17: Peer production and crowdsourcing
- Read: Jackson, Matthew O. "network formation." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. (Local copy available in the slides directory.)
- Review: Easley, D. and Kleinberg, J. Networks, Crowds, and Markets. Reasoning about a Highly Connected World. Cambridge University Press, 2010. Chapter 1, "Graphs".
- Skim: Easley, D. and Kleinberg, J. Networks, Crowds, and Markets. Reasoning about a Highly Connected World. Cambridge University Press, 2010. Chapter 13, "The Structure of the Web".
- Skim: Easley, D. and Kleinberg, J. Networks, Crowds, and Markets. Reasoning about a Highly Connected World. Cambridge University Press, 2010. Chapter 20, "The Small World Phenomenon".
- Skim: Johan Ugander, Brian Karrer, Lars Backstrom, Cameron Marlow. The Anatomy of the Facebook Social Graph. arXiv:1111.4503, Nov 2011.
- Optional: Fabrikant, Luthra, Maneva, Papadimitriou, Shenker, On a Network Creation Game, ACM Symposium on Principles of Distributed Computing, 2003
- Optional: Byung-Gon Chun, Rodrigo Fonseca, Ion Stoica and John Kubiatowicz, Characterizing Selfishly Constructed Overlay Routing Networks, IEEE INFOCOM'2004, March, 2004.
- Read: Wilkinson, D. Strong Regularities in Online Peer Production, Proceedings of ACM Conference on E-Commerce, July 2008.
- Skim: M. Feldman, C. Papadimitriou, J. Chuang, and I. Stoica, Free-Riding and Whitewashing in Peer-to-Peer Systems. IEEE Journal on Selected Areas in Communications, Vol. 24, No. 5, May 2006.
- Optional: Axelrod, R. and Hamilton, W., The Evolution of Cooperation, Science, 211(4489):1390-6, 1981. (Wikipedia)
- Optional: Nowak and Sigmund, Evolution of indirect reciprocity by image scoring, Nature 393, 573 - 577 (11 June 1998)
- Optional: Cohen, B. Incentives build Robustness in BitTorrent. Workshop on Economics of Peer-to-Peer Systems (P2PEcon), Berkeley CA, 2003.
- Optional: M. Feldman, K. Lai, I. Stoica, and J. Chuang, Robust Incentive Techniques for Peer-to-Peer Networks. Proceedings of 5th ACM Conference on Electronic Commerce (EC'04), New York NY, May 2004.
- Optional: M. Babaioff, J. Chuang, M. Feldman. Incentives in Peer-to-Peer Systems, Chapter 23 of N. Nisan, T. Roughgarden, E. Tardos, V. Vazirani, eds., Algorithmic Game Theory, Cambridge University Press, 2007.
Week 14. Patterns: Peer Production; Privacy
April 22: Peer production and crowdsourcing
April 24: Economics of privacy
- Read: Braess's paradox. Wikipedia.
- Read: P. Chia, J. Chuang. Community-based Web Security: Complementary Roles of the Serious and Casual Contributors. Proceedings of ACM CSCW, February 2012.
- Optional: Luis Von Ahn. Games with a Purpose. IEEE Computer, 2006.
- Optional: Edith Law and Luis Von Ahn. Input-Agreement: A New Mechanism for Collecting Data Using Human Computation Games. Proceedings of ACM SIGCHI, 2009.
- Optional: Resnick, Zeckhauser, Friedman, Eric, and Kuwabara. Reputation Systems. Communications of the ACM, 43(12), December 2000, pages 45-48.
- Optional: Dellarocas, The Digitization of Word of Mouth: Promise and Challenges of Online Feedback Mechanisms, Management Science, 2003.
- Optional: Galen Pickard, Iyad Rahwan, Wei Pan, Manuel Cebrian, Riley Crane, Anmol Madan, Alex Pentland, Time Critical Social Mobilization: The DARPA Network Challenge Winning Strategy, 2010.
- Optional: Tang et al. Reflecting on the DARPA Red Balloon Challenge, Communications of the ACM, 2011.
- Read: Acquisti, A. The Economics of Privacy: Theoretical and Empirical Aspects. To appear in Privacy, Big Data, and the Public Good: Frameworks for Engagement, Julia Lane, Victoria Stodden, Stefan Bender, and Helen Nissenbaum (editors), Cambridge University Press, 2014.
- Optional: Gergely Biczok, Pern Hui Chia. Interdependent Privacy: Let Me Share Your Data. Proceedings of Financial Cryptography 2013: 338-353.
- Optional: Schneier, B. A Revised Taxonomy of Social Networking Data, 2010.
Week 15. Patterns: Interdependency
April 29: Interdependent security
May 1: Interdependent security; Course review and evaluation
- Read: Anderson, R., Moore T.,, Information Security Economics - and Beyond. 2008.
- Read: J. Grossklags, N. Christin, J. Chuang. Secure or Insure? A Game-Theoretic Analysis of Information Security Games. Proceedings of the 17th International World Wide Web Conference (WWW2008), April 2008.
- Optional: Varian, System Reliability and Free-Riding, In Economics of Information Security, Camp, L. Jean; Lewis, Stephen (Eds.), Springer 2004.
- Optional: Anderson, R., Why Information Security is Hard: An Economic Perspective, 17th Annual Computer Security Applications Conference, December 10-14, 2001
- Optional: P. Chia, J. Chuang. Colonel Blotto in the Phishing War. Proceedings of 2nd International Conference on Decision and Game Theory for Security (GameSec 2011), November 2011.
Week 16. RRR Week
May 6: No Class
May 8: No Class
Week 17. Finals Week
May 13: Final Project due