>>>>> "Ben" == Ben Tilly <btilly@gmail.com> writes: Ben> Email has existed for over 3 decades and allows people to Ben> communicate with strangers. I submit that most of us mostly Ben> talk with people we know. I'm not talking about "talking", I'm talking about connection. You know, the kind of connection that associates you with the company that administers so-3-0-0.mpr2.iad5.us.above.net, or with the Tsuchiura office of Nomura Shoken. Didn't know about those, did you? So you obviously didn't "talk" to them personally, and those connections cost you no time, though you almost certainly connected to the former, and quite likely are fuzzily connected to the latter ("shoken" means "securities broker" in Japanese). It's true that asymptotically the value of such networks will be limited by people talking to each other. But today less than one percent of the world's population can say that their personally received value is dominated by their social relations. Most people spend well over 50% of their time merely providing for the physical needs of themselves and the four, five, or ten people they most value talking with. So I conjecture we have several generations of "mere" economic growth to pass through before the kinds of consumption activity you focus on present a binding constraint on network valuation. Ben> If you disagree, then I expect you today to go out, find a Ben> random email address, contact that person and open up a Ben> conversation. I am fairly confident in predicting that Ben> you'll be disappointed in the result. You're paying no attention at all to what I've written, except those parts you find easy to disagree with. >> What search technology *may* make possible is scaling up search >> in a heterogeneous network to a billion participants or so. Ben> It does. However what do people search FOR? I'm not talking about people doing the searching. Read what I wrote, I said that explicitly. This is really important. I can't give crystal-clear examples, because what we're talking about is Tom's claim of a new emergent effect. It is certainly true that historical claims of new emergent effects *that will transform society globally* have been nearly always bogus, but not quite so bogus as perpetual motion. In particular, new emergent effects that support a profitable business model for a while are found regularly. I can't be very optimistic about Tom's more grandiose claims, but this being FSB, I certainly do hope, and expect with positive probability, that there's a business opportunity in it for someone, maybe Tom himself. It's worth being precise about our analysis for that reason. And there are such global innovations. The market (bazaar) per se is one. The very special markets for primary factors (ie, land, labor, and financial capital) are another. I suspect that the Internet is a third. We don't really understand the connection between the abstract economics of the market and its generalization to economics of more general networks, so it's hard to explain what's going on. I can only humbly request that you try to figure out what I'm trying to say, help me to clarify it (including in my own mind), and disagree with *that* as appropriate (and of course correct my math mistakes!) Ben> Andrew and I have been contacted since then by multiple Ben> people who had come up with their own scaling estimates, it Ben> is fascinating how many different approaches all come up with Ben> n log(n) or something similar. Which is not Metcalfe's law, but it is still a *strong* network technology in economic terms. Do you know what Walmart's margin on turnover is? Around 2%. Can you imagine what they could do with n log n returns to scale if they can dominate an inherently linear industry on that margin? Ben> This is true, but people DON'T join networks at random. The networks I'm talking about, people don't join at all. They *are* members; they participate as much as they please. Thus the focus on marginal cost of participation per unit compared to value per unit. >> communication (sorry, no examples---that's Tom's job! ;-) might >> come pretty close, at least up to population levels feasible >> for humans on this planet. Ben> Whether it comes close depends on what you're communicating. Ben> With markets I'm communicating something very simple that Ben> machines can easily evaluate. With content I'm communicating Ben> something complex that machines cannot easily evaluate. The Ben> resulting dynamics are very different. The machines don't evaluate, the network does. The market works for cars and homes just as it does West Texas Light and red wheat #2. >> I think the jury's out on just how far Metcalfe's Law can >> extend its domain---but the financial markets are a pretty >> compelling example for "hey, this really does work sometimes!" Ben> So if Metcalfe's Law failed offline, for Usenet, and in Web Ben> 1.0, Who said it has failed for Usenet and Web 1.0? We're talking about a social phenomenon. Internet time does not apply, it is way too early to talk about failure, even for Usenet (which might be worth considering a kind of Web 0.1 for this purpose). Ben> It is a basic property of human nature that virtually Ben> everything is junk to us, and the *meaningful* connections we Ben> draw have very different topologies. Meaningful ! <=> valuable. In fact, "meaningful" ! <=> "meaningful connection". Sometimes the medium is the message, sometimes the message is valuable but otherwise not meaningful. >> First, it's not an assumption of equal value, really. It's an >> assumption of equal expected value per connection, independent >> of the number of connections. Apply Law of Large Numbers, live >> Metcalvian ever after. Ben> Sorry, insert the word expected and my statement still Ben> stands. (It may be that my expectations are rather different Ben> than yours, but I think that mine have a better grounding in Ben> actual human behaviour...) Nevertheless, this stuff is very delicate. I ask you to be precise, because there are lots of participants who are not going to make the automatic generalization from "equal value" to "equal expected/average value". >> Second, consider Mr. Lynch's problem. Have you ever watched a >> headhunter network a LUG meeting? ;-) If such people (excuse >> the exaggeration) are a constant fraction of the population, >> whammer jammer, Metcalfe's Law! (In the long run, nobody else >> will matter if they obey Metcalfe's Law---their Metcalfe value >> is a lower bound on social value.) Ben> Yes I have. It is the headhunter's job to facilitate finding Ben> potential connections of value. Their presence (like a Ben> search engine online) therefore can bring the potential value Ben> of the network from O(n) to O(n * log(n)). I don't understand that statement at all. I'm now not sure my implicit model made sense at all, so I won't try to argue for Metcalfe's Law in the sense of a quadratic increase at this point. But the value of the match achieved is an order statistic and, unless you believe that people have unbounded potential value for a single connection, thus bounded above. Since there's one match per person, the best *your* model of headhunting can achieve is O(n). Ben> Yes, this is true. For instance in telephone networks, many Ben> strangers will call the local pizza parlour. However again Ben> their potential value is bounded above by the potential value Ben> that humans find from being on the network, which I believe Ben> is generally far, far lower than Metcalfe's Law predicts. An economist only needs strictly superlinear to get seriously excited. I realize that from the point of view of corporate profit or rents earned by top programmers, quadratic is very nice, but the social organization effects are driven by small differences at the margin. Ben> I agree that Google increases the size of the network by Ben> increasing the marginal value of participating on the network Ben> to all participants. However that's a second-order effect Ben> and I think it far smaller than the primary benefit of Ben> lowering the difference between the value that people Ben> actually achieve and theoretically could in a perfect world. You are seriously confusing if you call an effect that is O(f(n)), f' > 0, "second-order" compared to an effect that is O(1). What are you trying to say? Ben> Oh no. Reed's Law *explicitly* says that every new member Ben> has that effect. Which is why it doesn't pass the "smell" Ben> test. >> Strawman! Strawman! Out to the cornfields with you! Ben> Strawman? How so? Ben> Reed's law says that the value of a network is exponential in Ben> the size of that network. At some point adding a new person Ben> will, on average, increase the value of that network by more Ben> than the current GNP. This is not a strawman argument - it Ben> is just a demonstration that Reed's law is not very Ben> realistic. That's true, but that's not the argument you wrote above. >> Reed's Law would work if the fraction of great minds per >> generation were constant regardless of size of generation, and >> everybody else was worth precisely zero in this sense. I think >> that's unlikely but arguable. Ben> I don't see that. You don't understand the "in a linear context substitute expected value for constant value, and get the same theorem" argument? Above you claimed it goes without saying. Or are you once again implicitly referring to the argument that I immediately proceed to make myself, but you haven't made yet? I expect that of propaganda maestros like RMS, but not of you. >> The problem with Reed's law is elsewhere. It is that it >> assumes that all needed groups actually form. If there's one >> great mind, then she has to participate in all (N-1)(N-2) >> possible groups for her to get Reed's law to work. Again, you >> could adjust this for some sort of average or probabilistic >> formation, but I don't think that makes much more sense than >> assuming all groups form---you still need the number of groups >> forming to be proportional to the number of possible groups, >> and eventually Ms. Great Mind will get tired of all that >> networking. Ben> Um, your math is off. She has to participate in something Ben> proportional to 2**(n-1) possible groups for her to get Ben> Reed's law to work. This is unrealistic. Yeah, well at least I was off in the direction such that correcting the math made the argument work better. :-) -- Graduate School of Systems and Information Engineering University of Tsukuba http://turnbull.sk.tsukuba.ac.jp/ Tennodai 1-1-1 Tsukuba 305-8573 JAPAN Economics of Information Communication and Computation Systems Experimental Economics, Microeconomic Theory, Game Theory