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The Middleman Economy: How Brokers, Agents, Dealers, and Everyday Matchmakers Create Value and Profit by Marina Krakovsky
Affordable Care Act / Obamacare, Airbnb, Al Roth, Ben Horowitz, Black Swan, buy low sell high, Chuck Templeton: OpenTable:, Credit Default Swap, cross-subsidies, crowdsourcing, disintermediation, diversified portfolio, experimental economics, George Akerlof, Goldman Sachs: Vampire Squid, income inequality, index fund, information asymmetry, Jean Tirole, Joan Didion, Kenneth Arrow, Lean Startup, Lyft, Marc Andreessen, Mark Zuckerberg, market microstructure, Martin Wolf, McMansion, Menlo Park, Metcalfe’s law, moral hazard, multi-sided market, Network effects, patent troll, Paul Graham, Peter Thiel, pez dispenser, ride hailing / ride sharing, Robert Metcalfe, Sand Hill Road, sharing economy, Silicon Valley, social graph, supply-chain management, TaskRabbit, The Market for Lemons, too big to fail, trade route, transaction costs, two-sided market, Uber for X, uber lyft, ultimatum game, Y Combinator
Thiers set out to build this bridge. Bridges as Two-Sided Markets * * * Lacking both experience and theoretical knowledge, she didn’t realize that the bridge she was trying to build had the interesting properties of what economists call a two-sided market. These days, two-sided markets (sometimes called two-sided networks or two-sided platforms) are everywhere because many of today’s Internet start-ups are middlemen businesses of exactly this type: whether you’re talking about connecting homeowners with guests (Airbnb) or drivers with fares (Lyft and Uber) workers with small jobs (TaskRabbit) restaurants with diners wanting take-out meals (GrubHub, Eat24) or doctors with patients (ZocDoc), you’re describing a two-sided market. At the same time, and maybe not coincidentally, the study of two-sided markets has become a popular field among academics, with many opinions about what counts as a two-sided market.
Because buyers usually want to be where sellers are, and sellers usually want to be where buyers are, a two-sided network with an abundance of participants on one side tends to attract more comers on the other side. In the language of economics—and increasingly of tech investors—two-sided markets usually create “indirect network effects.”36 As one side grows, the network becomes more attractive to the other side, and as the other side grows, it attracts more users who want to connect with that side. This positive feedback loop promotes rapid growth once you reach critical mass. That’s why tech investors love network effects. But this same growth curve means two-sided markets are extremely hard to get off the ground, as Thiers found out firsthand: how do you get a sitter to sign up for a service that doesn’t have a single parent, and likewise, how do you get a parent to sign up for a service that has no sitters?
Rather, it’s that without both sides on board, there is no service at all. If you want to open a gift shop—a middleman business that by most definitions is not a two-sided market—you lease your retail space, you buy some inventory from a wholesaler, and you’re ready to roll: a wholesaler won’t refuse your prepaid order because you have no customers yet. But if, on the other hand, your whole value proposition is access to your network, then if you have no network, you’ve got nothing. So how can you possibly begin? The typical way out of this chicken-and-egg problem is for the middleman to subsidize one side, thus getting these initial users to sign up before there’s anything on the other side. Even after a two-sided market takes off, with plenty of users on both sides and therefore the potential to charge both sets of users, middlemen usually continue to offer the service for free to one side while making all their money from charging the other side for access, relying on these cross-subsidies for continued growth and profit.
The Inner Lives of Markets: How People Shape Them—And They Shape Us by Tim Sullivan
"Robert Solow", Airbnb, airport security, Al Roth, Alvin Roth, Andrei Shleifer, attribution theory, autonomous vehicles, barriers to entry, Brownian motion, business cycle, buy and hold, centralized clearinghouse, Chuck Templeton: OpenTable:, clean water, conceptual framework, constrained optimization, continuous double auction, creative destruction, deferred acceptance, Donald Trump, Edward Glaeser, experimental subject, first-price auction, framing effect, frictionless, fundamental attribution error, George Akerlof, Goldman Sachs: Vampire Squid, Gunnar Myrdal, helicopter parent, information asymmetry, Internet of things, invisible hand, Isaac Newton, iterative process, Jean Tirole, Jeff Bezos, Johann Wolfgang von Goethe, John Nash: game theory, John von Neumann, Joseph Schumpeter, Kenneth Arrow, late fees, linear programming, Lyft, market clearing, market design, market friction, medical residency, multi-sided market, mutually assured destruction, Nash equilibrium, Occupy movement, Pareto efficiency, Paul Samuelson, Peter Thiel, pets.com, pez dispenser, pre–internet, price mechanism, price stability, prisoner's dilemma, profit motive, proxy bid, RAND corporation, ride hailing / ride sharing, Robert Shiller, Robert Shiller, Ronald Coase, school choice, school vouchers, sealed-bid auction, second-price auction, second-price sealed-bid, sharing economy, Silicon Valley, spectrum auction, Steve Jobs, Tacoma Narrows Bridge, technoutopianism, telemarketer, The Market for Lemons, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, transaction costs, two-sided market, uber lyft, uranium enrichment, Vickrey auction, Vilfredo Pareto, winner-take-all economy
The dense mathematics of his academic papers has served as a basis for regulatory policies on telecommunication networks. Tirole also applied himself to the question of how to regulate credit cards, which in turn led to a series of papers that aimed to understand two-sided markets more broadly: examining why they exist, what makes them different from the one-sided variety, and how competing platforms like Visa and Amex vie for customers on both sides of their respective markets, and providing some guiding principles for builders of two-sided markets and the authorities that regulate them. Much of Tirole’s work on platforms takes as its starting point that a two-sided market is one where participants on either side couldn’t simply find one another and strike a bargain in the absence of the platform standing between them.13 If they could, then they wouldn’t need the services of the platform.
It just wants to sell tickets to a lot of players and make sure the game is played on its turf.7 To do so, you have to ensure that the players you let onto the field actually enhance the platform’s value, so both sides stick around to play. (Think about the value proposition at eBay if conmen dominated its sellers’ ranks.) Looking at a two-sided market through this lens—as a space where people meet and not just where trade takes place—is a new angle to understanding exchange. The difference between one-sided and two-sided markets is subtle but meaningful. It changes the way that we might approach the market as a business or a consumer. And it affects how a regulator decides whether a platform can govern itself, or if there’s a need to step in to impose some rules on the businesses using the platform. The seemingly obscure rules of platforms have a great effect in your life.
The reason is, of course, because a bigger user base allows Google to extract ever-higher revenues from the other side of the market—the advertisers, who pay for search listings. In this case, stocking Google search results with more paid ads doesn’t do much to enhance the customer experience, so there’s a wide gap between what each side of the market pays to meet on Google. This state of affairs is entirely common in the realm of two-sided markets: many credit card companies don’t charge cardholders or even give them discounts, while merchants pay through the nose; shopping malls, a two-sided market from an earlier era, charge their tenants rent, while offering free parking and other inducements to attract shoppers. Sometimes the way that platforms charge can look perverse, until you understand the logic. Shopping malls charge their larger stores less money than smaller businesses because without those anchors to draw shoppers, the mall couldn’t exist.
Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You by Sangeet Paul Choudary, Marshall W. van Alstyne, Geoffrey G. Parker
3D printing, Affordable Care Act / Obamacare, Airbnb, Alvin Roth, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, Apple's 1984 Super Bowl advert, autonomous vehicles, barriers to entry, big data - Walmart - Pop Tarts, bitcoin, blockchain, business cycle, business process, buy low sell high, chief data officer, Chuck Templeton: OpenTable:, clean water, cloud computing, connected car, corporate governance, crowdsourcing, data acquisition, data is the new oil, digital map, discounted cash flows, disintermediation, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, Haber-Bosch Process, High speed trading, information asymmetry, Internet of things, inventory management, invisible hand, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, Khan Academy, Kickstarter, Lean Startup, Lyft, Marc Andreessen, market design, Metcalfe’s law, multi-sided market, Network effects, new economy, payday loans, peer-to-peer lending, Peter Thiel, pets.com, pre–internet, price mechanism, recommendation engine, RFID, Richard Stallman, ride hailing / ride sharing, Robert Metcalfe, Ronald Coase, Satoshi Nakamoto, self-driving car, shareholder value, sharing economy, side project, Silicon Valley, Skype, smart contracts, smart grid, Snapchat, software is eating the world, Steve Jobs, TaskRabbit, The Chicago School, the payments system, Tim Cook: Apple, transaction costs, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, winner-take-all economy, zero-sum game, Zipcar
This makes the design of monetization models more complex, since the platform must ensure that the value it gives away to one side can be used to capture value on the other side. Significant scholarly work has been done in this area. Two of this book’s authors (Geoff Parker and Marshall Van Alstyne) were among the first scholars to lay out the theory of two-sided market pricing.2 And the theory was mentioned as part of the 2014 Nobel Prize awarded to one of the other originators of two-sided market economics, Jean Tirole.3 Achieving the right balance among the complex factors involved in two-sided market pricing isn’t easy. Netscape, one of the pioneers of the Internet era, gave away browsers for free in hopes of selling web servers. Unfortunately, there was no proprietary connection between browsers and servers that Netscape could reliably control. Anyone could just as easily use Microsoft’s web server or the free Apache web server, which meant that Netscape was never able to monetize the other side of its free browser business.
Research Network, September 12, 2012, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1676444. 2. Parker and Van Alstyne, “Internetwork Externalities and Free Information Goods”; Geoffrey G. Parker and Marshall Van Alstyne, “Two-Sided Network Effects: A Theory of Information Product Design,” Management Science 51, no. 10 (2005); Eisenmann, Parker, and Van Alstyne, “Strategies for Two-Sided Markets.” 3. Jean-Charles Rochet and Jean Tirole, “Platform Competition in Two-Sided Markets,” Journal of the European Economic Association 1, no. 4 (2003): 990–1029. 4. Rob Hof, “Meetup’s Challenge,” Businessweek, April 14, 2005, http://www.businessweek.com/stories/2005-04-13/meetups-challenge. 5. Matt Linderman, “Scott Heiferman Looks Back at Meetup’s Bet-the-Company Moment,” Signal v. Noise, January 25, 2011, https://signalvnoise.com/posts/2751-scott-heiferman-looks-back-at-meetups-bet-the-company-moment-. 6.
Were the differences a matter of random luck, or were deeper design principles at work? What are the rules of the new economics of networks? Geoff and Marshall set about trying to answer these questions. It turned out to be a harder challenge than they expected. They ended up having to develop a new economic theory of two-sided networks. Their Harvard Business Review article “Strategies for Two-Sided Markets,” coauthored with Harvard professor Thomas R. Eisenmann, laid out what became one of the most widely taught theories of Internet business, one that is still taught in MBA programs around the world. Along with the work of other scholars, Geoff’s and Marshall’s insights helped to reshape mainstream thinking about business regulation. Later, at the MIT Initiative on the Digital Economy, they furthered their work with such firms as AT&T, Dun & Bradstreet, Cisco, IBM, Intel, Jawbone, Microsoft, Salesforce, SAP, Thomson Reuters, and many others.
Matchmakers: The New Economics of Multisided Platforms by David S. Evans, Richard Schmalensee
Airbnb, Alvin Roth, big-box store, business process, cashless society, Chuck Templeton: OpenTable:, creative destruction, Deng Xiaoping, disruptive innovation, if you build it, they will come, information asymmetry, Internet Archive, invention of movable type, invention of the printing press, invention of the telegraph, invention of the telephone, Jean Tirole, John Markoff, Lyft, M-Pesa, market friction, market microstructure, mobile money, multi-sided market, Network effects, Productivity paradox, profit maximization, purchasing power parity, QR code, ride hailing / ride sharing, sharing economy, Silicon Valley, Snapchat, Steve Jobs, Tim Cook: Apple, transaction costs, two-sided market, Uber for X, uber lyft, ubercab, Victor Gruen, winner-take-all economy
Then they had the insight that these businesses, and many others that look very different on the surface, have the same underlying business model. They all facilitate direct interactions between different types of customers. And they must use nontraditional, counterintuitive strategies to make money and survive. After working out a pioneering economic model, they wrote a paper, “Platform Competition in Two-Sided Markets,” which began circulating among economists in 2000.18 Economists now call these businesses multisided platforms because some of them actually facilitate interactions between more than two types of customers, as we will soon see. Jean Tirole received the Nobel Memorial Prize in Economic Sciences in 2014 for a number of important accomplishments, including his pioneering contributions to the new economics of multisided platforms.
Most consumers of ad-supported media, for example, pay little if anything and are provided content of significant value. Transaction cost: The economists’ term for frictions; see “Friction.” Turbocharged matchmaker: A matchmaker, or multisided platform, that benefits from a significant combination of powerful computer chips, the Internet, the web, broadband communications, programming languages and operating systems, and the Cloud. Airbnb, for example, benefits from all of these technologies. Two-sided market: The original name used to refer to industries that had “two-sided platforms.” Two-sidedness is a characteristic of businesses, not always of industries, however. Two-step strategy: An ignition strategy in which the platform secures significant participation by one group and then secures participation by the other group by offering them access to the first group. Advertising-supported media typically do this by securing eyeballs first and then selling access to them to advertisers.
Platform Scale: How an Emerging Business Model Helps Startups Build Large Empires With Minimum Investment by Sangeet Paul Choudary
3D printing, Airbnb, Amazon Web Services, barriers to entry, bitcoin, blockchain, business process, Chuck Templeton: OpenTable:, Clayton Christensen, collaborative economy, commoditize, crowdsourcing, cryptocurrency, data acquisition, frictionless, game design, hive mind, Internet of things, invisible hand, Kickstarter, Lean Startup, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, means of production, multi-sided market, Network effects, new economy, Paul Graham, recommendation engine, ride hailing / ride sharing, shareholder value, sharing economy, Silicon Valley, Skype, Snapchat, social graph, social software, software as a service, software is eating the world, Spread Networks laid a new fibre optics cable between New York and Chicago, TaskRabbit, the payments system, too big to fail, transport as a service, two-sided market, Uber and Lyft, Uber for X, uber lyft, Wave and Pay
Hence, the platform needs to figure out a model that incentivizes the harder side to join in. 5.On-Boarding Of Two Distinct Markets. On many platforms, producers and consumers may be two distinct markets. The same user may upload and view videos on YouTube but the traveler and driver markets, on Uber, are largely distinct. The typical user, on these platforms, plays only one of the two roles. Serving two-sided markets requires reaching minimum traction on both sides. Hence, two-sided markets require building two companies, often with completely different challenges, not just building two forms of behaviors among users. FIVE DESIGN PRINCIPLES FOR SOLVING CHICKEN-AND-EGG PROBLEMS With the above characteristics in mind, a solution to any chicken-and-egg problem relies on five key design principles: 1.Finding A Compelling Bait To Start The Loop.The first step in breaking a vicious cycle is to find an inorganic bait that attracts and hooks one of the two roles without the need for the other role being present.
Over time, the platform spilled beyond the initial use case to accommodate many different use cases. MAKE A TWO-SIDED MARKET ONE-SIDED The micro-market strategy works especially well when both production and consumption functions can be performed by the same target user. On Facebook, the same user creates and consumes content. On Yelp, the same user base would create and read reviews. The platform can target a single closed market and guarantee interactions. However, this does not work as easily for platforms that need two different markets to come on board. In such cases, the best solution to the problem of getting two different roles onto a platform is to find an existing community or group of potential users that already contains both roles. Etsy, a niche marketplace for arts and crafts, figured an elegant solution to this problem. Etsy is a two-sided market of buyers and sellers.
Facebook’s launch at Harvard University, and subsequently in similar closed markets, ensured that critical mass was reached a lot faster than the many Myspace copycats that were launching globally around that time. 4.Incentivizing The Role That Is More Difficult To Attract.Some user types may require more incentive to be pulled in. Acknowledging this is important, and is counterintuitive to the principles of traditional marketing. And finally, 5.Staging The Creation Of Two-Sided Markets.In general, the nature of two-sidedness only allows us to capture such markets one side at a time. However, we do observe exceptions in the strategies that follow. Finding the bait or incentive that brings in one role and enables them to remain while we get in the other role holds the key to succeeding with this model. OpenTable used this strategy to get restaurants on board by providing restaurant management software (the bait) before any consumers signed up.
Machine, Platform, Crowd: Harnessing Our Digital Future by Andrew McAfee, Erik Brynjolfsson
"Robert Solow", 3D printing, additive manufacturing, AI winter, Airbnb, airline deregulation, airport security, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, artificial general intelligence, augmented reality, autonomous vehicles, backtesting, barriers to entry, bitcoin, blockchain, British Empire, business cycle, business process, carbon footprint, Cass Sunstein, centralized clearinghouse, Chris Urmson, cloud computing, cognitive bias, commoditize, complexity theory, computer age, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, Dean Kamen, discovery of DNA, disintermediation, disruptive innovation, distributed ledger, double helix, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Ethereum, ethereum blockchain, everywhere but in the productivity statistics, family office, fiat currency, financial innovation, George Akerlof, global supply chain, Hernando de Soto, hive mind, information asymmetry, Internet of things, inventory management, iterative process, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, joint-stock company, Joseph Schumpeter, Kickstarter, law of one price, longitudinal study, Lyft, Machine translation of "The spirit is willing, but the flesh is weak." to Russian and back, Marc Andreessen, Mark Zuckerberg, meta analysis, meta-analysis, Mitch Kapor, moral hazard, multi-sided market, Myron Scholes, natural language processing, Network effects, new economy, Norbert Wiener, Oculus Rift, PageRank, pattern recognition, peer-to-peer lending, performance metric, plutocrats, Plutocrats, precision agriculture, prediction markets, pre–internet, price stability, principal–agent problem, Ray Kurzweil, Renaissance Technologies, Richard Stallman, ride hailing / ride sharing, risk tolerance, Ronald Coase, Satoshi Nakamoto, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, slashdot, smart contracts, Snapchat, speech recognition, statistical model, Steve Ballmer, Steve Jobs, Steven Pinker, supply-chain management, TaskRabbit, Ted Nelson, The Market for Lemons, The Nature of the Firm, Thomas Davenport, Thomas L Friedman, too big to fail, transaction costs, transportation-network company, traveling salesman, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, ubercab, Watson beat the top human players on Jeopardy!, winner-take-all economy, yield management, zero day
Companies that understand the economics of two-sided networks have prospered. For instance, credit cards provide a valuable service to both consumers and merchants. In theory, credit card issuers could charge both halves of this two-sided market. In practice, they sometimes do exactly that: charging annual fees to consumers and processing fees of 2% or more to merchants. In fact, in the early days, almost all card issuers charged their users for the privilege of using the cards. But increasingly, instead of charging the users, they give them away for free to maximize demand. That way, they make more money on merchant fees on the other half of the two-sided market. By lowering the annual fees and other user charges on their cards, credit card issuers can not only increase the market share of the cards, but also increase the attractiveness of their networks to merchants, as well as the associated processing fees.
Furthermore, platform owners can’t just focus on pricing. They have a variety of other levers to manage, including the user interface and user experience, reputation systems, marketing budgets, and core network technology. The most successful platform owners carefully curate the value that each side of the market gets from participating and aren’t too greedy. Once you understand the logic of two-sided markets, the next step is to apply it to multisided markets. Two-sided markets often become multisided markets with dozens or even thousands of distinct subgroups interacting through the platform. For instance, iTunes is a great way to get music on an iPhone. The more artists who put their music on iTunes, the more attractive it is to buy an iPhone. That’s a nice two-sided network. But the increase in iPhone sales not only makes iTunes more attractive to music artists; it also increases the value of the platform for developers Pandora, Waze, Uber, Lyft, Evernote, Clash of Clans, and every other mobile app.
This appears to be the case for rides in cars within cities. As Uber has lowered prices, first with UberX and then with UberPool (and perhaps eventually with self-driving cars), demand has expanded greatly.** Uber very much wants to satisfy this demand by charging extremely low prices, since doing so will maximize its revenue. Figure 8 Most demand curves are not straight lines. Sometimes, they have this shape. But in two-sided markets, simply working its way down the demand curve is only a small part of the story. To better understand Uber’s pricing decisions, let’s revisit some of the economics of networks first introduced in Chapter 6 when we discussed WhatsApp. Like WhatsApp, Uber benefits from network effects. But unlike WhatsApp, telephones, or faxes or many other networks, Uber is a two-sided network. Two-sidedness is at the core of many modern platforms.
Zucked: Waking Up to the Facebook Catastrophe by Roger McNamee
4chan, Albert Einstein, algorithmic trading, AltaVista, Amazon Web Services, barriers to entry, Bernie Sanders, Boycotts of Israel, Cass Sunstein, cloud computing, computer age, cross-subsidies, data is the new oil, Donald Trump, Douglas Engelbart, Douglas Engelbart, Electric Kool-Aid Acid Test, Elon Musk, Filter Bubble, game design, income inequality, Internet of things, Jaron Lanier, Jeff Bezos, John Markoff, laissez-faire capitalism, Lean Startup, light touch regulation, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, Menlo Park, Metcalfe’s law, minimum viable product, Mother of all demos, move fast and break things, move fast and break things, Network effects, paypal mafia, Peter Thiel, pets.com, post-work, profit maximization, profit motive, race to the bottom, recommendation engine, Robert Mercer, Ronald Reagan, Sand Hill Road, self-driving car, Silicon Valley, Silicon Valley startup, Skype, Snapchat, social graph, software is eating the world, Stephen Hawking, Steve Jobs, Steven Levy, Stewart Brand, The Chicago School, Tim Cook: Apple, two-sided market, Uber and Lyft, Uber for X, uber lyft, Upton Sinclair, WikiLeaks, Yom Kippur War
Google and Facebook operate a form of what economists call “two-sided markets,” which Wikipedia defines as “economic platforms having two distinct user groups that provide each other with network benefits.” The original two-sided markets included things like credit cards where the issuer sits between vendor and customer in a single transaction. For platforms, the two sides are not part of the same transaction. Users are the source of data, as well as the product, but they do not participate in a transaction or in the economics. The advertisers are the customer and provide the market’s revenue. What makes the platforms comparable to traditional two-sided markets is that both sides depend on the success (or scale) of the market. At the scale of Facebook and Google, the two-sided market confers advantages that cannot be overcome by competitors, providing monopoly power.
Rowe Price, 24–27 Truman Show, The, 9, 126, 215, 245 Trump, Donald, 93–94, 113, 119, 125, 130, 154, 162, 174, 180–81, 183, 187, 199, 202, 209, 283 Russia and, 12, 111, 117; see also Russia see also presidential election of 2016 Trump Tower, 12, 111 trust, 2, 7, 125–27, 207, 236, 242, 263 Truth About Tech conference, 166, 167 Tufekci, Zeynep, 102, 193, 252–53 Tunisia, 243 Twitter, 63, 95, 102, 106, 110, 125, 183–84, 195, 233–35, 238–39, 243–45, 253, 256, 270, 278, 282, 283 Congress and, 122, 127–33 disinformation on, 177 fake accounts on, 265 Goldman’s tweets, 169–73 Jones and Infowars and, 228–29 Russia and, 121–24, 131, 169, 174 words associated with, 231 Twitter and Tear Gas (Tufekci), 252–53 two-sided markets, 139 Tylenol, 7, 148 U2, 13, 28–29, 167 Uber, 50, 148, 263 Unilever, 173 United Kingdom, 258 Brexit and, 8–9, 96, 180, 196, 198, 244 Parliament, 209 United Muslims of America, 131 United Nations, 178, 215, 265 Universal Music Group, 30 USA Today, 118, 231 U.S. Bancorp, 231 Vachon, Michael, 159, 161–62 Vaidhyanathan, Siva, 241 Valley of Genius (Fisher), 55 Varney, Stuart, 21 Vassallo, Steve, 107 Velshi, Ali, 133 venture capital funding, 41–42, 46, 48, 104, 223, 261 Verge, 146–47, 167 Vestager, Margrethe, 277 Vice, 281 Vietnam, 125 Vietnam War, 20, 44 virtual private network (VPN), 140 virtual reality, 158, 223, 261 Oculus, 139, 144, 223, 261 VisiCalc, 34 Wall Street Journal, 61–62, 71, 231 Walt Disney Company, 143–44, 193 Warner, Mark, 111, 114, 116, 118, 121, 122, 128, 167, 207 Warzel, Charlie, 199 Washington Monthly, 155, 159–62 Washington Post, 58, 61, 168, 207, 217, 280 Watts, Clint, 93, 94, 252 Wehner, David, 144 Weiner, Anthony, 124 WELL, The, 98 Wells Fargo, 231 WhatsApp, 41, 110, 139, 140, 144, 178, 223, 261, 270–71, 280 white nationalism and supremacism, 91, 117, 123, 125 Whole Foods, 137 wide area networks (WANs), 35 WikiLeaks, 11, 114, 116 Wikipedia, 178 Winklevoss, Cameron, 53–54, 57, 65, 141 Winklevoss, Tyler, 53–54, 57, 65, 141 Wired, 92–93 women, 49–50, 58 Women’s March, 243, 250, 275 Wong, David, 13 Wordnik, 230 World Economic Forum, 159–63, 293–302 World War II, 43 World Wide Web, 36–39, 101, 104, 218 Web 2.0, 38, 40, 41, 43 Wortham, Jenna, ix, 37 Wu, Tim, 120, 136 Wylie, Christopher, 181, 182, 185–86, 196 Xbox, 173 Yahoo, 36, 38, 42, 152 email scanning and, 191–92 Facebook and, 14–16, 56, 57 Finance, 71 Yale University, 20–23, 54, 286–87 Yelp, 48 YouTube, 95, 97, 128, 156, 214, 223, 232, 235, 238–39, 242, 244, 260, 274, 279, 281 advertising and, 103, 283–84 algorithms of, 92–93, 139, 274 disinformation on, 177–78 Google and, 104, 139, 253, 261 Jones and Infowars and, 228–29 Zittrain, Jonathan, 226 Zuckerberg, Mark, 3, 16, 53–79, 141–49, 229, 233, 239 Andreessen and, 58 Cambridge Analytica and, 192–93, 216–18 congressional testimony of, 209–12, 216, 217 and criticisms of Facebook, 3, 65, 95–96, 141, 143, 146, 149, 158–61, 169, 192–93, 207, 230, 247–48 and Facebook decision making and organization, 144–45, 154, 155, 160, 168, 169, 207 Facebook F8 conference and, 217–18 Facebook launched by, 4, 39, 42, 50–51, 53–56, 104, 141, 189, 203, 241 Facebook sale considered by, 13–16 Facemash created by, 53, 60 at Harvard, 50, 53–54, 57, 141–42, 154, 189, 193 McGinn as personal pollster for, 167–69, 172 McNamee as advisor to, 1, 5, 13–16, 57–60, 64, 78 McNamee’s email to Sandberg and, 4–6, 149, 152, 160–61, 280, 297–300 mentors and advisors of, 58, 64 Messenger messages of, 207 New Year’s resolutions of, 158–59, 165, 174 plan for addressing Facebook problems, 158–59 and Russian interference in election, 118 Thiel and, 58 user data privacy and, 4–5, 55–56, 60, 141–42 Zynga, 38, 184 ABCDEFGHIJKLMNOPQRSTUVWXYZ ABOUT THE AUTHOR Roger McNamee has been a Silicon Valley investor for 35 years.
The Content Trap: A Strategist's Guide to Digital Change by Bharat Anand
Airbnb, Benjamin Mako Hill, Bernie Sanders, Clayton Christensen, cloud computing, commoditize, correlation does not imply causation, creative destruction, crowdsourcing, death of newspapers, disruptive innovation, Donald Trump, Google Glasses, Google X / Alphabet X, information asymmetry, Internet of things, inventory management, Jean Tirole, Jeff Bezos, John Markoff, Just-in-time delivery, Khan Academy, Kickstarter, late fees, Mark Zuckerberg, market design, Minecraft, multi-sided market, Network effects, post-work, price discrimination, publish or perish, QR code, recommendation engine, ride hailing / ride sharing, selection bias, self-driving car, shareholder value, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Skype, social graph, social web, special economic zone, Stephen Hawking, Steve Jobs, Steven Levy, Thomas L Friedman, transaction costs, two-sided market, ubercab, WikiLeaks, winner-take-all economy, zero-sum game
when it restricted its service Judd Cramer and Alan Krueger, “Disruptive Change in the Taxi Business: The Case of Uber,” National Bureau of Economic Research, Working Paper No. 22083, March 2016. “product versus platform” See also Jean-Charles Rochet and Jean Tirole, “Platform Competition in Two-Sided Markets,” Journal of the European Economic Association 1, No. 4 (June 2003), 990–1039; Mark Armstrong, “Competition in Two-Sided Markets,” RAND Journal of Economics , 37, no. 3 (Autumn 2006), 668–91; Jean-Charles Rochet and Jean Tirole, “Two-Sided Markets: A Progress Report,” RAND Journal of Economics , 37, no. 3 (Autumn 2006), 645–67. in 1996 Nick Statt, “Rare Pokemon Card Attracts Record-Breaking $50k Offers on eBay,” CNET , September 5, 2013. indirect network effects Andrei Hagiu, “Strategic Decisions for Multisided Platforms,” MIT Sloan Management Review , Winter 2014; Andrei Hagiu and Simon Rothman, “Network Effects Aren’t Enough,” Harvard Business Review, April 2016; and Rita McGrath, “The Problem with Groupon’s Business Model,” Harvard Business Review , July 13, 2011.
“Reproducing Knowledge: Replication Without Information at Moderate Complexity.” Organization Science 12, no. 3 (May–June 2001). Rob, Rafael, and Joel Waldfogel. “Piracy on the High C’s: Music Downloading, Sales Displacement, and Social Welfare in a Sample of College Students.” Journal of Law and Economics, 49, no. 1 (2006): 29–62. Rochet, Jean-Charles, and Jean Tirole. “Platform Competition in Two-Sided Markets.” Journal of the European Economic Association 1, no. 4 (June 2003): 990–1029. ———. “Two-Sided Markets: A Progress Report.” RAND Journal of Economics 37, no. 3 (Autumn 2006): 645–67. Rogers, Jim. The Death and Life of the Music Industry in the Digital Age. London: Bloomsbury Academic, May 9, 2013. Rohlfs, Jeffrey. “A Theory of Interdependent Demand for a Communications Service.” Bell Journal of Economics, no. 1 (Spring 1974): 16–37. Rosen, Sherwin.
“Brands as Beacons: A New Source of Loyalty to Multiproduct Firms.” Journal of Marketing Research 41, no. 2 (May 2004): 135–50. Anderson, Chris. The Long Tail: Why the Future of Business Is Selling Less of More. New York: Hyperion Books, 2008. Anton, James, and Dennis Yao. “Expropriation and Inventions: Appropriable Rents in the Absence of Property Rights.” American Economic Review 84, no. 1 (March 1994): 190–209. Armstrong, Mark. “Competition in Two-Sided Markets.” RAND Journal of Economics 37, no. 3 (Autumn 2006): 668–91. Arum, Richard, and Josipa Roksa. Academically Adrift: Limited Learning on College Campuses . Chicago: University of Chicago Press, 2011. Bagwell, Kyle. The Economics of Advertising. Cheltenham, UK: Edward Elgar. 2001 Barker, Rocky. Scorched Earth: How the Fires of Yellowstone Changed America. Washington, DC: Island Press, 2005.
Platform Capitalism by Nick Srnicek
3D printing, additive manufacturing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, collaborative economy, collective bargaining, deindustrialization, deskilling, disintermediation, future of work, gig economy, Infrastructure as a Service, Internet of things, Jean Tirole, Jeff Bezos, knowledge economy, knowledge worker, liquidity trap, low skilled workers, Lyft, Mark Zuckerberg, means of production, mittelstand, multi-sided market, natural language processing, Network effects, new economy, Oculus Rift, offshore financial centre, pattern recognition, platform as a service, quantitative easing, RFID, ride hailing / ride sharing, Robert Gordon, self-driving car, sharing economy, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, software as a service, TaskRabbit, the built environment, total factor productivity, two-sided market, Uber and Lyft, Uber for X, uber lyft, unconventional monetary instruments, unorthodox policies, Zipcar
London: Bank of England. https://bankunderground.co.uk/2015/07/27/drivers-of-long-term-global-interest-rates-canweaker-growth-explain-the-fall (accessed June 12, 2016). ‘Reinventing the Deal’. 2015. The Economist, 24 October. http://www.economist.com/news/briefing/21676760-americas-startups-are-changing-what-itmeans-own-company-reinventing-deal (accessed 4 June 2016). Rochet, Jean-Charles, and Jean Tirole. 2003. ‘Platform Competition in Two-Sided Markets’. Journal of the European Economic Association, 1 (4): 990–1029. Rochet, Jean-Charles, and Jean Tirole. 2006. ‘Two-Sided Markets: A Progress Report’. The RAND Journal of Economics, 37 (3): 645–67. Scheiber, Noam. 2015. ‘Growth in the “Gig Economy” Fuels Work Force Anxieties’. The New York Times, 12 July. http://www.nytimes.com/2015/07/13/business/rising-economic-insecurity-tied-to-decades-long-trend-in-employment-practices.html (accessed 4 June 2016).
Trading and Exchanges: Market Microstructure for Practitioners by Larry Harris
active measures, Andrei Shleifer, asset allocation, automated trading system, barriers to entry, Bernie Madoff, business cycle, buttonwood tree, buy and hold, compound rate of return, computerized trading, corporate governance, correlation coefficient, data acquisition, diversified portfolio, fault tolerance, financial innovation, financial intermediation, fixed income, floating exchange rates, High speed trading, index arbitrage, index fund, information asymmetry, information retrieval, interest rate swap, invention of the telegraph, job automation, law of one price, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, market clearing, market design, market fragmentation, market friction, market microstructure, money market fund, Myron Scholes, Nick Leeson, open economy, passive investing, pattern recognition, Ponzi scheme, post-materialism, price discovery process, price discrimination, principal–agent problem, profit motive, race to the bottom, random walk, rent-seeking, risk tolerance, risk-adjusted returns, selection bias, shareholder value, short selling, Small Order Execution System, speech recognition, statistical arbitrage, statistical model, survivorship bias, the market place, transaction costs, two-sided market, winner-take-all economy, yield curve, zero-coupon bond, zero-sum game
FIGURE 13-1. The Inside Spread in RobertsonBooks.com Depending on the market, dealers may provide their quotes only on request, or they may quote continuous firm two-sided markets. Dealers in most corporate bond markets, and in some foreign exchange markets, quote only on request. Most organized quote-driven stock markets require that their registered dealers quote firm two-sided markets. For example, dealers in the Nasdaq Stock Market must continuously post firm prices at which they will trade. * * * ▶ The Inside Spread Charles, Cheryl, Goldie, Larry, and Teri are dealers in RobertsonBooks.com. Each quotes a two-sided market. Their quotes appear in table 13-1. Although each dealer’s bid/ask spread is 50 cents, the inside bid/ask spread is only 10 cents. Teri is the best bidder at 100.3 and Charles has the best offer at 100.4.
The realized spread is the difference between the prices at which dealers actually buy and sell. Realized spreads are usually smaller than quoted spreads because dealers occasionally trade at better prices than they quote and because they often adjust their bid and ask prices between trades. Dealers who quote both bid and ask prices quote a two-sided market. Their quotes make a market. Those who quote only one side quote a onesided market. Although most dealers will quote a two-sided market, they usually aggressively price only the side on which they would prefer to trade. For example, dealers who want to buy usually quote high (aggressive) bid prices to encourage sellers to sell to them. They also quote high uncompetitive ask prices to discourage buyers from buying from them. Dealers who want to sell quote low bid and ask prices.
Since the chooser will take the larger piece, the divider must try to divide the cake exactly in half to maximize his share. This solution is not entirely fair. The chooser has a slight advantage over the divider. If the divider cannot divide the cake exactly in half, a careful chooser will always take the bigger piece. The divider faces the adverse selection problem. When dealers quote two-sided markets, they divide the number line of possible prices into two parts. If they set their prices too low or too high, informed traders will take the more attractive side. To avoid adverse selection, dealers must set their bids below fundamental values and their offers above them. You can be confident that dealers offer fair prices when they quote tight bid/ask spreads before they know whether you want to buy or sell.
Trading Risk: Enhanced Profitability Through Risk Control by Kenneth L. Grant
backtesting, business cycle, buy and hold, commodity trading advisor, correlation coefficient, correlation does not imply causation, delta neutral, diversification, diversified portfolio, fixed income, frictionless, frictionless market, George Santayana, implied volatility, interest rate swap, invisible hand, Isaac Newton, John Meriwether, Long Term Capital Management, market design, Myron Scholes, performance metric, price mechanism, price stability, risk tolerance, risk-adjusted returns, Sharpe ratio, short selling, South Sea Bubble, Stephen Hawking, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, two-sided market, value at risk, volatility arbitrage, yield curve, zero-coupon bond
For example, a portfolio that has a long position in corn and a short position in wheat is likely to be less risky, on a unit basis, than one that features dual longs or shorts in these same commodities. Similarly, an account that is long IBM and short Microsoft is likely to carry less exposure than one that contains the same securities held on the same side of the market. As portfolios scale up in size, the need to operate on both sides of a given market becomes more pronounced, and I strongly urge this kind of two-sided market orientation as being one of the best means of maximizing risk-adjusted profitability. However, I should tell you that this challenge is, in my experience, one of the most difficult in advanced portfolio management. This is because most traders and, indeed, most markets lend themselves more directly toward a single-sided market orientation. For example, it was plainly easier to trade the long side of the stock market in the last half of the 1990s, first, because the market enjoyed a sustained rally for the entire period; second, because the equity markets are structurally organized under all market conditions to favor long bets through such mechanisms as the “uptick rule” for short sales, the rather complicated “borrowing-based” mechanics of short selling, the rules that compel large institutional portfolios to operate exclusively on the long side of the market, and other factors.
As indicated earlier, by doing so, you reduce your exposure to broad-based market events, such as crashes. A portfolio that is entirely on one side of the market is exposed to the full fury of these episodes, which, as we have already discussed, are likely to cause all securities to move in lockstep with one another. Perhaps as important, Adjusting Portfolio Exposure (Rule 2) 137 the presence of some well-adapted two-sided market exposure will greatly enhance your ability to stay with your best ideas—across all market cycles—and thus capitalize in those situations when you feel a high level of conviction that a certain scenario will play out but less sure as to the precise timing. Let’s take a moment to more closely examine my assertion that a long/short position orientation also reduces the need to be absolutely accurate in terms of market timing, shall we?
Failing this, there’s always the opportunity to sell broad-based indexes, such as Standard & Poor’s (S&P) 500 futures, which will protect your position in some, if not all, of the types of situations that might otherwise force you to sell XTC before its time. If you are able to hold XTC through the approval process, you can call it a victory—irrespective of whether you liquidate your LSD, DRG, or S&Ps at a profit or at a loss. When viewed at a safely objective distance from the actual portfolio management process, it is easy to see how a two-sided market orientation, with one side serving largely as instruments of risk control, could offer better risk-adjusted returns than one that focused exclusively on either longs or shorts. Moreover, in these circumstances, it would be logical (and perhaps even in some cases desirable) that the aggregate P/L for the hedging side of the market would be negative. However, in my experience, these factors offer little direct solace to many portfolio managers who often feel the pain of losses on the hedging side much more acutely than they do when the ideas for which they have the highest level of conviction liquidate to negative P/L.
Value of Everything: An Antidote to Chaos The by Mariana Mazzucato
"Robert Solow", activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, bank run, banks create money, Basel III, Berlin Wall, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, business cycle, butterfly effect, buy and hold, Buy land – they’re not making it any more, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, cleantech, Corn Laws, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, European colonialism, fear of failure, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, full employment, G4S, George Akerlof, Google Hangouts, Growth in a Time of Debt, high net worth, Hyman Minsky, income inequality, index fund, informal economy, interest rate derivative, Internet of things, invisible hand, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, laissez-faire capitalism, light touch regulation, liquidity trap, London Interbank Offered Rate, margin call, Mark Zuckerberg, market bubble, means of production, money market fund, negative equity, Network effects, new economy, Northern Rock, obamacare, offshore financial centre, Pareto efficiency, patent troll, Paul Samuelson, peer-to-peer lending, Peter Thiel, profit maximization, quantitative easing, quantitative trading / quantitative ﬁnance, QWERTY keyboard, rent control, rent-seeking, Sand Hill Road, shareholder value, sharing economy, short selling, Silicon Valley, Simon Kuznets, smart meter, Social Responsibility of Business Is to Increase Its Profits, software patent, stem cell, Steve Jobs, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, transaction costs, two-sided market, very high income, Vilfredo Pareto, wealth creators, Works Progress Administration, zero-sum game
Firms like Google, Facebook and Amazon - and new ‘sharing-economy' firms like Airbnb and Uber - like to define themselves as ‘platforms'. They don't face a traditional market, in which the firm produces a good or service and sells it to a population of potential consumers. They operate, instead, in what economists call two-sided markets, developing the supply and demand sides of the market as the lynchpin, connector or gatekeeper between them. On the one side, there is a service offering to users. On the other side, there is a market offering to other firms - from sales to advertising space to information on users' behaviour. Firms have long operated in more than one market. The peculiarity of two-sided markets, however, lies in how the two sides are connected. As the number of users on one side of the market (using a search engine or joining a social network) rises, clicks on ads and information on consumers' behaviour also increases, boosting profitability in the other side of the market.
Rather, it is users who provide Google with necessary inputs for its production process: their looks on ads and, most importantly, their personal data. In return, they obtain online searches and other services. The bulk of Google's profits come from selling advertising space and users' data to firms. If something is free online, you are not the customer, you are the product.64 Facebook's and Google's business models are built on the commodification of personal data, transforming through the alchemy of a two-sided market our friendships, interests, beliefs and preferences into sellable propositions. The so-called ‘sharing economy' is based on the same idea. For all the hype about ‘sharing', it is less about altruism and more about allowing market exchange to reach into areas of our lives - our homes, our vehicles, even our private relationships - that were previously beyond its scope and to commodify them.65 As Evgeny Morozov has warned, it risks turning us all into ‘perpetual hustlers',66 with all of our lives up for sale, while at the same time undermining the basis for stable employment and a good standard of living.
Six firms (Facebook, Google, Yahoo, AOL, Twitter and Amazon) account for around 53 per cent of the digital advertising market (with just Google and Facebook making up 39 per cent).71 Such dominance implies that online giants can impose their conditions on users and customer firms. Many book publishers, for example, are unhappy with the conditions Amazon insists upon and are asking for better ones. But they have no leverage at all, because - as Evgeny Morozov puts it - ‘there is no second Amazon they can turn to'.72 The powerful network effects in the two-sided market have entrenched these companies' position. Companies like Google are de facto monopolies.73 But they are not recognized as such and have not attracted the kind of anti-trust legislation that large companies in more traditional industries - tobacco, autos, food - have done. The dominant position of a platform provider in core markets can then be used to favour their products and services in satellite markets, further extending the company's reach.
Lean Analytics: Use Data to Build a Better Startup Faster by Alistair Croll, Benjamin Yoskovitz
Airbnb, Amazon Mechanical Turk, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, barriers to entry, Bay Area Rapid Transit, Ben Horowitz, bounce rate, business intelligence, call centre, cloud computing, cognitive bias, commoditize, constrained optimization, en.wikipedia.org, Firefox, Frederick Winslow Taylor, frictionless, frictionless market, game design, Google X / Alphabet X, Infrastructure as a Service, Internet of things, inventory management, Kickstarter, lateral thinking, Lean Startup, lifelogging, longitudinal study, Marshall McLuhan, minimum viable product, Network effects, pattern recognition, Paul Graham, performance metric, place-making, platform as a service, recommendation engine, ride hailing / ride sharing, rolodex, sentiment analysis, skunkworks, Skype, social graph, social software, software as a service, Steve Jobs, subscription business, telemarketer, transaction costs, two-sided market, Uber for X, web application, Y Combinator
If, after reading Chapter 7, you’ve concluded that you’re running this kind of company, here’s what you need to know. In this model, the company makes money when a buyer and seller come together to complete a transaction. While eBay is undoubtedly the most famous example of a two-sided marketplace, the underlying pattern is fairly common. Consider the following business models, all of which have an aspect of a two-sided market: Real estate listing services allow prospective buyers to identify properties by a wide range of criteria, and then extract a fee for setting up the transaction, either as a one-time cost or a percentage. Indiegogo lets artists list projects and collect the support of backers. Backers are able to browse projects and find those they want to support. The site takes a percentage of monies raised.
Focus on the number of listings per seller and whether that’s growing, as well as the completeness of those listings (are sellers completing the description of their offering?). A bigger inventory means more searches are likely to yield results. If you start to saturate your marketplace (i.e., if most of the sellers in your market have already become members), then your growth will come from increasing their listings and the effectiveness of those listings. Buyer Searches In many two-sided markets, searches are the primary way in which buyers find sellers. You need to track the number of searches that return no results—this is a lost sales opportunity. For example, you might track the change in daily searches, new listings, and result counts, which will show you whether you’re growing the business (see Table 13-7). Table 13-7. Buyer searches month over month Feb Mar Apr May Jun Change in daily searches per buyer 103.3% 92.2% 116.4% 56.6% 80.6% Change in new listings per day 184.2% 139.6% 96.1% 69.6% 208.3% Change in average result count per search 147.6% 109.7% 123.5% 123.8% 175.0% In this example, buyers performed fewer daily searches in May and June than beforehand, relatively speaking.
The seller may set the minimum price, as well as a “Buy now” value, but the final price is what the market is willing to pay. If this is your model, you’ll need to analyze how many sales failed to receive a bid (indicating overpricing), how many sold for the “Buy now” price (indicating underpricing), and the duration and outcome of auctions. You might use this information to improve the prices your sellers set—and your resulting revenues. Key Takeaways Two-sided markets come in all shapes and sizes. Early on, the big challenge is solving the “chicken and egg” problem of finding enough buyers and sellers. It’s usually good to focus on the people who have money to spend first. Since sellers are inventory, you need to track the growth of that inventory and how well it fits what buyers are looking for. While many marketplaces take a percentage of transactions, you may be able to make money in other ways, by helping sellers promote their products or charging a listing fee.
Broken Markets: How High Frequency Trading and Predatory Practices on Wall Street Are Destroying Investor Confidence and Your Portfolio by Sal Arnuk, Joseph Saluzzi
algorithmic trading, automated trading system, Bernie Madoff, buttonwood tree, buy and hold, commoditize, computerized trading, corporate governance, cuban missile crisis, financial innovation, Flash crash, Gordon Gekko, High speed trading, latency arbitrage, locking in a profit, Mark Zuckerberg, market fragmentation, Ponzi scheme, price discovery process, price mechanism, price stability, Sergey Aleynikov, Sharpe ratio, short selling, Small Order Execution System, statistical arbitrage, stocks for the long run, stocks for the long term, transaction costs, two-sided market, zero-sum game
Elimination of Stub Quotes The SEC did eliminate stub quotes, which were essentially placeholders for market makers that wanted only to quote one side of a market. Typically, stub quotes were placed far away from the market, often as low as one penny for a bid. For example, if a market maker wanted to place an offer to only sell stock, he would have to place a stub quote as a bid to create a two-sided market. When Accenture traded at $0.01 during the Flash Crash, the bid that was hit was a stub quote. According to the SEC Flash Crash report, “Executions against stub quotes represented a significant proportion of broken trades on May 6.”14 Eliminating stub quotes was a no-brainer in our opinion. What is needed, however, are more stringent market maker obligations. Currently, market makers need to quote within only 8% of the NBBO for most securities.
33 Kaufman was eerily prescient when he said in early autumn 2009, “Moreover, unlike specialists and traditional market-makers that are regulated, some of these new high frequency traders are unregulated, though they are acting in a market-maker capacity. They have no requirements to ‘maintain a fair and orderly’ market. They trade when it benefits them. If we experience another shock to the financial system, will this new (and dominant) type of pseudo market maker act in the interest of the markets when we really need them? Will they step up and maintain a two-sided market, or will they simply shut off the machines and walk away? Even worse, will they seek even further profit and exacerbate the downside?”34 Zero Hedge was relentless, publishing scores if not hundreds of posts in the year leading up to the crash criticizing HFT and the stock market and predicting a high-speed market meltdown. A few weeks before the crash, on April 16, 2010, I submitted a comment letter on the SEC’s Concept Release.35 I wrote that “Formal and informal market makers in the equities markets today have few or none of the responsibilities of the old dealers...firms shed responsibility for price continuity, quote size, meaningful quote continuity or quote depth...
Stocks would have to be traded by real market makers with obligations to supply capital at all times. These market makers would have affirmative and negative obligations. They would have to supply real liquidity, not phantom liquidity, and they should not interfere when the market is working without their assistance. 2. There must be minimum quote sizes based on the market cap of the stock and a minimum order life on all orders. 3. To reward market makers for creating a more stable two-sided market, there also needs to be a minimum spread that is wider than a penny. No doubt, our critics will claim that this alternative is going in the wrong direction. They will say it is a step backward and will bring back all the problems that we had with the old NYSE specialist and NASDAQ market maker systems. They will say that technology has moved us forward and made the markets more efficient.
The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism by Arun Sundararajan
additive manufacturing, Airbnb, AltaVista, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, basic income, bitcoin, blockchain, Burning Man, call centre, collaborative consumption, collaborative economy, collective bargaining, commoditize, corporate social responsibility, cryptocurrency, David Graeber, distributed ledger, employer provided health coverage, Erik Brynjolfsson, Ethereum, ethereum blockchain, Frank Levy and Richard Murnane: The New Division of Labor, future of work, George Akerlof, gig economy, housing crisis, Howard Rheingold, information asymmetry, Internet of things, inventory management, invisible hand, job automation, job-hopping, Kickstarter, knowledge worker, Kula ring, Lyft, Marc Andreessen, megacity, minimum wage unemployment, moral hazard, moral panic, Network effects, new economy, Oculus Rift, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, peer-to-peer rental, profit motive, purchasing power parity, race to the bottom, recommendation engine, regulatory arbitrage, rent control, Richard Florida, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Ross Ulbricht, Second Machine Age, self-driving car, sharing economy, Silicon Valley, smart contracts, Snapchat, social software, supply-chain management, TaskRabbit, The Nature of the Firm, total factor productivity, transaction costs, transportation-network company, two-sided market, Uber and Lyft, Uber for X, uber lyft, universal basic income, Zipcar
Varian and Carl Shapiro call this the “demand-side economies of scale” in their book Information Rules: A Strategic Guide to the Network Economy (Cambridge: Harvard Business Books, 1999). 23. See http://oz.stern.nyu.edu/io/network.html for more discussion of network effects. 24. Thomas R. Eisenmann, Geoffrey Parker, and Marshall W. Van Alstyne, “Strategies for Two-Sided Markets,” Harvard Business Review 96, 4 (2006): 581–595. https://hbr.org/2006/10/strategies-for-two-sided-markets. 25. Of course, there may be other traditional economies of scale that could lead to the eventual dominance of one or two firms because of several circumstances—by getting drivers to sign on and retaining them; or learning by doing in launching in a new market; or learning by doing in dealing with local regulators. 26. A transcript (from panel 4) of the workshop, titled “The ‘Sharing’ Economy: Issues Facing Platforms, Participants, and Regulators,” is available at https://www.ftc.gov/system/files/documents/videos/sharing-economy-workshop-part-4/ftc_sharing_economy_workshop_-_transcript_segment_4.pdf.
This is because unlike local transport, short-term accommodation is sought primarily by travelers rather than by local residents. You favor a platform that can get you accommodation anywhere in the world, rather than one that specializes in one city. Thus, on the Airbnb platform, network effects are more resilient. In a sense, the “fractal” structure of the network effects in both these examples makes their economics more complex than those of traditional two-sided markets, potentially making them either stronger or weaker. As I discuss in chapter 6, there are a number of new regulatory challenges raised by the emergence of the sharing economy. One that I do not discuss relates to the question of market power. This is because deepening our understanding the nature of these new network effects, or asking the question framed by Professor Maurice Stucke when he spoke at a June 2015 Federal Trade Commission panel about regulating the sharing economy—“Do I have the analytical tools to assess what the impact would be?”
The Gig Economy: A Critical Introduction by Jamie Woodcock, Mark Graham
Airbnb, Amazon Mechanical Turk, autonomous vehicles, barriers to entry, British Empire, business process, business process outsourcing, call centre, collective bargaining, commoditize, corporate social responsibility, crowdsourcing, David Graeber, deindustrialization, disintermediation, en.wikipedia.org, full employment, future of work, gender pay gap, gig economy, global value chain, informal economy, information asymmetry, inventory management, Jaron Lanier, Jeff Bezos, job automation, knowledge economy, Lyft, mass immigration, means of production, Network effects, new economy, Panopticon Jeremy Bentham, planetary scale, precariat, rent-seeking, RFID, ride hailing / ride sharing, Ronald Reagan, self-driving car, sentiment analysis, sharing economy, Silicon Valley, Silicon Valley ideology, TaskRabbit, The Future of Employment, transaction costs, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, union organizing, women in the workforce, working poor, young professional
Platform infrastructure While we will return to the concept of ‘platforms’ in detail in chapter 2, it is worth noting how important platform infrastructure is as a precondition to the gig economy. The basic idea in the architectures of platforms that mediate work is to create a digital context in which buyers of labour power are able to connect with sellers of labour power (what economists call a ‘two-sided market’). Uber’s platform connects people who want a taxi ride with people who are willing to provide taxi rides. Fiverr’s platform connects people looking for a graphic designer or video editor with people offering those services. Unlike older ways of connecting buyers and sellers of work, digital platforms make much of the process relatively seamless for both parties. On many platforms, it only takes a few minutes for a client seeking a service to issue a request through the platform, connect to a worker, and the worker to begin to perform that service.
Multiple gig economy models have emerged, ranging from general online freelancing platforms, which are necessarily limited in the amount of control that they can exert on work, to transportation and care work platforms, which are characterized by extremely high levels of explicit coordination and power asymmetry. But what all gig economy models have in common is a defining logic that seeks to shift maximal risk and minimal reward onto workers. Platform companies achieve this through technologies and infrastructures of connectivity that allow work to be organized via two-sided markets, political environments that impose few regulations, a zeitgeist that values flexibility, and a backdrop of increasing inequality that leads ever more workers to make the calculation that a bad job is better than no job. The gig economy is big, and around the world there are powerful interests who only seek to make it bigger. Yet nothing about the gig economy is inevitable. If we want to make sure that we avoid yet another industry in yet another place becoming organized by the logics of the gig economy, then we all have a part to play in resisting some of its worst characteristics.
The Payoff by Jeff Connaughton
algorithmic trading, bank run, banking crisis, Bernie Madoff, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, desegregation, Flash crash, locking in a profit, London Interbank Offered Rate, London Whale, Long Term Capital Management, naked short selling, Neil Kinnock, plutocrats, Plutocrats, Ponzi scheme, risk tolerance, Robert Bork, short selling, Silicon Valley, too big to fail, two-sided market, young professional
In a speech on September 14, 2009, the anniversary of the collapse of Lehman Brothers, Ted warned of a flash crash and how HFT would fuel it: [U]nlike specialists and traditional market-makers that are regulated, some of these new high-frequency traders are unregulated, though they are acting in a market-maker capacity. They have no requirements to “maintain a fair and orderly” market. They trade when it benefits them. If we experience another shock to the financial system, will this new, and dominant, type of pseudo market maker act in the interest of the markets when we really need them? Will they step up and maintain a two-sided market, or will they simply shut off the machines and walk away? Even worse, will they seek even further profit and exacerbate the downside? One problem we faced—and one you may be experiencing as you read this chapter—is that HFT isn’t just mind-boggling. It’s mind-numbing. Senator Kay Hagan (D-NC), a fellow freshman who’d become Ted’s friend, was presiding in the chair on the day Ted gave the above speech.
Regulators’ lack of understanding of HFT strategies and the volatility they create left the markets vulnerable to a nausea-inducing plunge. For example, the SEC took for granted that high-frequency traders were the new market makers without taking into account the ways in which they differed from traditional market makers. Not only did the speed of HFT algorithms cripple the markets in a matter of minutes, but the absence of true market makers to guarantee two-sided markets in times of high volatility created an enormous liquidity shortage. Andrew Haldane, executive director for financial stability for the Bank of England, said that the flash crash demonstrates that HFT is “adding liquidity during a monsoon and absorbing it during a drought.” Although circuit breakers may make a crash less calamitous, they’re not a cure for regulatory ignorance. Third, the lack of data made identifying the causes of the flash crash a monumental task.
Hit Refresh: The Quest to Rediscover Microsoft's Soul and Imagine a Better Future for Everyone by Satya Nadella, Greg Shaw, Jill Tracie Nichols
"Robert Solow", 3D printing, Amazon Web Services, anti-globalists, artificial general intelligence, augmented reality, autonomous vehicles, basic income, Bretton Woods, business process, cashless society, charter city, cloud computing, complexity theory, computer age, computer vision, corporate social responsibility, crowdsourcing, Deng Xiaoping, Donald Trump, Douglas Engelbart, Edward Snowden, Elon Musk, en.wikipedia.org, equal pay for equal work, everywhere but in the productivity statistics, fault tolerance, Gini coefficient, global supply chain, Google Glasses, Grace Hopper, industrial robot, Internet of things, Jeff Bezos, job automation, John Markoff, John von Neumann, knowledge worker, Mars Rover, Minecraft, Mother of all demos, NP-complete, Oculus Rift, pattern recognition, place-making, Richard Feynman, Robert Gordon, Ronald Reagan, Second Machine Age, self-driving car, side project, Silicon Valley, Skype, Snapchat, special economic zone, speech recognition, Stephen Hawking, Steve Ballmer, Steve Jobs, telepresence, telerobotics, The Rise and Fall of American Growth, Tim Cook: Apple, trade liberalization, two-sided market, universal basic income, Wall-E, Watson beat the top human players on Jeopardy!, young professional, zero-sum game
User scorecards determine which is the most effective. Sometimes, seemingly tiny differences can mean a lot. Something as simple as the color or size of a type font may profoundly impact the willingness of consumers to engage, triggering behavioral variations that may be worth tens of millions in revenue. Now Microsoft had to master this new approach to product design. Third, we had to be great at understanding and building two-sided markets—the economics of a new online business. On one side are the consumers who go online for search results, and on the other side are the advertisers who want their businesses to be found. Both are needed to succeed. This creates the auction effect I was describing earlier. Both sides of the business are equally important, and designing the experience for both sides is crucial. Attracting more and more searchers obviously makes it easier to attract more and more advertisers.
See also specific products Tait, Richard, 7, 29 talent development, 117–18 TCI company, 28 teachers, 104, 106, 198, 226 teams and team building, 1, 39, 56, 107, 117–18 technology boom of 1990s, 24 democratizing and personalizing, 69 diffusion of, 216–17, 219 disruption and, 12 empathy and, 42–43 future of, 140–44 human performance augmented by, 142–43, 201 intensity of use, 217, 219, 221, 224–26 soul and, 68–69 transformation and, 11–12 TED talks, 180 telecommunications, 225 teleconferencing, shared-screen, 142 telegraph, 186 telepresence, 236 telerobotics, 236 tensor-processing unit (TPU), 161 Teper, Jeff, 29 terrorism, 172, 177–79 TextIt, 216 theoretical physicists, 162–64 think weeks, 64 32-bit operating systems, 29 Thiruvengadam, Arun, 187 Thompson, John, 14–15 3D printing, 228 three C s, 122–23, 141 Three Laws of Robotics, 202 ThyssenKrupp, 59–60 Tiger Server project, 30 time management model, 138 Tirupati, India, 19 topological quantum computing (TQC), 166 Toyota, 127 Tractica, 198 trade, 229–31, 236 training, 92, 227 transfer learning, 151, 153, 155 transformation, 11–12, 57, 67, 90 cloud and, 42, 55–56, 71 cultural (see culture, transforming) Trans-Pacific Partnership (TPP), 230–31 transparency, 135, 174–75, 191–92, 202, 204–6 Trump, Donald, 212, 230 trust, 56, 88, 107, 135, 169–94, 205, 236 Turing, Alan, 26 Turner, Kevin, 3 TV white space, 99, 225 Twilight Zone, The (TV show), 159 Twitter, 174 2001 (film), 201 two-in-one computers, 129 two-sided markets, 50 Uber, 44, 126, 153 uncertainty, 38, 111, 157 United Kingdom, 215, 236 United Nations, 44 U.S. Congress, 177, 211 U.S. Constitution, 187 U.S. Court of Appeals for Second Circuit, 177 U.S. Postal Service, 186 U.S. Supreme Court, 177, 185 universal basic income, 239–40 University of California at Santa Barbara, 162 University of Chicago, 29 University of Pennsylvania, 184 University of Wisconsin, 22–26 UNIX, 26, 29, 128 Upside of Inequality, The (Conard), 220 asphyxia in utero, 8 Vairavan, Dr., 23 values, 76, 182, 205 Vancouver, 92–93 Vanity Fair, 73–74 venture capital, 199 vice presidents, 118–19 videogames, 103, 106–8, 127 video-on-demand (VOD), 30 video surveillance cameras, 153 Vietnam, 170 virtual reality, 144–45, 228 visual crowding, 104 visual recognition, 76, 89, 150–51, 200 Visual Studio, 58, 59 vocational training, 227 Volvo, 153 Von Neumann, John, 26 WALL-E (film), 13 Wall Street Journal, 179, 230 Wal-Mart, 3 Washington Post, 80 Watsa, Prem, 20 Web, 49, 99.
The Ethical Algorithm: The Science of Socially Aware Algorithm Design by Michael Kearns, Aaron Roth
23andMe, affirmative action, algorithmic trading, Alvin Roth, Bayesian statistics, bitcoin, cloud computing, computer vision, crowdsourcing, Edward Snowden, Elon Musk, Filter Bubble, general-purpose programming language, Google Chrome, ImageNet competition, Lyft, medical residency, Nash equilibrium, Netflix Prize, p-value, Pareto efficiency, performance metric, personalized medicine, pre–internet, profit motive, quantitative trading / quantitative ﬁnance, RAND corporation, recommendation engine, replication crisis, ride hailing / ride sharing, Robert Bork, Ronald Coase, self-driving car, short selling, sorting algorithm, speech recognition, statistical model, Stephen Hawking, superintelligent machines, telemarketer, Turing machine, two-sided market, Vilfredo Pareto
For example, suppose the candidates Elaine and Saeed have the following ranked list of residencies (ignore the annotating characters for now, which we discuss shortly): Elaine Saeed Harvard Cornell Johns Hopkins UC San Diego @ UC San Diego & Harvard # Baylor Johns Hopkins Based on application materials and interviews, the schools of course also have their own ranked lists of candidates, such as: Harvard UC San Diego Saeed # Roger Elaine Saeed @ Roger Elaine & Gwyneth Mary So this is a two-sided market—candidates and hospitals—and there are also capacity constraints, because each candidate can of course take only one residency, and each hospital can only take a limited number of residents (which for simplicity we’ll assume is also just one). Thus, as with dating and commuting, we once again have a large system (many thousands of applicants, and hundreds of schools) of interacting, competing preferences and would like to specify a desirable solution—and a fast algorithm for finding one.
See also gender data and bias sexual orientation data, 25–26, 51–52, 86–89 Shapley, Lloyd, 129–30 The Shining (King), 118, 120 Shmatikov, Vitaly, 25 Simmons, Joe, 157–58 simple algorithms, 174 simulated game play, 134–35 single nucleotide polymorphisms (SNPs), 30–31 singularity, 180 Smith, Adam, 36 smoking, 27–28, 34–36, 39, 51–54 Snowden, Edward, 47–48 social awareness, 16–17, 131 social welfare, 97, 113, 115 societal norms and values, 12, 15–18, 20–21, 86, 134, 169–70 socioeconomic groups, 57 software engineers, 48–49 sorting algorithms, 4–5 spurious correlations, 150, 159 stable equilibriums, 99–100, 128 stable matchings, 128–30 standoffs, 98 statistics and adaptive data analysis, 159 and aggregate data, 22–23, 30–31 and algorithmic violations of fairness and privacy, 96 Bayesian, 38–39, 173 and the Bonferroni correction, 149 criminal sentencing, 14–15 and differential privacy, 40, 44–45, 47–52, 167 and fairness issues, 193–94 flawed statistical reasoning, 140–41 and interpretability of model outputs, 171–72 and investing scams, 138–41 and medical research, 34 and online shopping algorithms, 117 and p-hacking, 144–45, 153–55, 157–59, 161, 164, 169–70 statistical modeling, 90 statistical parity, 69–74, 84 and US Census data, 195 and “word embedding” models, 57–58, 63–64 stock investing, 81, 137–41 strategy, 97–102 Strava, 50–51 subgroup protections, 88–89 subjectivity, 86, 172 subpoenas, 41, 45–46, 48 “superfood” research, 143–44 superintelligent AI, 179–81, 185, 187 supervised machine learning, 63–64, 69–70, 183 supply and demand, 94–97 Supreme Court nomination hearings, 24 survey responses, 40–45 Sweeney, Latanya, 23 synthetic images, 132–35 target populations, 172–73 TD-Gammon program, 132 technological advances, 100–101, 103 TED Talks, 141–42 telemarketing calls, 38 temporal difference, 132 Tesauro, Gerry, 132 test preparation courses, 74–75 theoretical computer science, 11–13, 36 threshold rule, 75 Title VII, 15 tobacco research, 34–36 torturing data, 156–59 traffic and navigation problems, 19–20, 101–11, 113–15, 179 training data, 61–62 transparency, 125–26, 170–71 trust, 45–47, 170–71, 194–95 “truthfulness” in game theory, 114 “tunable” parameters, 37–39, 125–26, 171 Turing, Alan, 11–12, 180 Turing Award, 133 Turing machine, 11 23andMe, 54–55 2020 Census, 49, 195 Twitter Predictor Game, 52–53 two-route navigation problem, 107 two-sided markets, 127 2001: A Space Odyssey (film), 184 typing, 118 underspecified problems, 183 unintended consequences, 6–8, 16–17, 184–85, 188 unique data points, 26–27 unsupervised learning, 63–64 upstream effects, 194 US Census Bureau, 49 US Constitution, 49 US Equal Employment Opportunity Commission, 86–87 user identifiers, 24 user modeling, 121 user ratings, 118–21 US military deployments, 50–51 US State Department, 15 validation sets, 162–63 value alignment problems, 184 values.
Working in Public: The Making and Maintenance of Open Source Software by Nadia Eghbal
Amazon Web Services, barriers to entry, Benevolent Dictator For Life (BDFL), bitcoin, Clayton Christensen, cloud computing, commoditize, continuous integration, crowdsourcing, cryptocurrency, David Heinemeier Hansson, death of newspapers, Debian, disruptive innovation, en.wikipedia.org, Ethereum, Firefox, Guido van Rossum, Hacker Ethic, Induced demand, informal economy, Jane Jacobs, Jean Tirole, Kevin Kelly, Kickstarter, Kubernetes, Mark Zuckerberg, Menlo Park, Network effects, node package manager, Norbert Wiener, pirate software, pull request, RFC: Request For Comment, Richard Stallman, Ronald Coase, Ruby on Rails, side project, Silicon Valley, Snapchat, social graph, software as a service, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, The Death and Life of Great American Cities, The Nature of the Firm, transaction costs, two-sided market, urban planning, web application, wikimedia commons, Zimmermann PGP
Micropayments make the transaction about content, rather than about creators, but because there is so much freely available, highly substitutable content they create decision fatigue for consumers.362 Subscription models can operate like a freemium model, but they get even more interesting as a two-sided market. In a freemium model, a creator gives away some of their content for free, but restricts other content to those with paid subscriptions. The free content helps creators grow their reputation via public network effects. In a two-sided market, paying subscribers subsidize all of the content for nonpaying readers, under the assumption that creators aren’t actually selling content but a sense of membership and identity. Instead of charging, say, all 100,000 readers ten cents to read an article, creators can instead give away the article for free, but charge 1,000 extra-dedicated subscribers ten dollars per year.
People, Power, and Profits: Progressive Capitalism for an Age of Discontent by Joseph E. Stiglitz
"Robert Solow", affirmative action, Affordable Care Act / Obamacare, barriers to entry, basic income, battle of ideas, Berlin Wall, Bernie Madoff, Bernie Sanders, business cycle, Capital in the Twenty-First Century by Thomas Piketty, carried interest, central bank independence, clean water, collective bargaining, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crony capitalism, deglobalization, deindustrialization, disintermediation, diversified portfolio, Donald Trump, Edward Snowden, Elon Musk, Erik Brynjolfsson, Fall of the Berlin Wall, financial deregulation, financial innovation, financial intermediation, Firefox, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, George Akerlof, gig economy, global supply chain, greed is good, income inequality, information asymmetry, invisible hand, Isaac Newton, Jean Tirole, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John von Neumann, Joseph Schumpeter, labor-force participation, late fees, low skilled workers, Mark Zuckerberg, market fundamentalism, mass incarceration, meta analysis, meta-analysis, minimum wage unemployment, moral hazard, new economy, New Urbanism, obamacare, patent troll, Paul Samuelson, pension reform, Peter Thiel, postindustrial economy, price discrimination, principal–agent problem, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, Richard Thaler, Robert Bork, Robert Gordon, Robert Mercer, Robert Shiller, Robert Shiller, Ronald Reagan, secular stagnation, self-driving car, shareholder value, Shoshana Zuboff, Silicon Valley, Simon Kuznets, South China Sea, sovereign wealth fund, speech recognition, Steve Jobs, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, trickle-down economics, two-sided market, universal basic income, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, War on Poverty, working-age population
Chien, “Patent Assertion and Startup Innovation” (Santa Clara University of Law Legal Studies Research Paper Series 26-13, 2013). 35.Chicago economists defend these anti-competitive practices by saying that these restraints are just the natural way that efficient competition takes in two-sided markets. According to these economists, two-sided markets are just a “meeting place”—today, typically an electronic platform—for two sets of agents to interact with each other. Credit cards bring together customers with stores. They argue that courts shouldn’t interfere with the workings of markets. To say that these arguments ignore the actual workings of the marketplace is an understatement. Nevertheless, with these arguments, they succeeded in persuading some courts—including the US Supreme Court in another one of its five-to-four split decisions—to allow these abuses of market power to continue. For an excellent discussion, see Benjamin E. Hermalin and Michael L. Katz, “What’s So Special About Two-Sided Markets?” in Martin Guzman, ed. Toward a Just Society (New York: Columbia University Press, 2018), 111-130. 36.The contract provisions are so strongly anticompetitive that even a firm with a small market share (like Discover Card) could and did charge exorbitant prices, far in excess of costs.
Who Gets What — and Why: The New Economics of Matchmaking and Market Design by Alvin E. Roth
Affordable Care Act / Obamacare, Airbnb, algorithmic trading, barriers to entry, Berlin Wall, bitcoin, Build a better mousetrap, centralized clearinghouse, Chuck Templeton: OpenTable:, commoditize, computer age, computerized markets, crowdsourcing, deferred acceptance, desegregation, experimental economics, first-price auction, Flash crash, High speed trading, income inequality, Internet of things, invention of agriculture, invisible hand, Jean Tirole, law of one price, Lyft, market clearing, market design, medical residency, obamacare, proxy bid, road to serfdom, school choice, sealed-bid auction, second-price auction, second-price sealed-bid, Silicon Valley, spectrum auction, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, The Wealth of Nations by Adam Smith, two-sided market, uber lyft, undersea cable
MARKETS FOR BREAKFAST AND THROUGH THE DAY [>] sold “by sample”: See Jonathan Levin and Paul Milgrom, “Online Advertising: Heterogeneity and Conflation in Market Design,” American Economic Review 100, no. 2 (May 2010): 603–7. [>] Credit cards offered merchants: Credit cards are sometimes referred to by economists as “two-sided markets” because of the way they form a marketplace that needs to attract two different kinds of participants: merchants and consumers. One important strand of work focuses on how the two sides of the service should be priced; see, for example, Jean-Charles Rochet and Jean Tirole, “Two-Sided Markets: A Progress Report,” RAND Journal of Economics 37, no. 3 (Autumn 2006): 645–67. [>] they seldom switch cards: See Lawrence M. Ausubel, “The Failure of Competition in the Credit Card Market,” American Economic Review 81, no. 1 (March 1991): 50–81. [>] middlemen: For competition among middlemen, see Benjamin Edelman and Julian Wright, “Price Coherence and Adverse Intermediation” (working paper, Harvard Business School, Cambridge, MA, December 2013). 3.
High-Frequency Trading by David Easley, Marcos López de Prado, Maureen O'Hara
algorithmic trading, asset allocation, backtesting, Brownian motion, capital asset pricing model, computer vision, continuous double auction, dark matter, discrete time, finite state, fixed income, Flash crash, High speed trading, index arbitrage, information asymmetry, interest rate swap, latency arbitrage, margin call, market design, market fragmentation, market fundamentalism, market microstructure, martingale, natural language processing, offshore financial centre, pattern recognition, price discovery process, price discrimination, price stability, quantitative trading / quantitative ﬁnance, random walk, Sharpe ratio, statistical arbitrage, statistical model, stochastic process, Tobin tax, transaction costs, two-sided market, yield curve
Two liquidity measures are calculated: the percentage of time that traders of each group provide two-sided liquidity, and bid–offer spread compiled on a one-second grid and averaged over 10-minute time intervals, with USD/JPY, EUR/JPY currency pairs for BOJ intervention, and EUR/CHF, USD/CHF currency pairs for SNB intervention. The BOJ intervention at 01h00 GMT on August 4, 2011, caused a sharp jump in the USD/JPY exchange rate that did not disrupt the two-sided market. MTs provided liquidity 100% of the entire intervention time, while HF traders and slow AI failed to provide two-sided liquidity only for two seconds and eight seconds, respectively. UHF traders provided only intermittent liquidity during first 79 i i i i i i “Easley” — 2013/10/8 — 11:31 — page 80 — #100 i i HIGH-FREQUENCY TRADING the 10 minutes after intervention and withdrew from the market for several minutes around 02h40 GMT.
The SNB intervention on September 6, 2011, lasted for 30 minutes, from 08h00 to 08h30 GMT. Liquidity provided by slow AI users for the USD/CHF exchange rate had notable gaps prior to the SNB intervention. The intervention briefly decreased the percentage of time for which all customer groups quoted two-way prices. HF traders were the quickest, while UHF traders were the slowest in restoring the two-sided market. HF traders were the most active in setting the bid–offer spread during and after the intervention. For the EUR/CHF exchange rate, MTs and HF traders were the best liquidity providers during the SNB intervention. While the SNB intervention affected the EUR/USD exchange rate, its liquidity was not impaired. These two events suggest that high-frequency traders can be valuable contributors to market liquidity during dramatic price moves of exchange rates, such as during central bank interventions.
How to DeFi by Coingecko, Darren Lau, Sze Jin Teh, Kristian Kho, Erina Azmi, Tm Lee, Bobby Ong
algorithmic trading, asset allocation, Bernie Madoff, bitcoin, blockchain, buy and hold, capital controls, collapse of Lehman Brothers, cryptocurrency, distributed ledger, diversification, Ethereum, ethereum blockchain, fiat currency, Firefox, information retrieval, litecoin, margin call, new economy, passive income, payday loans, peer-to-peer, prediction markets, QR code, reserve currency, smart contracts, tulip mania, two-sided market
Opyn is also noncustodial and trustless, with a reliance on incentives for it to work. ~ What are the key differences between Nexus Mutual and Opyn? Nexus Mutual Opyn Covers Against Smart Contract Hacks Technical, financial, admin key risks Claims Approval Yes – Voting No – immediate withdrawal upon claim Coverage Any Smart Contract on mainnet (Wider coverage) Compound and Curve (Limited coverage) Liquidity Coverage Pools Two-Sided Market Fully Collateralized No Yes Common Capital Pool Yes No Pricing Nexus pricing algorithm & Risk Assessors Depends on the supply and demand of the market, mainly via Uniswap ~ Opyn: Step-by-Step Guide Step 1 Go to https://opyn.co/ and click get started. We will be insuring some DAI on Compound Step 2 Since we have 20 DAI on Compound, we wish to buy insurance for them Step 3 After clicking Buy Insurance, we will be redirected here Click confirm and confirm the transaction Step 4 As you can see we got ocDai in exchange for our ETH Note that the amounts are different. 1 ocDAI covers 1 cDAI, not 1 DAI.
Ghost Work: How to Stop Silicon Valley From Building a New Global Underclass by Mary L. Gray, Siddharth Suri
Affordable Care Act / Obamacare, Amazon Mechanical Turk, augmented reality, autonomous vehicles, barriers to entry, basic income, big-box store, bitcoin, blue-collar work, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, collaborative consumption, collective bargaining, computer vision, corporate social responsibility, crowdsourcing, data is the new oil, deindustrialization, deskilling, don't be evil, Donald Trump, Elon Musk, employer provided health coverage, en.wikipedia.org, equal pay for equal work, Erik Brynjolfsson, financial independence, Frank Levy and Richard Murnane: The New Division of Labor, future of work, gig economy, glass ceiling, global supply chain, hiring and firing, ImageNet competition, industrial robot, informal economy, information asymmetry, Jeff Bezos, job automation, knowledge economy, low skilled workers, low-wage service sector, market friction, Mars Rover, natural language processing, new economy, passive income, pattern recognition, post-materialism, post-work, race to the bottom, Rana Plaza, recommendation engine, ride hailing / ride sharing, Ronald Coase, Second Machine Age, sentiment analysis, sharing economy, Shoshana Zuboff, side project, Silicon Valley, Silicon Valley startup, Skype, software as a service, speech recognition, spinning jenny, Stephen Hawking, The Future of Employment, The Nature of the Firm, transaction costs, two-sided market, union organizing, universal basic income, Vilfredo Pareto, women in the workforce, Works Progress Administration, Y Combinator
Sometimes these jobs are given heft as harbingers of the “Second Machine Age” or the “Fourth Industrial Revolution” or part of a larger digital or platform economy. Other times, they’re simply, glibly called gigs.9 No employment laws capture the on-demand gig economy’s odd mix of independence from any single employer and dependency on a web-based platform. As the taskmasters of the gig economy, on-demand platforms make their money by matching those buying and selling human labor online, generating a two-sided market of myriad businesses and anonymous crowds of workers. And, importantly, as media scholar and sociologist Tarleton Gillespie points out, platforms may not create the content that they host, “but they do make important choices about it.”10 On-demand work platforms can easily become silent business partners more aligned with the interests of those willing to pay a fee to find workers than with the workers searching for jobs.
Since 2015, companies buying and selling on-demand work have tiptoed cautiously around any activity that makes them look as if they are doing anything other than providing an online meeting place and matching service between people with jobs to be filled and workers willing and able to work. On-demand ghost work platforms see themselves as neutral parties, arguing that they are the software serving as the middlemen managing what economists call a two-sided market. They connect requesters seeking workers, on one side of the platform’s marketplace, and workers seeking jobs, on the other side. And in the absence of set hours, work sites, or agreement about who’s the official boss in charge, it is difficult to gauge how much ghost work is done across this burgeoning industry, who’s paying for it, and which workers are completing the tasks. The transaction costs that economist and Nobel laureate Ronald Coase so long ago identified as the reason for the very existence of firms seemed to melt away with the new on-demand systems.
Virtual Competition by Ariel Ezrachi, Maurice E. Stucke
Airbnb, Albert Einstein, algorithmic trading, barriers to entry, cloud computing, collaborative economy, commoditize, corporate governance, crony capitalism, crowdsourcing, Daniel Kahneman / Amos Tversky, David Graeber, demand response, disintermediation, disruptive innovation, double helix, Downton Abbey, Erik Brynjolfsson, experimental economics, Firefox, framing effect, Google Chrome, index arbitrage, information asymmetry, interest rate derivative, Internet of things, invisible hand, Jean Tirole, John Markoff, Joseph Schumpeter, Kenneth Arrow, light touch regulation, linked data, loss aversion, Lyft, Mark Zuckerberg, market clearing, market friction, Milgram experiment, multi-sided market, natural language processing, Network effects, new economy, offshore financial centre, pattern recognition, prediction markets, price discrimination, price stability, profit maximization, profit motive, race to the bottom, rent-seeking, Richard Thaler, ride hailing / ride sharing, road to serfdom, Robert Bork, Ronald Reagan, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, smart meter, Snapchat, social graph, Steve Jobs, supply-chain management, telemarketer, The Chicago School, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, Travis Kalanick, turn-by-turn navigation, two-sided market, Uber and Lyft, Uber for X, uber lyft, Watson beat the top human players on Jeopardy!, women in the workforce, yield management
When the ability to innovate is present, the incentive to innovate is driven by the desire to appropriate financial gains associated with innovation. This economic framework is “often associated with the eminent economist Professor Joseph Schumpeter,” who suggested, “firms with market power will have the greatest incentive to innovate because of their large relative size and dominant position in a market” D. L. Weisman and R. B. Kulick, “Price Discrimination, Two-Sided Markets, and Net Neutrality Regulation,” Tulane Journal of Technology and Intellectual Property 13 (2010): 81, https://www.researchgate.net/profile/Dennis_Weisman /publication/228307995_Price _Discrimination _Two-Sided _ Markets _ and _Net _Neutrality_Regulation/links/0deec5187eadf2a5c8000000.pdf. 7. Josh Wright, “Price Discrimination Is Good, Part I,” Truth on the Market (November 30, 2008), http://truthonthemarket.com/2008/11/30/price -discrimination-is-good-part-i/.
Josh Wright, “Price Discrimination Is Good, Part I,” Truth on the Market (November 30, 2008), http://truthonthemarket.com/2008/11/30/price -discrimination-is-good-part-i/. This approach, generally associated with Nobel laureate economist Kenneth Arrow, suggests “the increased business generated by an innovation will come mostly from sales that formerly would have gone to competitors, while monopolists may largely cannibalize their own business”; Weisman and Kulick, “Price Discrimination, Two-Sided Markets, and Net Neutrality Regulation.” 8. “The reason why price discrimination may intensify competition is that with uniform pricing, firms would only compete for ‘marginal consumers’ whereas through price discrimination, firms can compete for all customers, including those with strong loyalty to a competitor’s brand”; Papandropoulos, “How Should Price Discrimination Be Dealt with by Competition Authorities?”
Empirical Market Microstructure: The Institutions, Economics and Econometrics of Securities Trading by Joel Hasbrouck
Alvin Roth, barriers to entry, business cycle, conceptual framework, correlation coefficient, discrete time, disintermediation, distributed generation, experimental economics, financial intermediation, index arbitrage, information asymmetry, interest rate swap, inventory management, market clearing, market design, market friction, market microstructure, martingale, price discovery process, price discrimination, quantitative trading / quantitative ﬁnance, random walk, Richard Thaler, second-price auction, selection bias, short selling, statistical model, stochastic process, stochastic volatility, transaction costs, two-sided market, ultimatum game, zero-sum game
In lowactivity securities, though, the potential dealer’s costs of continuously monitoring bids and offers may be too large to recover from the relatively infrequent trades. In these instances, continuous liquidity requires that a dealer be designated as such (by the market authority) and provided with additional incentives. Perhaps the best-known designated dealer is the NYSE specialist. The specialist has many roles and responsibilities, but an important one is maintaining a two-sided market when there is nothing on the limit order book and no one else on the floor bidding or offering. Establishing the proper incentives for designated dealers, though, has proven to be difficult. The issues involve measuring the liquidity that the dealers provide, determining the beneficiaries of this liquidity, allocating the costs, and balancing the rights of dealers against the public TRADING MECHANISMS users of limit orders (who are usually the dealers’ direct competitors).
Humans as a Service: The Promise and Perils of Work in the Gig Economy by Jeremias Prassl
3D printing, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, Andrei Shleifer, autonomous vehicles, barriers to entry, call centre, cashless society, Clayton Christensen, collaborative consumption, collaborative economy, collective bargaining, creative destruction, crowdsourcing, disruptive innovation, Donald Trump, Erik Brynjolfsson, full employment, future of work, George Akerlof, gig economy, global supply chain, hiring and firing, income inequality, information asymmetry, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kickstarter, low skilled workers, Lyft, Mahatma Gandhi, Mark Zuckerberg, market friction, means of production, moral hazard, Network effects, new economy, obamacare, pattern recognition, platform as a service, Productivity paradox, race to the bottom, regulatory arbitrage, remote working, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Rosa Parks, Second Machine Age, secular stagnation, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley ideology, Simon Singh, software as a service, Steve Jobs, TaskRabbit, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, transaction costs, transportation-network company, Travis Kalanick, two tier labour market, two-sided market, Uber and Lyft, Uber for X, uber lyft, union organizing, working-age population
There are two closely related challenges to the on-demand economy’s claim to have fostered a revolutionary culture of innovation: first, that many of its supposedly innovative elements are, in fact, simply aimed at entrench- ing existing operators against future competitors; and second, that platforms’ business models might in fact disincentivize the investment in research, development, and working conditions that spurs innovation. Pernicious Innovation Take rating algorithms as an example. The dramatic increase in information available about workers and consumers alike has gone a long way towards alleviating the information asymmetries that traditionally plague two-sided markets. The case for productivity-enhancing innovation looks straightfor- ward: extensive information allows for easy matching of supply and demand, increasing service provision for platform users, and income for workers. Upon closer inspection, however, not all is quite as it seems. As we saw in the previous chapter, two of the most important functions of algorithmic * * * 88 The Innovation Paradox ratings are to control workers—and to lock them into a particular app’s ‘eco-system’: ratings need to be built up over time and cannot be taken from one platform to another.
Simple Rules: How to Thrive in a Complex World by Donald Sull, Kathleen M. Eisenhardt
Affordable Care Act / Obamacare, Airbnb, asset allocation, Atul Gawande, barriers to entry, Basel III, Berlin Wall, carbon footprint, Checklist Manifesto, complexity theory, Craig Reynolds: boids flock, Credit Default Swap, Daniel Kahneman / Amos Tversky, diversification, drone strike, en.wikipedia.org, European colonialism, Exxon Valdez, facts on the ground, Fall of the Berlin Wall, haute cuisine, invention of the printing press, Isaac Newton, Kickstarter, late fees, Lean Startup, Louis Pasteur, Lyft, Moneyball by Michael Lewis explains big data, Nate Silver, Network effects, obamacare, Paul Graham, performance metric, price anchoring, RAND corporation, risk/return, Saturday Night Live, sharing economy, Silicon Valley, Startup school, statistical model, Steve Jobs, TaskRabbit, The Signal and the Noise by Nate Silver, transportation-network company, two-sided market, Wall-E, web application, Y Combinator, Zipcar
Instead, they ended up hosting a forty-five-year-old father from Utah, a thirty-five-year-old woman from Boston, and a thirty-year-old Indian man. Brian and Joe realized this market might be bigger than they first thought. They soon launched Air Mattress Bed & Breakfast, later Airbnb. Airbnb is among the most successful of the shared-economy companies. Unlike many traditional businesses, shared-economy companies have no single base of customers. Rather, these companies provide two-sided markets that connect sellers (or people with something to share) with buyers (who are willing to pay for the product or service)—like the transportation-network company Lyft, which connects passengers who need a ride to drivers who have a car, and TaskRabbit, an errand-outsourcing company that connects people who need something done with “taskers” who will do the job. For Airbnb, it’s connecting local residents with room to spare and travelers who need a place to stay.
Market Sense and Nonsense by Jack D. Schwager
3Com Palm IPO, asset allocation, Bernie Madoff, Brownian motion, buy and hold, collateralized debt obligation, commodity trading advisor, computerized trading, conceptual framework, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, diversified portfolio, fixed income, high net worth, implied volatility, index arbitrage, index fund, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, market fundamentalism, merger arbitrage, negative equity, pattern recognition, performance metric, pets.com, Ponzi scheme, quantitative trading / quantitative ﬁnance, random walk, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Robert Shiller, selection bias, Sharpe ratio, short selling, statistical arbitrage, statistical model, survivorship bias, transaction costs, two-sided market, value at risk, yield curve
Investment Insights Although track records are an essential component in making investment decisions, their routine use and superficial interpretation can lead to erroneous, and even completely misleading, conclusions. The key question an investor needs to ask is whether the implications of the past track record are pertinent for the future. It some cases, they will not be. For example, the track record of an equity hedge manager that coincides with a bull market may not be at all indicative of how the manager could be expected to fare in a more two-sided market, let alone a bear market. In some cases, a good track record may reflect excessive risk taking in a benign environment rather than manager skill. In order to assess the relevance of a past track record, an investor needs to understand the source of the past gains and the risks taken to achieve them. 1 Of course, many credit-based managers did well during 2003–2007 without taking on excessive credit risk exposure.
The Inevitable: Understanding the 12 Technological Forces That Will Shape Our Future by Kevin Kelly
A Declaration of the Independence of Cyberspace, AI winter, Airbnb, Albert Einstein, Amazon Web Services, augmented reality, bank run, barriers to entry, Baxter: Rethink Robotics, bitcoin, blockchain, book scanning, Brewster Kahle, Burning Man, cloud computing, commoditize, computer age, connected car, crowdsourcing, dark matter, dematerialisation, Downton Abbey, Edward Snowden, Elon Musk, Filter Bubble, Freestyle chess, game design, Google Glasses, hive mind, Howard Rheingold, index card, indoor plumbing, industrial robot, Internet Archive, Internet of things, invention of movable type, invisible hand, Jaron Lanier, Jeff Bezos, job automation, John Markoff, Kevin Kelly, Kickstarter, lifelogging, linked data, Lyft, M-Pesa, Marc Andreessen, Marshall McLuhan, means of production, megacity, Minecraft, Mitch Kapor, multi-sided market, natural language processing, Netflix Prize, Network effects, new economy, Nicholas Carr, old-boy network, peer-to-peer, peer-to-peer lending, personalized medicine, placebo effect, planetary scale, postindustrial economy, recommendation engine, RFID, ride hailing / ride sharing, Rodney Brooks, self-driving car, sharing economy, Silicon Valley, slashdot, Snapchat, social graph, social web, software is eating the world, speech recognition, Stephen Hawking, Steven Levy, Ted Nelson, the scientific method, transport as a service, two-sided market, Uber for X, uber lyft, Watson beat the top human players on Jeopardy!, Whole Earth Review, zero-sum game
ITunes was an entire ecosystem of apps constructed on the capabilities built into the phone, and it boomed. Since Apple kept adding ingenious new ways to interact with the phone, including new sensors such as a camera, GPS, and an accelerometer, thousands of novel species of innovations deepened the iPhone ecology. A third generation of platforms further expanded the power of the marketplaces. Unlike traditional two-sided markets—say, a farmers’ market that enables buyers and sellers—a platform ecosystem became a multisided market. A good example of this is Facebook. The firm created some rules and protocols that formed a marketplace where independent sellers (college students) produced their own profiles, which were matched up in a marketplace with their friends. The attention of the students was sold to advertisers.
The Black Box Society: The Secret Algorithms That Control Money and Information by Frank Pasquale
Affordable Care Act / Obamacare, algorithmic trading, Amazon Mechanical Turk, American Legislative Exchange Council, asset-backed security, Atul Gawande, bank run, barriers to entry, basic income, Berlin Wall, Bernie Madoff, Black Swan, bonus culture, Brian Krebs, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, Chelsea Manning, Chuck Templeton: OpenTable:, cloud computing, collateralized debt obligation, computerized markets, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crowdsourcing, cryptocurrency, Debian, don't be evil, drone strike, Edward Snowden, en.wikipedia.org, Fall of the Berlin Wall, Filter Bubble, financial innovation, financial thriller, fixed income, Flash crash, full employment, Goldman Sachs: Vampire Squid, Google Earth, Hernando de Soto, High speed trading, hiring and firing, housing crisis, informal economy, information asymmetry, information retrieval, interest rate swap, Internet of things, invisible hand, Jaron Lanier, Jeff Bezos, job automation, Julian Assange, Kevin Kelly, knowledge worker, Kodak vs Instagram, kremlinology, late fees, London Interbank Offered Rate, London Whale, Marc Andreessen, Mark Zuckerberg, mobile money, moral hazard, new economy, Nicholas Carr, offshore financial centre, PageRank, pattern recognition, Philip Mirowski, precariat, profit maximization, profit motive, quantitative easing, race to the bottom, recommendation engine, regulatory arbitrage, risk-adjusted returns, Satyajit Das, search engine result page, shareholder value, Silicon Valley, Snapchat, social intelligence, Spread Networks laid a new fibre optics cable between New York and Chicago, statistical arbitrage, statistical model, Steven Levy, the scientific method, too big to fail, transaction costs, two-sided market, universal basic income, Upton Sinclair, value at risk, WikiLeaks, zero-sum game
173 I imagine there would be mass protest and a slew of lawsuits. The very possibility seems antique, the fever dream of a robber baron. But in the digital realm, monopolistic cable firms are angling to impose a similar arrangement: to make Internet access cheap if paired with their own content, and pricier if used to access others’ work. Similarly, firms like Google and Amazon are in prime position to make money off both sides of a two-sided market: monetizing our data and purchases, while promoting to us their own products and ser vices, or those of “partners” who let the larger platform share in their profits. That’s one reason we need to look back to the legal principles that animated Populists and Progressives in response to America’s first Gilded Age. The great Internet companies and the physical networks that enable them are not the first private enterprises to achieve near monopolistic power over a key ser vice, and to leverage that power into windfall profits and influence.174 It happened in the nineteenth century with railroads and telegraphs.175 Like today’s search and cable companies, those fi rms controlled essential junctions of an emerging economic order.
The Age of Surveillance Capitalism by Shoshana Zuboff
Amazon Web Services, Andrew Keen, augmented reality, autonomous vehicles, barriers to entry, Bartolomé de las Casas, Berlin Wall, bitcoin, blockchain, blue-collar work, book scanning, Broken windows theory, California gold rush, call centre, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, choice architecture, citizen journalism, cloud computing, collective bargaining, Computer Numeric Control, computer vision, connected car, corporate governance, corporate personhood, creative destruction, cryptocurrency, dogs of the Dow, don't be evil, Donald Trump, Edward Snowden, en.wikipedia.org, Erik Brynjolfsson, facts on the ground, Ford paid five dollars a day, future of work, game design, Google Earth, Google Glasses, Google X / Alphabet X, hive mind, impulse control, income inequality, Internet of things, invention of the printing press, invisible hand, Jean Tirole, job automation, Johann Wolfgang von Goethe, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, knowledge economy, linked data, longitudinal study, low skilled workers, Mark Zuckerberg, market bubble, means of production, multi-sided market, Naomi Klein, natural language processing, Network effects, new economy, Occupy movement, off grid, PageRank, Panopticon Jeremy Bentham, pattern recognition, Paul Buchheit, performance metric, Philip Mirowski, precision agriculture, price mechanism, profit maximization, profit motive, recommendation engine, refrigerator car, RFID, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Mercer, Second Machine Age, self-driving car, sentiment analysis, shareholder value, Shoshana Zuboff, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, slashdot, smart cities, Snapchat, social graph, social web, software as a service, speech recognition, statistical model, Steve Jobs, Steven Levy, structural adjustment programs, The Future of Employment, The Wealth of Nations by Adam Smith, Tim Cook: Apple, two-sided market, union organizing, Watson beat the top human players on Jeopardy!, winner-take-all economy, Wolfgang Streeck
Roben Farzad, “Google at $400 Billion: A New No. 2 in Market Cap,” BusinessWeek, February 12, 2014, http://www.businessweek.com/articles/2014-02-12/google-at-400-billion-a-new-no-dot-2-in-market-cap. 92. “Largest Companies by Market Cap Today,” Dogs of the Dow, 2017, https://web.archive.org/web/20180701094340/http://dogsofthedow.com/largest-companies-by-market-cap.htm. 93. Jean-Charles Rochet and Jean Tirole, “Two-Sided Markets: A Progress Report,” RAND Journal of Economics 37, no. 3 (2006): 645–67. 94. For a discussion on this point and its relation to online target advertising, see Katherine J. Strandburg, “Free Fall: The Online Market’s Consumer Preference Disconnect” (working paper, New York University Law and Economics, October 1, 2013). 95. Kevin Kelly, “The Three Breakthroughs That Have Finally Unleashed AI on the World,” Wired, October 27, 2014, https://www.wired.com/2014/10/future-of-artificial-intelligence. 96.
Stigum's Money Market, 4E by Marcia Stigum, Anthony Crescenzi
accounting loophole / creative accounting, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Black-Scholes formula, Brownian motion, business climate, buy and hold, capital controls, central bank independence, centralized clearinghouse, corporate governance, credit crunch, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, disintermediation, distributed generation, diversification, diversified portfolio, financial innovation, financial intermediation, fixed income, full employment, high net worth, implied volatility, income per capita, intangible asset, interest rate derivative, interest rate swap, large denomination, locking in a profit, London Interbank Offered Rate, margin call, market bubble, market clearing, market fundamentalism, money market fund, mortgage debt, Myron Scholes, offshore financial centre, paper trading, pension reform, Ponzi scheme, price mechanism, price stability, profit motive, Real Time Gross Settlement, reserve currency, risk tolerance, risk/return, seigniorage, shareholder value, short selling, technology bubble, the payments system, too big to fail, transaction costs, two-sided market, value at risk, volatility smile, yield curve, zero-coupon bond, zero-sum game
Treasury bill: A non-interest-bearing discount security issued by the U.S. Treasury to finance the national debt. Regularly issued bills include 4-week, 3-month, and 6-month maturities. Also referred to as a T-bill. TT&L account: Treasury tax and loan account at a bank. turnaround: Securities bought and sold for settlement on the same day. turnaround time: The time available or needed to effect a turnaround. two-sided market: A market in which both bid and asked prices, good for the standard unit of trading, are quoted. two-way market: Market in which both a bid and an asked price are quoted. underlier: The thing against which an option is written. The underlier may be a stock, a bond, a futures contract, oil, land, whatever. underwriter: A dealer who purchases new issues from the issuer and distributes them to investors.