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Part 1


Bacon / Hauer / Connery The top 20 centers in the IMDB (2004 ... 72) Sheen, Martin (2.72) Quinn, Anthony (2.72) Heston, Charlton (2.72) Hackman, Gene (2 ... – PowerPoint PPT presentation

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Title: Part 1

  • Part 1 Trust

Trust is a Honda Accord
  • As opposed to
  • "Existentialist trust"
  • Reliance on ...

  • Working definition handing over the control of
    the situation to someone else, who can in
    principle choose to behave in an opportunistic
  • the lubricant of society it is what makes
    interaction run smoothly
  • Example
  • Robert Putnams
  • Bowling alone

The Trust Game as the measurement vehicle
The Trust Game general format
S lt P lt R lt T
The Trust Game as the measurement vehicle
Ego characteristics trustors
Note results differ somewhat depending on
which kind of trust you are interested in.
  • Gentle and cooperative individuals
  • Blood donors, charity givers, etc
  • Non-economists
  • Religious people
  • Males
  • ...
  • ? Effects tend to be relatively small, or at
    least not systematic

Alter characteristics some are trusted more
  • Appearance
  • Nationality
  • We tend to like individuals from some countries,
    not others.

Alter characteristics some are trusted more
  • Appearance
  • - we form subjective judgments easily...
  • - ... but they are not related to actual
  • - we tend to trust
  • pretty faces
  • average faces
  • faces with characteristics similar to our own

Alter characteristics some are trusted more
  • Nationality

Some results on trust between countries
  • There are large differences between countries
    some are trusted, some are not
  • There is a large degree of consensus within
    countries about the extent to which they trust
    other countries
  • Inter-country trust is symmetrical the Dutch do
    not trust Italians much, and the Italians do not
    trust us much

Trust has economic value (1)
contract length
trust between NL and other country
Trust has economic value (2)
after-sales problems
trust between NL and other country
The effect of payoffs on behavior
Game theory anyone?
  • Started scientifically with Von Neumann en
  • (1944 Theory of games
  • and economic behavior)
  • 1950 John Nash (equilibrium concept). Nobel
    prize for his work in 1994, together with
    Harsanyi en Selten.

Trust Games utility transformations
Next experiment
  • let lots of people play lots of different kinds
    of Trust Games with each other
  • (how do you do that?) ? Experimental economics
  • figure out what predicts behavior best personal
    characteristics of ego, of alter, or

The effect of payoffs on behavior
  • Trustworthy behavior temptation explains
    behavior well
  • Trustful behavior risk ((355)/(755)) explains
    behavior well, temptation ((9575)/(955)) does
  • People are less good at choosing their behavior
    in interdependent situations such as this one
  • Nevertheless strong effects of the payoffs on
    trustful and trustworthy behavior

Solving the trust problem
  • Norms
  • Changing the incentive structure (sanctions /
  • Repetition
  • (cf. Robert Axelrod "The evolution of

  • Part 2 - Small world networks
  • The way in which people are embedded in a
    network of connections might affect, or even
    completely determine, their behavior
  • NOTE
  • Edge of network theory
  • Not fully understood yet
  • but interesting findings

The network perspective
Two firms in the same market. Which firm performs
better (say, is more innovative) A or B?
  • This depends on
  • Cost effectiveness
  • Organizational structure
  • Corporate culture
  • Flexibility
  • Supply chain management

The network perspective
Two firms in the same market. Which firm performs
better (say, more innovative) A or B?
Note Networks are one specific way of dealing
with market imperfection
Example network (source Borgatti)
Example network a food chain
Example network terrorists (source Borgatti)
Kinds of network arguments (from Burt)
  • Closure competitive advantage stems from managing
    risk closed networks enhance communication and
    enforcement of sanctions
  • Brokerage competitive advantage stems from
    managing information access and control networks
    that span structural holes provide the better
  • Contagion information is not a clear guide to
    behavior, so observable behavior of others is
    taken as a signal of proper behavior.
  • 1 contagion by cohesion you imitate the
    behavior of those you are connected to
  • 2 contagion by equivalence you imitate the
    behavior of those others who are in a
    structurally equivalent position
  • Prominence information is not a clear guide to
    behavior, so the prominence of an individual or
    group is taken as a signal of quality

The small world phenomenon Milgrams (1967)
original study
  • Milgram sent packages to a couple hundred people
    in Nebraska and Kansas.
  • Aim was get this package to ltaddress of person
    in Bostongt
  • Rule only send this package to someone whom you
    know on a first name basis. Try to make the chain
    as short as possible.
  • Result average length of chain is only six
  • six degrees of separation

Milgrams original study (2)
  • Is this really true?
  • It seems that Milgram used only part of the data,
    actually mainly the ones supporting his claim
  • Many packages did not end up at the Boston
  • Follow up studies often small scale

The small world phenomenon (cont.)
  • Small world project is (was?) testing this
    assertion as we speak (http//smallworld.columbia.
    edu), you might still be able to participate
  • Email to ltaddressgt, otherwise same rules.
    Addresses were American college professor, Indian
    technology consultant, Estonian archival
  • Conclusions thusfar
  • Low completion rate (around 1.5)
  • Succesful chains more often through professional
  • Succesful chains more often through weak ties
    (weak ties mentioned about 10 more often)
  • Chain size typically 5, 6 or 7.

The Kevin Bacon experiment Tjaden (/-1996)
  • Actors actors
  • Ties has played in a movie with
  • Small world networks
  • short average distance between pairs
  • but relatively high cliquishness

The Kevin Bacon game
  • Can be played at
  • http//
  • Kevin Bacon
  • number
  • Jack Nicholson 1 (A few good men)
  • Robert de Niro 1 (Sleepers)
  • Rutger Hauer (NL) 2 Jackie Burroughs
  • Famke Janssen (NL) 2 Donna Goodhand
  • Bruce Willis 2 David Hayman
  • Kl.M. Brandauer (AU) 2 Robert Redford
  • Arn. Schwarzenegger 2 Kevin Pollak

Connecting the improbable
Bacon / Hauer / Connery
The top 20 centers in the IMDB (2004?)
  1. Steiger, Rod (2.67)
  2. Lee, Christopher (2.68)
  3. Hopper, Dennis (2.69)
  4. Sutherland, Donald (2.70)
  5. Keitel, Harvey (2.70)
  6. Pleasence, Donald (2.70)
  7. von Sydow, Max (2.70)
  8. Caine, Michael (I) (2.72)
  9. Sheen, Martin (2.72)
  10. Quinn, Anthony (2.72)
  11. Heston, Charlton (2.72)
  12. Hackman, Gene (2.72)
  13. Connery, Sean (2.73)
  14. Stanton, Harry Dean (2.73)
  15. Welles, Orson (2.74)
  16. Mitchum, Robert (2.74)
  17. Gould, Elliott (2.74)
  18. Plummer, Christopher (2.74)
  19. Coburn, James (2.74)

NB Bacon is at place 1049
Elvis has left the building
Strogatz and Watts
  • 6 billion nodes on a circle
  • Each connected to 1,000 neighbors
  • Start rewiring links randomly
  • Calculate average path length and clustering
    as the network starts to change
  • Network changes from structured to random
  • APL starts at 3 million, decreases to 4 (!)
  • Clustering probability that two nodes linked to
    a common node will be linked to each other
    (degree of overlap)
  • Clustering starts at 0.75, decreases to 1 in 6
  • Strogatz and Wats asked what happens along the

Strogatz and Watts (2)
We move in tight circles yet we are all bound
together by remarkably short chains (Strogatz,
? Implications for, for instance, AIDS research.
We find small world networks in all kinds of
  • Caenorhabditis Elegans
  • 959 cells
  • Genome sequenced 1998
  • Nervous system mapped
  • ? small world network
  • Power grid network of Western States
  • 5,000 power plants with high-voltage lines
  • ? small world network

Small world networks so what?
  • You see it a lot around us for instance in road
    maps, food chains, electric power grids,
    metabolite processing networks, neural networks,
    telephone call graphs and social influence
    networks ? may be useful to study them
  • We (can try to) create them
  • see Hyves, openBC, etc
  • They seem to be useful for a lot
  • of things, or at least pop up often,
  • but how do they emerge?

Combining game theory and networks Axelrod
(1980), Watts Strogatz (1998?)
  1. Consider a given network.
  2. All connected actors play the repeated Prisoners
    Dilemma for some rounds
  3. After a given number of rounds, the strategies
    reproduce in the sense that the proportion of
    the more succesful strategies increases in the
    network, whereas the less succesful strategies
    decrease or die
  4. Repeat 2 and 3 until a stable state is reached.
  5. Conclusion to sustain cooperation, you need a
    short average distance, and cliquishness (small

How do these networks arise?
  • Perhaps through preferential attachment
  • lt show NetLogo simulation heregt
  • Observed networks tend to follow a power-law.
    They have a scale-free architecture.

The tipping point (Watts)
  • Consider a network in which each node determines
    whether or not to adopt (for instance the latest
    fashion), based on what his direct connections
  • Nodes have different thresholds to adopt
  • (random networks)
  • Question when do you get cascades of adoption?
  • Answer two phase transitions or tipping points
  • in sparse networks no cascades
  • as networks get more dense, a sudden jump in the
    likelihood of cascades
  • as networks get more dense, the likelihood of
    cascades decreases and suddenly goes to zero

Watts, D.J. (2002) A simple model of global
cascades on random networks. Proceedings of the
National Academy of Sciences USA 99, 5766-5771
Open problems and related issues ...
  • Decentralized computing
  • Imagine a ring of 1,000 lightbulbs
  • Each is on or off
  • Each bulb looks at three neighbors left and
  • ... and decides somehow whether or not to switch
    to on or off.
  • Question how can we design a rule so that the
    network can solve a given task, for instance
    whether most of the lightbulbs were initially on
    or off.
  • - As yet unsolved. Best rule gives 82 correct.
  • - But on small-world networks, a simple
    majority rule gets
  • 88 correct.
  • How can local knowledge be used to solve global

Open problems and related issues (2)
  • Applications to
  • Spread of diseases (AIDS, foot-and-mouth disease,
    computer viruses)
  • Spread of fashions
  • Spread of knowledge
  • Small-world networks are
  • Robust to random problems/mistakes
  • Vulnerable to selectively targeted attacks

Application to trust
  • People (have to or want to) trust each other.
  • Whether or not this will work out, is dependent
    on the context in which the interaction occurs ?
    this can be given a more concrete meaning it is
    dependent on in which kind of network the Trust
    Game is being played!
  • Dealing with overcoming opportunistic behavior is
    difficult, given that people are relatively poor
    at using the other parties incentives to predict
    their behavior. Perhaps it is better to make sure
    that the network you are in, deters opportunistic

cf. eBay reputation
Possible assignment
  • For the programmers have a look at the
    literature on "games in networks".
  • Run a simulation where people are playing Trust
    Games on a network. Try to determine, for
    instance, how network characteristics affect
    behavior in Trust Games.
  • Take one other "soft topics" such as trust
    (regret? envy? guilt?). Scan the literature for
    implementations of that particular topic in terms
    of abstract games. Explain and summarize the