INFO 234. Information Technology Economics, Strategy, and Policy

Week 1. Introduction

• For Fun: Miller, E. Golden Footballs and the Economics of Groupon, May 2009.

Week 2. Economics of information goods, services, platforms

• Read: McAfee, P., et al., Introduction to Economic Analysis, Version 2, 2009 [PDF]. 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.]

• Read: McAfee, P., et al., Introduction to Economic Analysis, Version 2, 2009 [PDF]. Section 17.3 on "Hotelling Differentiation".


• Optional: Varian, H. How to Build an Economic Model in Your Spare Time. In Passion and Craft: Economists at Work, edited by Michael Szenberg, University of Michigan Press, 1997.

Week 3. Business Strategy

• 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.

• Optional: Shiller and Waldfogel, Music for a Song: An Empirical Look at Uniform Song Pricing and its Alternatives, Journal of Industrial Economics

Week 4. Business Strategy

• Read: Varian, H., Section 5 "Differentiation of products and prices" in Economics of Information Technology. Mattioli Lecture at Bocconi University, Milan, Italy, 2001.
• 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: 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.

• Read: Shapiro, C. and Varian, H. Versioning: The Smart Way to Sell Information Harvard Business Review, 1998.


• Optional: Shapiro, C. and Varian, H. Versioning, Notes to accompany Information Rules: A Strategic Guide to the Network Economy, Harvard Business School Press, 1998.

Week 5. Business Strategy

Week 6. Business Strategy

• 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.

• Read: McAfee, P., et al., Introduction to Economic Analysis, Version 2, 2009 [PDF]. 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.

Week 7. Business Strategy

• Read: Easley, D. and Kleinberg, J. Networks, Crowds, and Markets. Reasoning about a Highly Connected World. Cambridge University Press, 2010. Chapter 6, "Game Theory".

• Read: Brandenburger, A. and Nalebuff, B., The Right Game: Use Game Theory to Shape Strategy, Harvard Business Review, 1995.

Week 8. Industry Structure

• 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.

• Read: Chuang, J. Loci of Competition for Future Internet Architectures, IEEE Communications Magazine, July 2011.
• Read: McAfee, P., et al., Introduction to Economic Analysis, Version 2, 2009 [PDF]. Section 21.4 on "Mergers".

Week 9. Industry Structure; Policy and Regulation

• Read: U.S. Department of Justice and the Federal Trade Commission, Horizontal Merger Guidelines, issued August 19, 2010.
• 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.

• 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 10. Spring Break

Week 11. Economics of Information

• 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.

• Read: Levitt and Dubner, Cracking the Real Estate Code, Wired, May 2005.
• Read: Akerlof, G. A. (1970). The Market for "Lemons": Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics 84(3): 488-500. (This is one of the select few journal articles that have their own Wikipedia articles.)


• Optional: Feldman, Chuang, Stoica, Shenker, Hidden action in network routing. IEEE Journal for Selected Areas in Communications, 2007.

Week 12. Economics of Privacy and Security

• Read: Acquisti, A. The Economics of Privacy: Theoretical and Empirical Aspects. 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.

• 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 13. Long Tail, Epidemics

• 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.
• Read: M. Cha, H. Kwak, P. Rodriguez, Y.-Y. Ahn, and S. Moon. I Tube, You Tube, Everybody Tubes: Analyzing the World’s Largest User Generated Content Video System. Proceedings of ACM Internet Measurement Conference, 2007.


• 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.

• 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.

Week 14. Epidemics and Network Structure

• 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.

• 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.

Week 15. Peer Production

• 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)
  http://www.nature.com/doifinder/10.1038/31225
  http://www.ped.fas.harvard.edu/people/faculty/publications_nowak/Nature98.pdf
• 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.

• 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.

Week 16. RRR Week

Week 17. Finals Week