News and Notes 226

1
News and Notes 2/26

• Homework 2 due now
• Midterm March 4 (one week from today)
• will cover up to and including The Web as
  Network
• closed book absolutely no auxiliary materials
  allowed
• no notes, books, articles, calculators, laptops,
  spatulas, etc.
• Part or all of Tuesdays class will be a midterm
  review

2
Context, Motivation and Influence the Emergence
of the Global from the Local

• Networked Life
• CSE 112
• Spring 2004
• Prof. Michael Kearns

3
So Far We Have

• Examined a wide variety of network types and
  specifics
• types content, technological, social, physical,
  etc.
• specifics the web, Kevin Bacon graph, nervous
  system, etc.
• but a rather limited variety of processes on
  networks
• navigation forwarding letters or messages
• search finding relevant pages on the web
• have primarily examined relatively passive
  activities
• In reality, many kinds of activities in (human)
  networks are
• based on preferences, desires and goals
• involve direct or indirect interaction with
  others
• entail interdependent behaviors
• Broadly speaking, we are entering the domains of
• social science
• psychology
• economics and game theory

4
Examples from Schelling and Beyond

• Going to the beach or not
• too few ? youll go, making it more crowded
• too many ? you wont go, or will leave if youre
  there
• Sending Christmas cards
• people send to those they expect will send to
  them
• everybody hates it, but no individual can break
  the cycle
• Investing in an apartment fire sprinkler
• only worth it if enough people do it
• insurance companies wont discount for it
• Choosing where to sit in the Levine Auditorium

5
Sitting in Levine

• Would anyone like to change their seat now?
• Common desires
• having a buffer zone
• being near an exit or aisle
• not wanting to sit in front of someone
• not wanting to have to climb over people
• not wanting to be climbed over
• preferring the front, back, or middle rows
• 25 liked their seats, 5 indifferent, 1 disliked
• may the rest of your lives be so enjoyable
• 25 sat in the same place every class, 5 move
  around
• suppose the auditorium were half the size
• Global desires 18 described a different
  arrangement
• move everyone forward
• evenly distributed

6
Choice Quotes

• I want to put my feet on the chair in front of
  me, but I dont want feet near my head.
• I would try to fulfill the preferences of as
  many people as possible, instead of completely
  satisfying only a few.
• All the smart, cute boys would sit near me, and
  all the other girls can go to the very back.
• My seat would lie where there is the most space
  between me and the other people.
• I would want to sit in the last third of the
  auditorium but would also want some people
  sitting behind me.
• I would be in the third or fourth row with
  nobody in my row who had to get up and leave.
  About 10 people would fill the two rows in front
  of me, and everyone else would be either on the
  right side (so they dont walk over me if they
  leave) or behind me in the back 2/3 of the room.
• I am assuming everyone is happy with their seat
  because the auditorium is empty enough.

7
Global Conflict from Local Preferences

• You cant all sit in the back or front rows
• You cant all have too large a buffer zone
• If you like sitting on the aisle, but dont like
  being climbed over, youll probably be unhappy
  sooner or later
• e.g. by people who like sitting in the middle
• You cant have too many who are far from the
  crowd
• You cant all be in the back 1/3 with some behind
  you
• Etc. etc. etc.
• Everyone may have personal preferences that
• are rather mild
• can easily all be fulfilled with a small (or
  large) enough group
• but are collectively impossible with the current
  group size
• The impossibility may be subtle and diffuse
• think of an overconstrained system of equations

8
Equilibrium Analysis

• Have a complex system of interacting individuals
• each with his or her own preferences, desires,
  goals, etc.
• each adjusting their behavior in response to
  others
• each trying to selfishly improve their own
  situation
• Equilibrium
• a global situation (choice of individual
  behaviors)
• in which no individual wants to change their
  behavior unilaterally
• A stable state or fixed point of the behavioral
  dynamics
• Not necessarily desirable
• for individuals
• for the global population
• just a situation nothing can do anything about
  (by themselves)
• But without equilibria, its difficult to
• describe how the system will evolve
• judge the goodness or badness of collective
  outcomes
• discuss how we might influence collective
  outcomes

9
Roadmap Next 5 Weeks

• Micromotives and Macrobehavior (Schelling)
• market economies vs. more general social systems
• tipping and cascading in social systems
• Game Theory and Economics
• generalization and formalization of equilibrium
  notions
• Nash, correlated, market, and other equilibria
• games and markets on networks
• Interdependent Security Games
• tipping and cascading in airline security
• influence of network structure
• Behavioral Game Theory
• merging psychology with economics
• network effects
• Evolutionary Game Theory
• optimize or mimic?

10
Schelling Quotes

• On the amorality of equilibrium analysis
• The body of a hanged man is in equilibrium when
  it stops swinging, but nobody is going to insist
  that the man is all right.
• On contingent and interdependent behavior
• If your problem is that there is too much
  traffic, you are part of the problem.
• On the open-ended influence of apparently closed
  markets
• The market for pets does not reflect the
  interest of bird lovers in the market for cats.
• On inescapable accounting identities
• Any one of us can get rid of Canadian quarters
  by passing them on, but collectively we cannot.

11
Schellings Morals

• Generalized social systems vs. economics
• economics is special case of voluntary
  participation
• but both share many important concepts --- e.g.
  equilibrium analysis
• Cannot infer individual preferences from global
  outcome
• due to frequent unilateral nature of
  equilibrium/outcome
• individuals may be trapped in the system
• Global outcome may violate everyones common
  wishes
• we might all be trapped
• then how did we get here, and why cant we
  escape?
• The prevalence of critical mass phenomena
• what happens when not enough or too many engage
  in some behavior
• Social systems often show cascading and tipping
• we become trapped by incremental, myopic,
  self-interested behavior
• final can be highly influenced by initial
  conditions

12
The Market for Lemons

• People who are selling bad used cars know it
• People who are buying used cars dont know which
  are bad
• Buyers average (expected) fraction of lemons into
  prices
• a low price for a good car ? discourages sellers
  of good cars
• a high price for a lemon ? encourages sellers of
  lemons
• So, the fraction of lemons increases
• Now even average cars are undervalued and leave
  market
• Which means an even higher fraction of lemons,
  etc.
• Note evolution occurs even if lemons are
  initially rare!
• Generalizes to many settings with asymmetric
  information
• insurance companies and people with diseases,
  suicidal tendencies,
• Market may unravel entirely due to such processes

13
Volleyball, Critical Mass and Tipping

• Consider activities where the number who will
  participate depends on the (expected) number
  participating
• Schellings examples volleyball and seminars
• but also going to the movies, Internet downloads,
  voting,
• individuals may be (e.g.) computer programs
• May prefer crowds, solitude, or some precise
  balance
• Different people may have different preferences
• Dynamics can often be conceptualized in a diagram
• To compute what will happen from a given starting
  point
• go up to the curve from the starting point
• go from current point on curve horizontally (left
  or right) to diagonal
• go from diagonal vertically (up or down) back to
  curve
• keep repeating last two steps
• Can get equilibria (stable or unstable), cycles
  (limited or not)

14
Local Preferences and Segregation

• Special case of preferences housing choices
• Imagine individuals who are either red or
  blue
• They live on in a grid world with 8 neighboring
  cells
• Neighboring cells either have another individual
  or are empty
• Individuals have preferences about demographics
  of their neighborhood
• Here is a very nice simulator