Tentative Schedule and Readings (Subject to Change)
Assignments and projects are posted on bCourses.
Lecture slides will be available on bCourses 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
January 18: Course Overview
January 18: Assignment 1 posted
Week 2. Economics of information goods, services, platforms
January 23: Economies of Scale and Scope
January 25: Economic Modeling and Analysis
- 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.]
Week 3. Economics of information goods, services, platforms
January 30: Network Effects and Switching Costs
January 30: Assignment 1 due; Assignment 2 posted
- 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.
- Skim: 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.
February 1: Business strategy: strategic pricing
Week 4. Business Strategy
February 6: Price Discrimination
February 8: Bundling
February 8: Assignment 2 due; Assignment 3 posted
- 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.
Week 5. Business Strategy
February 13: Versioning
February 15: Price Conditioning; Economics of Free
- 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.
- 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.
- Skim: Anderson, C., Economics of free: Free! Why $0.00 Is the Future of Business. Wired 02.25.08.
- Skim: 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 6. Competition Models
February 20: President's Day -- No Class
February 22: Competition Models
February 22: Assignment 3 due; Assignment 4 posted
- 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. Competition Models
February 27: Game Theoretic Models
March 1: Game Theoretic Models
Week 8. Business Strategy & Industry Structure
March 6: Complements and Substitutes
March 8: 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 9. Industry Structure
March 13: Loci of Competition
March 15: Market Power
March 15: Assignment 4 due; Assignment 5 posted
Week 10. Industry Structure; Policy and Regulation
March 20: Vertical Control
March 22: 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 22: 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 11. Spring Break
March 27: No Class
March 29: No Class
Week 12. Economics of Information
April 3: Value of Information
April 5: 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.
- Read: Levitt and Dubner, Cracking the Real Estate Code, Wired, May 2005.
- Skim: 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, M., Chuang, J. Stoica, I. Shenker, S. Hidden action in network routing. IEEE Journal for Selected Areas in Communications, 2007.
Week 13. Economics of Privacy and Security
April 10: Economics of privacy
April 12: Economics of information 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.
- Read: Bruce Schneier. Data is a toxic asset, so why not throw it out?. CNN, March 2016.
- Skim: Alessandro Acquisti, Leslie John, and George Loewenstein. What is privacy worth?. The Journal of Legal Studies, June 2013.
- Optional: Gergely Biczok, Pern Hui Chia. Interdependent Privacy: Let Me Share Your Data. Proceedings of Financial Cryptography 2013: 338-353.
- Optional: Bruce Schneier. A Revised Taxonomy of Social Networking Data, 2010.
April 12: Assignment 6 due; Final Project posted
- Read: Anderson, R., Moore T.,, Information Security Economics - and Beyond. 2008.
- Skim: 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 14. Long Tail, Epidemics
April 17: Long tail, search, and recommendation
April 19: Network cascades and social epidemics
- 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: 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", Sections 18.1-18.6.
- Optional: Anderson, C., The Long Tail, Wired 12.10, Oct 2004.
- 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", Sections 19.1-19.2.
- Skim: Salganik, M., Dodds, P., Watts, D., Experimental Study of Inequality and Unpredictability in an Artificial Cultural Market, Science, Feb 2006.
- Skim: Easley, D. and Kleinberg, J. Networks, Crowds, and Markets. Reasoning about a Highly Connected World. Cambridge University Press, 2010. Chapter 21, "Epidemics", Sections 21.1-21.3.
Week 15. Network Structure and Peer Production
April 24: Network structure, network formation
April 26: Peer production
- 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.
- 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.
- Skim: Luis Von Ahn. Games with a Purpose. IEEE Computer, 2006.
- Skim: Braess's paradox. Wikipedia.
- Skim: P. Chia, J. Chuang. Community-based Web Security: Complementary Roles of the Serious and Casual Contributors. Proceedings of ACM CSCW, February 2012.
- Optional: 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: Wilkinson, D. Strong Regularities in Online Peer Production, Proceedings of ACM Conference on E-Commerce, July 2008.
Week 16. RRR Week
May 1: No Class
May 3: No Class
Week 17. Finals Week
May 8: Final Project Report due