search costs

52 results back to index

Reinventing the Bazaar: A Natural History of Markets by John McMillan

accounting loophole / creative accounting, Albert Einstein, Alvin Roth, Andrei Shleifer, Anton Chekhov, Asian financial crisis, classic study, congestion charging, corporate governance, corporate raider, crony capitalism, Dava Sobel, decentralized internet, Deng Xiaoping, Dutch auction, electricity market, experimental economics, experimental subject, fear of failure, first-price auction, frictionless, frictionless market, George Akerlof, George Gilder, global village, Great Leap Forward, Hacker News, Hernando de Soto, I think there is a world market for maybe five computers, income inequality, income per capita, independent contractor, informal economy, information asymmetry, invisible hand, Isaac Newton, job-hopping, John Harrison: Longitude, John Perry Barlow, John von Neumann, Kenneth Arrow, land reform, lone genius, manufacturing employment, market clearing, market design, market friction, market microstructure, means of production, Network effects, new economy, offshore financial centre, ought to be enough for anybody, pez dispenser, pre–internet, price mechanism, profit maximization, profit motive, proxy bid, purchasing power parity, Robert Solow, Ronald Coase, Ronald Reagan, sealed-bid auction, search costs, second-price auction, Silicon Valley, spectrum auction, Stewart Brand, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, War on Poverty, world market for maybe five computers, Xiaogang Anhui farmers, yield management

Sellers intending to continue doing business over the long run might refrain from price-gouging in order to earn repeat business from their customers. Advertising and loss leaders may dislodge customers from rival stores. Brand names and trademarks can reduce search costs for consumers. Market intermediaries like wholesalers and trading companies reduce search costs for firms. There is a long list of market devices that aid the acquisition of information and mitigate the anticompetitive effects of the costs of search. Search costs bring entrepreneurial opportunities. Even small search costs, as we have seen, can give rise to overpricing unless there is some additional force to counter their effects. Search being a wasteful activity, buyers might be willing to pay for a service that conducts the search for them.

…

In addition, transactions sometimes occur between the wrong people, or fail to occur at all. If search costs are high, shoppers will not search very far or might even give up looking. The difficulty of locating alternative sellers might mean you purchase from the seller you know, though there might be other sellers who would offer you a better deal or a different product that better fits your needs. Search costs can result in inappropriate matches of buyer and seller, sometimes preventing mutually beneficial transactions from being made. And search costs, as we saw, actually weaken the force of competition. The mere existence of choice does not in itself ensure that the market operates competitively.

…

The shopper values the assurance against being cheated that the relationship provides, and the merchant wants to leave the shopper satisfied enough to return tomorrow. The relationships economize on search costs and result in prices being lower for repeat customers. Repeat-business relationships are only a partial solution to informational problems. A sophisticated market needs additional mechanisms for providing information. Most markets contain devices designed to overcome the frictions generated by search costs and thereby allow competitive forces to drive prices down. Services like Consumer Reports and the Yellow Pages lower search costs. Word of mouth is a handy source of shopping tips. Sellers intending to continue doing business over the long run might refrain from price-gouging in order to earn repeat business from their customers.

Virtual Competition by Ariel Ezrachi, Maurice E. Stucke

"World Economic Forum" Davos, Airbnb, Alan Greenspan, Albert Einstein, algorithmic management, algorithmic trading, Arthur D. Levinson, barriers to entry, behavioural economics, cloud computing, collaborative economy, commoditize, confounding variable, corporate governance, crony capitalism, crowdsourcing, Daniel Kahneman / Amos Tversky, David Graeber, deep learning, demand response, Didi Chuxing, digital capitalism, disintermediation, disruptive innovation, double helix, Downton Abbey, driverless car, electricity market, Erik Brynjolfsson, Evgeny Morozov, experimental economics, Firefox, framing effect, Google Chrome, independent contractor, 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, nowcasting, offshore financial centre, pattern recognition, power law, prediction markets, price discrimination, price elasticity of demand, 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, search costs, self-driving car, sharing economy, Silicon Valley, Skype, smart cities, smart meter, Snapchat, social graph, Steve Jobs, sunk-cost fallacy, 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, vertical integration, Watson beat the top human players on Jeopardy!, women in the workforce, yield management

The Promise of a Better Competitive Environment 5 Lower Search Costs Having more information and greater market transparency is not especially helpful if it takes too much time and effort for consumers to review the information. New York City has over 5,000 grocery stores.11 Grocery stores are often transparent in their prices. But consumers don’t have the time to travel around town to compare prices for each grocery item. Thus another procompetitive feature of online markets is their ability to reduce users’ search costs. The economic literature has long illustrated that increases in search costs will likely lead to increases in the seller’s power and prices.12 Ill-informed customers are more likely to be subjected to higher, even monopolistic, pricing.

…

When the seller’s market power is based on the presence of high search costs related to quality or price, reducing those costs should, in theory, decrease the seller’s market power and prices.13 Online platforms can help reduce search costs for both sellers and buyers by facilitating information flow and enabling users to quickly compare a range of products and relevant prices.14 The promise of online platforms, including PCWs, in promoting competition lies not only in their provision of price information, but in several other features that support customers’ decision making and reduce their search costs. For example, online shopping platforms provide users with interactive tools to identify the products or ser vices that match their preferences.

…

Price comparison websites (PCW), which benefit from economies of scale and high conversion rates, can further lower these advertising costs and facilitate access to markets.22 Indeed, it has been reported that consumers indicated that “they would only know to contact a few companies for any given product or ser vice, but on [PCWs] they get a wider range of options to choose from.”23 More Dynamic Disruption and Efficiencies Reducing search costs, lowering entry barriers, and increasing information flows can increase the competitive pressure to innovate.24 Thus the fourth promise of online markets is to promote distinct dynamic and allocative efficiencies. The disruptive technology—by increasing transparency and reducing search costs—can more efficiently match buyers and sellers, thereby promoting allocative efficiency. With these online tools, users can quickly identify the provider or product that better matches their needs.25 As the U.K.

The Internet Trap: How the Digital Economy Builds Monopolies and Undermines Democracy by Matthew Hindman

A Declaration of the Independence of Cyberspace, accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, AltaVista, Amazon Web Services, barriers to entry, Benjamin Mako Hill, bounce rate, business logic, Cambridge Analytica, cloud computing, computer vision, creative destruction, crowdsourcing, David Ricardo: comparative advantage, death of newspapers, deep learning, DeepMind, digital divide, discovery of DNA, disinformation, Donald Trump, fake news, fault tolerance, Filter Bubble, Firefox, future of journalism, Ida Tarbell, incognito mode, informal economy, information retrieval, invention of the telescope, Jeff Bezos, John Perry Barlow, John von Neumann, Joseph Schumpeter, lake wobegon effect, large denomination, longitudinal study, loose coupling, machine translation, Marc Andreessen, Mark Zuckerberg, Metcalfe’s law, natural language processing, Netflix Prize, Network effects, New Economic Geography, New Journalism, pattern recognition, peer-to-peer, Pepsi Challenge, performance metric, power law, price discrimination, recommendation engine, Robert Metcalfe, search costs, selection bias, Silicon Valley, Skype, sparse data, speech recognition, Stewart Brand, surveillance capitalism, technoutopianism, Ted Nelson, The Chicago School, the long tail, The Soul of a New Machine, Thomas Malthus, web application, Whole Earth Catalog, Yochai Benkler

How often do they try out new brands of deodorant or toothpaste? How many consumers are really getting the lowest possible rate on their mortgage, or the highest interest rate on their savings account? Most of the time firms and individuals stick with products and services that are known to be good enough. Search costs, then, can also produce lock-in. And these search costs will be the subject of the next chapter. 3 The Political Economy of Personalization It’s becoming quite apparent to us that the world of playing the perfect music to people and the world of playing perfect advertising to them are strikingly similar. —Eric Bieschke, chief scientist at Pandora In his 1995 book Being Digital, Nicholas Negroponte described a world in which everyone had a virtual newspaper entirely tailored to his or her personal taste.

…

A couple shopping for a car are far more likely to save money after checking a second or third auto dealership than they are from checking prices at the ninety-ninth or the hundredth. Stigler argued that diverse and geographically big markets have especially high search costs. How does one lower the costs of search? One answer is to localize markets, as has happened for thousands of years as merchants clustered in bazaars or town squares or shopping districts. Advertising is a slightly more recent attempt to lower search costs. Classified advertising in particular provides a mediated marketplace where buyers and sellers can meet. Another solution, as Stigler explained, involves the creation of market makers: “specialized traders whose chief service . . . is implicitly to provide a meeting place for potential buyers and sellers.”11 He suggested that such firms can take a variety of forms, from large used car dealers to trade journals to specialized information brokers.

…

Site design and mobile app design are distribution costs, since clunky interfaces stunt audience growth. Fresh content is a distribution cost, since few readers want to read the same piece twice. 168 • Chapter 8 Distribution costs also include search costs, which are spread across digital giants, smaller publishers, and users alike. Google and Facebook pay by filtering through billions of items to find those most likely to satisfy users. Publishers pay search costs, too, by optimizing their content for visibility in search engines and social sites, or simply by buying advertising. Buzzfeed and the Huffington Post pay millions of dollars to ensure that Facebook features their stories—money that goes to everything from site design to content management platforms, testing infrastructure to writers’ salaries.

Competition Demystified by Bruce C. Greenwald

additive manufacturing, airline deregulation, AltaVista, AOL-Time Warner, asset allocation, barriers to entry, book value, business cycle, creative destruction, cross-subsidies, deindustrialization, discounted cash flows, diversified portfolio, Do you want to sell sugared water for the rest of your life?, Everything should be made as simple as possible, fault tolerance, intangible asset, John Nash: game theory, Nash equilibrium, Network effects, new economy, oil shock, packet switching, PalmPilot, Pepsi Challenge, pets.com, price discrimination, price stability, revenue passenger mile, search costs, selective serotonin reuptake inhibitor (SSRI), shareholder value, Silicon Valley, six sigma, Steve Jobs, transaction costs, vertical integration, warehouse automation, yield management, zero-sum game

Costs of switching were reduced or eliminated, and competition in the industry intensified. SEARCH COSTS Customers are also tied to their existing suppliers when it is costly to locate an acceptable replacement. If the need is a new refrigerator, the search costs are minimal; information and ratings on competitive products are easily available. But for many people, finding a new doctor involves more than looking in the yellow pages or even in a health-care network directory. There is no ready source of the kind of information a prospective patient wants, and given the personal nature of the relationship, no alternative to direct experience. High search costs are an issue when products or services are complicated, customized, and crucial.

…

For businesses, the more specialized and customized the product or service, the higher the search cost for a replacement. Professional services, which also may involve an intense level of personal contact, fit into this category, as do complicated manufacturing and warehousing systems. It is easier to upgrade with a current vendor or continue with a law firm even when not totally satisfied, because finding a better one is costly and risky. To avoid the danger of being locked in to a single source, many firms develop relationships with multiple suppliers, including professional service providers. Taken together, habits, switching costs, and search costs create competitive advantages on the demand side that are more common and generally more robust than advantages stemming from the supply or cost side.

…

As banks move beyond simple check processing and ATM withdrawals to automatic bill payment, preestablished access to lines of credit, direct salary deposit, and other routine functions, customers become more reluctant to leave for another bank, even if it offers superior terms on some products. The same tactic of providing more integration of multiple features raises search costs. Comparison shopping is more difficult if the alternatives are equally complicated but not exactly comparable. Few people spend their leisure time analyzing the pricing and service plans of wireless telephone companies. Also, as the importance and added value of products and services increases, so does the risk of getting a poor outcome from an alternative provider.

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World by Don Tapscott, Alex Tapscott

"World Economic Forum" Davos, Airbnb, altcoin, Alvin Toffler, asset-backed security, autonomous vehicles, barriers to entry, behavioural economics, bitcoin, Bitcoin Ponzi scheme, blockchain, Blythe Masters, Bretton Woods, business logic, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon footprint, clean water, cloud computing, cognitive dissonance, commoditize, commons-based peer production, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crowdsourcing, cryptocurrency, currency risk, decentralized internet, digital capitalism, disintermediation, disruptive innovation, distributed ledger, do well by doing good, Donald Trump, double entry bookkeeping, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, failed state, fiat currency, financial innovation, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, Future Shock, Galaxy Zoo, general purpose technology, George Gilder, glass ceiling, Google bus, GPS: selective availability, Hacker News, Hernando de Soto, Higgs boson, holacracy, income inequality, independent contractor, informal economy, information asymmetry, information security, intangible asset, interest rate swap, Internet of things, Jeff Bezos, jimmy wales, Kickstarter, knowledge worker, Kodak vs Instagram, Lean Startup, litecoin, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, microcredit, mobile money, money market fund, Neal Stephenson, Network effects, new economy, Oculus Rift, off grid, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, performance metric, Peter Thiel, planetary scale, Ponzi scheme, prediction markets, price mechanism, Productivity paradox, QR code, quantitative easing, radical decentralization, ransomware, Ray Kurzweil, renewable energy credits, rent-seeking, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Salesforce, Satoshi Nakamoto, search costs, Second Machine Age, seigniorage, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, smart grid, Snow Crash, social graph, social intelligence, social software, standardized shipping container, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, supply-chain management, systems thinking, TaskRabbit, TED Talk, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, The Soul of a New Machine, The Wisdom of Crowds, transaction costs, Turing complete, Turing test, Tyler Cowen, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, unorthodox policies, vertical integration, Vitalik Buterin, wealth creators, X Prize, Y2K, Yochai Benkler, Zipcar

He posited that a firm would expand until the cost of performing a transaction inside the firm exceeded the cost of performing the transaction outside the firm.5 Don argued that the Internet would reduce a firm’s internal transaction costs somewhat; but we thought, because of its global accessibility, it would reduce costs in the overall economy even more, in turn lowering barriers to entry for more people. Yes, it did drop search costs, through browsers and the World Wide Web. It also dropped coordination costs through e-mail, data processing applications like ERP, social networks, and cloud computing. Many companies benefited from outsourcing such units as customer service and accounting. Marketers engaged customers directly, even turning consumers into producers (prosumers).

…

By giving away their source code for free, sharing power with everyone on the network, using consensus mechanisms to ensure integrity, and conducting their business openly on the blockchain, they are magnets of hope for the many disillusioned and disenfranchised. As such, blockchain technology offers a credible and effective means not only of cutting out intermediaries, but also of radically lowering transaction costs, turning firms into networks, distributing economic power, and enabling both wealth creation and a more prosperous future. 1. Search Costs—How Do We Find New Talent and New Customers? How do we find the people and information we need? How do we determine if their services, goods, and capabilities are best for us as we seek to bring the tonic of the market to bear on our internal operations? Although the architecture of the firm is basically intact, the first era of the Internet dropped such costs significantly and enabled important changes.

…

The results of these queries won’t be résumés, advertising links, or other pushed content; they’ll be transaction histories, proven track records of individuals and enterprises, ranked perhaps by reputation score. Get the picture? Said Vitalik Buterin, founder of the Ethereum blockchain, “Blockchains will drop search costs, causing a kind of decomposition that allows you to have markets of entities that are horizontally segregated and vertically segregated. That never really existed before. Instead you had kind of monoliths that do everything.”12 Several companies are working on search engines for blockchains, given the potential bonanza.

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, Benchmark Capital, Black Swan, buy low sell high, Chuck Templeton: OpenTable:, Credit Default Swap, cross-subsidies, crowdsourcing, deal flow, disintermediation, diversified portfolio, experimental economics, George Akerlof, Goldman Sachs: Vampire Squid, income inequality, index fund, information asymmetry, Jean Tirole, Joan Didion, John Zimmer (Lyft cofounder), 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, power law, real-name policy, ride hailing / ride sharing, Robert Metcalfe, Sand Hill Road, search costs, seminal paper, sharing economy, Silicon Valley, social graph, supply-chain management, TaskRabbit, the long tail, The Market for Lemons, the strength of weak ties, too big to fail, trade route, transaction costs, two-sided market, Uber for X, uber lyft, ultimatum game, Y Combinator

“We can be out for weeks at a time and come back with next to nothing in our van, or we can make one unplanned stop on some back road we take out of sheer curiosity and find a huge honey hole,” they write, using picker slang for a stop full of rusty gold that its owners are willing to part with.3 He’s making a point about unpredictability, but his comment also says something about search costs. Imagine driving for days, buying gallons of gas, without scoring a single buy. The search costs in the picking business are tremendous, of which travel expenses alone can eat away any profit. Until his TV show brought fame and fortune, Wolfe would sleep in his car to stay within his budget, and you can be sure that car was nothing like the shiny Benz you see on his show.

…

But for now let’s focus on the value Wolfe provides to his clients; it’s important to appreciate because it is much the same value so many other middlemen provide in other industries. A large part of what makes him valuable to the dealers and collectors who buy from him is precisely his willingness to go far and wide—to bear those search costs. Sure, Wolfe skips the middleman, just as he says—but he’s a middleman every bit as much as the dealers who buy from him are. Think about it: if an antiques dealer bought directly from a guy with an old barn, instead of from Wolfe, the dealer would say he’s skipping the middleman, too. But the antiques dealers want the middleman—they value the picker—because any markup they pay to him is worth the price to them.

…

If you’re a specialist, you know all the kinds of questions to ask. If you’re a generalist you don’t know what these résumés mean.” That kind of expertise translates not only into a higher success rate in filling jobs, which means a higher rate of getting paid and getting hired again, but also in lower search costs, since Robboy can scout and screen candidates much more quickly than if he were recruiting outside his niche. That’s why he turns down jobs outside that niche, even if he could fill the job eventually: “It would take me ten times as long to fill the job—it’s a waste of time.” Time is money for everyone, of course, but the savvy and busy Certifier understands opportunity costs especially well.

Value Investing: From Graham to Buffett and Beyond by Bruce C. N. Greenwald, Judd Kahn, Paul D. Sonkin, Michael van Biema

Andrei Shleifer, barriers to entry, Berlin Wall, book value, business cycle, business logic, capital asset pricing model, corporate raider, creative destruction, Daniel Kahneman / Amos Tversky, discounted cash flows, diversified portfolio, Eugene Fama: efficient market hypothesis, Fairchild Semiconductor, financial engineering, fixed income, index fund, intangible asset, junk bonds, Long Term Capital Management, naked short selling, new economy, place-making, price mechanism, quantitative trading / quantitative finance, Richard Thaler, risk free rate, search costs, shareholder value, short selling, Silicon Valley, stocks for the long run, Telecommunications Act of 1996, time value of money, tulip mania, Y2K, zero-sum game

Practically the only way the entrant can make any inroads is by offering to write the insurance at premiums substantially lower than those the incumbents are charging. But as this is almost always a losing proposition, entry in situations like this stops before the high profit levels of the incumbents are completely eliminated. In the model we have proposed here, the high search cost limits the arrival of new entrants, and the gap between the asset values and the earnings power values of the incumbents does not disappear. High switching costs are the third and probably most common source of customer captivity. If it costs money, time, and effort for a customer to switch from one supplier to another, incumbents have an advantage over entrants.

…

Firms with captive customers should work to enhance their ties in the following ways: • By raising switching costs through adding features and services to the original offering, which has been a Microsoft strategy; • By reinforcing habits through increasing frequency of purchases due to obsolescence or with leasing plans for automobiles; • By raising search costs through extending and complicating the offered range of services and enhancing existing customer satisfaction.z At the same time, companies benefiting from these competitive advantages should exploit them with aggressive pricing strategies and raise prices whenever they can. Those that do not capitalize on their protected positions may be concealing substantial value in unused pricing power.

…

The brand may be an essential element of the perceived value of the product. But by itself the brand does not construct barriers to entry, establish competitive advantages, or create a franchise. The aspects of consumer behavior that do create franchise value are those we have described in this chapter-habit, search costs, and switching costs-as leading to customer captivity. These may be encompassed by some definitions of brand behavior, but these definitions are so broad that they cannot compete with an examination of the direct sources of captivity. Also, the value of brands is greatly enhanced by the presence of economies of scale.

The Great Reversal: How America Gave Up on Free Markets by Thomas Philippon

airline deregulation, Amazon Mechanical Turk, Amazon Web Services, Andrei Shleifer, barriers to entry, Big Tech, bitcoin, blockchain, book value, business cycle, business process, buy and hold, Cambridge Analytica, carbon tax, Carmen Reinhart, carried interest, central bank independence, commoditize, crack epidemic, cross-subsidies, disruptive innovation, Donald Trump, driverless car, Erik Brynjolfsson, eurozone crisis, financial deregulation, financial innovation, financial intermediation, flag carrier, Ford Model T, gig economy, Glass-Steagall Act, income inequality, income per capita, index fund, intangible asset, inventory management, Jean Tirole, Jeff Bezos, Kenneth Rogoff, labor-force participation, law of one price, liquidity trap, low cost airline, manufacturing employment, Mark Zuckerberg, market bubble, minimum wage unemployment, money market fund, moral hazard, natural language processing, Network effects, new economy, offshore financial centre, opioid epidemic / opioid crisis, Pareto efficiency, patent troll, Paul Samuelson, price discrimination, profit maximization, purchasing power parity, QWERTY keyboard, rent-seeking, ride hailing / ride sharing, risk-adjusted returns, Robert Bork, Robert Gordon, robo advisor, Ronald Reagan, search costs, Second Machine Age, self-driving car, Silicon Valley, Snapchat, spinning jenny, statistical model, Steve Jobs, stock buybacks, supply-chain management, Telecommunications Act of 1996, The Chicago School, the payments system, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, Travis Kalanick, vertical integration, Vilfredo Pareto, warehouse automation, zero-sum game

The answer is: the same firms as today. The conclusions we draw from Figures 3.2 and 3.3 are not consistent with what most people think of as competition. If we go back to our six hypotheses, we can say that Figures 3.2 and 3.3 rule out lower search costs as an explanation because this hypothesis predicts the opposite pattern. Under the Lower Search Costs hypothesis, small changes in productivity or innovation lead to large swings in market shares. Instead we see increased persistence and stability of market shares. FIGURE 3.2  Turnover at the top. See text for details. Figures 3.2 and 3.3 are consistent with decreasing domestic competition.

…

There could be other hypotheses, but I think they would boil down to a combination of these five. The Rise of Superstar Firms hypothesis is the story of Walmart in the 1990s, which is discussed in Chapter 2. According to this view, concentration is good news and should be linked to faster productivity growth. The hypothesis of Lower Search Costs is related to the superstar firms hypothesis, but it is conceptually distinct. It argues that consumers have become more price-elastic thanks to online shopping tools. Notice that this hypothesis implies that ex post competition has increased and that profit margins (earnings over sales) have decreased.

…

., 133 licensing, occupational, 282–283 Lieber, Ethan, 236 life expectancy, 224, 229 Liljenquist, Dan, 198 Lisbon Strategy, 136–137 lobbying, 153–155; impact of, 9, 174–175; against competition, 23–24; and future of Europe’s free markets, 148–149; as democratic right, 155; challenges of measuring impact of, 156–157; and endogeneity bias, 157–160; benign view versus negative view of, 160; inefficiencies created by, 160–161; connections as key to success in, 161–163; fiscal targets of, 163; empirical regularities about, 164–166; in Europe versus US, 164–166; skewness of, 166–170; effectiveness of, 170–174; intensity, 171; and campaign finance contributions, 189; in finance, 220–222; in health care, 234, 235; by internet giants, 260–262 LOOP (law of one price), 111–112 Lopez-de-Silanes, Florencio, 127 loss leader pricing, 43 Lower Search Costs hypothesis, 49–50, 52 Lucca, David, 200 luxury goods, 113 Lyon, Spencer G., 22 Ma, Song, 82 MacMillan, Douglas, 271 macroeconomic equilibrium, 292 Mahoney, Christine, 173 manufacturing, rise in concentration in, 46 marginal cost, 118 Marinescu, Ioana, 280 Marino, Tom, 235 market power: and assessing competition, 25; versus demand elasticity, 26; and welfare, 27–30; concentration and rise in, 45–48; concentration hypotheses and rise in, 48–51; persistence of market shares over time and rise in, 51–53; profits of US firms and rise in, 51–53; profit margins and payouts and rise in, 54–58; China shock and rise in, 58–60; versus efficiency in merger regulation, 88–90 market share: of Walmart, 32; persistence of, over time, 51–53.

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 logic, business process, Chuck Templeton: OpenTable:, Clayton Christensen, collaborative economy, commoditize, crowdsourcing, cryptocurrency, data acquisition, data science, fake it until you make it, frictionless, game design, gamification, growth hacking, Hacker News, hive mind, hockey-stick growth, 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, Salesforce, search costs, shareholder value, sharing economy, Silicon Valley, Skype, Snapchat, social bookmarking, 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 long tail, the payments system, too big to fail, transport as a service, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, Wave and Pay

On development platforms like Android, the infrastructure layer may be very dominant. On other platforms, like Instagram, the infrastructure layer may be thinner. The infrastructure layer provides the infrastructure on top of which value can be created. Large-scale value creation leads to the problem of abundance. With an abundance of production, search costs increase for consumers. Too many videos on YouTube may make it harder for consumers to find the best ones. To solve for this, platforms need a third layer: data. c. Data layer The final platform layer is the data layer. Every platform uses data in some way. Data allows the platform to match supply with demand.

…

A lot of value is created without anyone interested in consuming it. This, in turn, discourages further creation and destroys the activity on the platform. A platform that fails to encourage curation becomes loaded with poor-quality content and fails to stay useful and engaging. Finally, a platform that fails to encourage customization will increase search costs for the consumer. Consumers will find the experience irrelevant. This, in turn, may lead to a user exodus over time. When running a platform business, one must ensure that all four actions are repeatedly performed across all interactions. Failure to encourage any one of these actions may lead to failure of the entire interaction.

…

Platforms that abstract all non-core activities for producers and act as true plug-and-play infrastructures succeed in attracting more production activity. Overcoming the time/effort barrier may be equally useful for the consumer. Platforms achieve this through efficient aggregation and by lowering search costs for consumers. In the early days of the Web, Yahoo provided value as the home page of the Web. As the Web grew, and portal-based navigation grew more inefficient, Google’s pull-based search helped consumers navigate the Web. In recent times, a variety of content consumption tools, ranging from Flipboard to Pocket, have attacked different content consumption problems with the sole purpose of reducing the time or effort barriers involved in the act of consumption.

Understanding Sponsored Search: Core Elements of Keyword Advertising by Jim Jansen

AltaVista, AOL-Time Warner, barriers to entry, behavioural economics, Black Swan, bounce rate, business intelligence, butterfly effect, call centre, Claude Shannon: information theory, complexity theory, content marketing, correlation does not imply causation, data science, en.wikipedia.org, first-price auction, folksonomy, Future Shock, information asymmetry, information retrieval, intangible asset, inventory management, life extension, linear programming, longitudinal study, machine translation, megacity, Nash equilibrium, Network effects, PageRank, place-making, power law, price mechanism, psychological pricing, random walk, Schrödinger's Cat, sealed-bid auction, search costs, search engine result page, second-price auction, second-price sealed-bid, sentiment analysis, social bookmarking, social web, software as a service, stochastic process, tacit knowledge, telemarketer, the market place, The Present Situation in Quantum Mechanics, the scientific method, The Wisdom of Crowds, Vickrey auction, Vilfredo Pareto, yield management

Understanding the Potential Customers Intent 49 1 0.9 0.8 0.7 P(x) 0.6 0.5 0.4 0.3 0.2 0.1 0 1 2 3 4 5 6 7 8 9 10 Number of Results Clicked θ=.02 θ=.05 θ=.08 Figure 3.7.╇ Relationship of searcher, query, keyphrase, and result Searchers as potential consumers typically do not craft long queries, do not submit a lot of queries, and do not click on a lot of results. Therefore, they typically do not visit a lot of sites that are the landing pages of advertisements. Interestingly, economists at one time found this behavior extremely puzzling, as by common sense and empirical evaluation, the Web lowers search costs. Therefore, searching should increase as theoretically, there are no physical search or transportation costs for online searchers. However, online searchers are not exhibiting the lengthy search that economic theory would predict given the low physical costs of information search on the Web [60].

…

“Depth and Dynamics of Online Search Behavior.” Management Science, vol. 50(3), pp. 299–308. Diamond, P. A. 1989. “Search theory.” In The New Palgrave: Allocation, Information, and Markets, J. Eatwell, M. Milgate, and P. Newman, Eds. New York: Norton, pp. 271–286. Bakos, J. Y. 1997. “Reducing Buyer Search Costs: Implications for Electronic Marketplaces.” Management Science, vol. 43(12), pp. 1676–1692. Wessels, W. J. 1997. Microeconomics the Easy Way. Hauppauge, NY: Barron. Zipf, G. K. 1932. Selected Studies of the Principle of Relative Frequency in Language. Cambridge, MA: Harvard University Press. Newman, M. 2006.

…

“Consumer Memory for Television Advertising: A Field Study of Duration, Serial Position, and Competition Effects,” Journal of Consumer Research, vol. 23(4), pp. 263–277. [42] Terry, S. W. 2005. “Serial Position Effects in Recall of Television Commercials.” Journal of General Psychology, vol. 132(2), pp. 151–163. [43] Hoque, A. Y. and Lohse, G. L. 1999. “An Information Search Cost Perspective for Designing Interfaces for Electronic Commerce.” Journal of Marketing Research, vol. 36(3), pp. 387–394. [44] Ansari, A. and Mela, C. F. 2003 “E-customization.” Journal of Marketing Research, vol. 40(2), pp. 131–145. [45] Drèze, X. and Zufryden, F. 2004. “The Measurement of Online Visibility and Its Impact on Internet Traffic.”

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, Benchmark Capital, big data - Walmart - Pop Tarts, bitcoin, blockchain, business cycle, business logic, 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, data science, digital map, discounted cash flows, disintermediation, driverless car, Edward Glaeser, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, financial innovation, Free Software Foundation, gigafactory, growth hacking, Haber-Bosch Process, High speed trading, independent contractor, information asymmetry, Internet of things, inventory management, invisible hand, Jean Tirole, Jeff Bezos, jimmy wales, John Markoff, Kevin Roose, Khan Academy, Kickstarter, Lean Startup, Lyft, Marc Andreessen, market design, Max Levchin, Metcalfe’s law, multi-sided market, Network effects, new economy, PalmPilot, 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, Salesforce, Satoshi Nakamoto, search costs, self-driving car, shareholder value, sharing economy, side project, Silicon Valley, Skype, smart contracts, smart grid, Snapchat, social bookmarking, social contagion, software is eating the world, Steve Jobs, TaskRabbit, The Chicago School, the long tail, the payments system, Tim Cook: Apple, transaction costs, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, winner-take-all economy, zero-sum game, Zipcar

Market aggregation provides information and power to platform users who formerly engaged in interactions in a haphazard fashion, often without access to reliable or up-to-date market data. Consider, for example, bus transportation in India. Different bus fleets operate on interstate, intrastate, and other routes. Many different types of bus exist, and pricing is extremely variable. Because the industry is so fragmented and unorganized, consumer search costs and decision overhead are high.13 Now a platform business called redBus is aggregating information from all Indian bus operators in a central plug-and-play infrastructure. The result is quicker, easier, and cheaper decision-making for consumers, and, in the long run, a healthier transportation market for India.

…

As the definition implies, matching quality is closely related to the effectiveness with which products or service offerings on the platform are curated. Users generally participate in a platform with highly interactional intent; they want to find what they’re looking for as quickly as possible. Precision in matching leads to lower search costs for users—that is, they need to invest less time, energy, effort, and other resources in finding the matches they want. Thus, if the platform does a great job of linking users to one another quickly and accurately, those users are likely to become active participants and long-term members of the platform; if matching quality is poor, slow, and disappointing, users will soon dwindle in number, interactions will slow to a trickle, and the platform may be doomed to an early demise.

…

Both are already undergoing disruption thanks to the rise of digital platforms, with millions of producers (artisans, craftspeople, writers) creating and marketing their own goods through platforms like Etsy, eBay, and Amazon. • Highly fragmented industries. Market aggregation through a platform increases efficiencies and reduces search costs for businesses and individuals looking for goods and services created by far-flung local producers. Platforms ranging from Yelp and OpenTable to Etsy, Uber, and Airbnb have made it easy for customers to visit a single source to gain access to thousands of small suppliers. • Industries characterized by extreme information asymmetries.

The Economics Anti-Textbook: A Critical Thinker's Guide to Microeconomics by Rod Hill, Anthony Myatt

American ideology, Andrei Shleifer, Asian financial crisis, bank run, barriers to entry, behavioural economics, Bernie Madoff, biodiversity loss, business cycle, cognitive dissonance, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, different worldview, electricity market, endogenous growth, equal pay for equal work, Eugene Fama: efficient market hypothesis, experimental economics, failed state, financial innovation, full employment, gender pay gap, Gini coefficient, Glass-Steagall Act, Gunnar Myrdal, happiness index / gross national happiness, Home mortgage interest deduction, Howard Zinn, income inequality, indoor plumbing, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, liberal capitalism, low interest rates, low skilled workers, market bubble, market clearing, market fundamentalism, Martin Wolf, medical malpractice, military-industrial complex, minimum wage unemployment, moral hazard, Paradox of Choice, Pareto efficiency, Paul Samuelson, Peter Singer: altruism, positional goods, prediction markets, price discrimination, price elasticity of demand, principal–agent problem, profit maximization, profit motive, publication bias, purchasing power parity, race to the bottom, Ralph Nader, random walk, rent control, rent-seeking, Richard Thaler, Ronald Reagan, search costs, shareholder value, sugar pill, The Myth of the Rational Market, the payments system, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, ultimatum game, union organizing, working-age population, World Values Survey, Yogi Berra

The housing market has many non-competitive elements: apartments are heterogeneous and tastes idiosyncratic, which renders the market thin; search costs are substantial (as evidenced by agents’ fees), as are moving costs; and there is a lack of information about who’s a good landlord and who’s a good tenant. Are these merely details that can be ignored as irrelevant? Most housing economists believe that these are too important to be ignored in practice. Since the mid-1980s most of them have turned their attention to non-competitive models – models that emphasize search costs and the importance of contracts. Because of this different methodological perspective, they are much less 60 Question for your professor: Would rent controls necessarily cause shortages if the rental housing market were only imperfectly competitive?

…

Then any firm which charged half an epsilon more would lose no customers and thus would choose to increase its price. Similarly, it would pay all other firms to increase their prices. But at the higher price, it would again pay each to increase price, and so on until the price charged at every firm is the monopoly price, even though search costs are small. (Ibid.: 477) In the above quote, ‘epsilon’ stands for an arbitrarily small quantity. Just an epsilon of costs of acquiring information could lead otherwise competitive firms to charge the monopoly price. The point is that even slight departures from free, and hence perfect, information have large consequences.

Trading and Exchanges: Market Microstructure for Practitioners by Larry Harris

active measures, Andrei Shleifer, AOL-Time Warner, asset allocation, automated trading system, barriers to entry, Bernie Madoff, Bob Litterman, book value, business cycle, buttonwood tree, buy and hold, compound rate of return, computerized trading, corporate governance, correlation coefficient, data acquisition, diversified portfolio, equity risk premium, fault tolerance, financial engineering, financial innovation, financial intermediation, fixed income, floating exchange rates, High speed trading, index arbitrage, index fund, information asymmetry, information retrieval, information security, interest rate swap, invention of the telegraph, job automation, junk bonds, 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, National best bid and offer, Nick Leeson, open economy, passive investing, pattern recognition, payment for order flow, Ponzi scheme, post-materialism, price discovery process, price discrimination, principal–agent problem, profit motive, proprietary trading, race to the bottom, random walk, Reminiscences of a Stock Operator, rent-seeking, risk free rate, risk tolerance, risk-adjusted returns, search costs, selection bias, shareholder value, short selling, short squeeze, Small Order Execution System, speech recognition, statistical arbitrage, statistical model, survivorship bias, the market place, transaction costs, two-sided market, vertical integration, winner-take-all economy, yield curve, zero-coupon bond, zero-sum game

Investors use the markets to move money from the present to the future. Borrowers do the opposite. Hedgers trade to manage financial risks they face. Asset exchangers trade one asset for another they value more. Gamblers trade to entertain themselves. Exchanges and brokerages design markets to minimize the search costs of trading. They usually organize markets so that everyone who wants to trade gathers at the same place. A common gathering place helps traders find those traders who will offer the best prices. Exchanges and brokerages once organized their markets exclusively on physical trading floors. Now they can do so within computerized communications networks that allow buyers and sellers to arrange their trades remotely.

…

The structure of currency markets also ensures that dealers trade several times with each other for every trade that they make with a client. Real estate trades in brokered markets because every parcel is unique. The difficulties that buyers and sellers have finding each other make the real estate market the least liquid of the markets we have discussed. Electronic multiple listing services have lowered trader search costs, but these costs are still very high. Clearing and settlement in real estate markets is also quite expensive because the trades usually are large, complex, and among traders who do not have standing credit relationships. 3.4.2 Stock Markets Corporations apply to exchanges to list their stocks.

…

. ◀ * * * In many markets, passive traders commit to trade at prices that they post. These commitments increase the probability that an active trader will call upon them. Active traders prefer to call upon such traders because they are confident that they can arrange trades with them and thereby reduce their overall search costs. Problems that large traders encounter when they expose their orders often complicate their liquidity search strategies. Large traders generally do not like to show that they want to trade because they fear that front runners will trade ahead of them or that liquidity suppliers will retreat from before them.

Open for Business Harnessing the Power of Platform Ecosystems by Lauren Turner Claire, Laure Claire Reillier, Benoit Reillier

Airbnb, Amazon Mechanical Turk, Amazon Web Services, augmented reality, autonomous vehicles, barriers to entry, basic income, benefit corporation, Blitzscaling, blockchain, carbon footprint, Chuck Templeton: OpenTable:, cloud computing, collaborative consumption, commoditize, crowdsourcing, data science, deep learning, Diane Coyle, Didi Chuxing, disintermediation, distributed ledger, driverless car, fake news, fulfillment center, future of work, George Akerlof, independent contractor, intangible asset, Internet of things, Jean Tirole, Jeff Bezos, Kickstarter, knowledge worker, Lean Startup, Lyft, Mark Zuckerberg, market design, Metcalfe’s law, minimum viable product, multi-sided market, Network effects, Paradox of Choice, Paul Graham, peer-to-peer lending, performance metric, Peter Thiel, platform as a service, price discrimination, price elasticity of demand, profit motive, ride hailing / ride sharing, Sam Altman, search costs, self-driving car, seminal paper, shareholder value, sharing economy, Silicon Valley, Skype, smart contracts, Snapchat, software as a service, Steve Jobs, Steve Wozniak, TaskRabbit, the long tail, The Market for Lemons, Tim Cook: Apple, transaction costs, two-sided market, Uber and Lyft, uber lyft, universal basic income, Y Combinator

Charging only when a transaction occurs on the platform Transaction fee models have been used to encourage participants to join platforms as they are only charged when the participants receive some significant value from the platform (e.g. eBay charges transaction fees to sellers when items are sold). This approach works best when the platform seeks to offer a wide selection of ‘inventory’ with minimal friction. It may, however, increase ‘search costs’ for users if the platform is then inundated with lowquality listings. This search cost can be reduced through enhanced matching, searching and curation activities by the platform (to make sure most relevant results are displayed first). Charging a membership fee irrespective of transactions on the platform Where platforms seek reliable participants who will conduct a high volume of interactions, they may charge joining or membership fees.

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 3D printing, access to a mobile phone, additive manufacturing, Airbnb, Alan Greenspan, Albert Einstein, Amazon Mechanical Turk, Amazon Web Services, American Society of Civil Engineers: Report Card, Any sufficiently advanced technology is indistinguishable from magic, autonomous vehicles, barriers to entry, basic income, Baxter: Rethink Robotics, Boston Dynamics, British Empire, business cycle, business intelligence, business process, call centre, carbon tax, Charles Lindbergh, Chuck Templeton: OpenTable:, clean water, combinatorial explosion, computer age, computer vision, congestion charging, congestion pricing, corporate governance, cotton gin, creative destruction, crowdsourcing, data science, David Ricardo: comparative advantage, digital map, driverless car, employer provided health coverage, en.wikipedia.org, Erik Brynjolfsson, factory automation, Fairchild Semiconductor, falling living standards, Filter Bubble, first square of the chessboard / second half of the chessboard, Frank Levy and Richard Murnane: The New Division of Labor, Freestyle chess, full employment, G4S, game design, general purpose technology, global village, GPS: selective availability, Hans Moravec, happiness index / gross national happiness, illegal immigration, immigration reform, income inequality, income per capita, indoor plumbing, industrial robot, informal economy, intangible asset, inventory management, James Watt: steam engine, Jeff Bezos, Jevons paradox, jimmy wales, job automation, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Khan Academy, Kiva Systems, knowledge worker, Kodak vs Instagram, law of one price, low skilled workers, Lyft, Mahatma Gandhi, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Mars Rover, mass immigration, means of production, Narrative Science, Nate Silver, natural language processing, Network effects, new economy, New Urbanism, Nicholas Carr, Occupy movement, oil shale / tar sands, oil shock, One Laptop per Child (OLPC), pattern recognition, Paul Samuelson, payday loans, post-work, power law, price stability, Productivity paradox, profit maximization, Ralph Nader, Ray Kurzweil, recommendation engine, Report Card for America’s Infrastructure, Robert Gordon, Robert Solow, Rodney Brooks, Ronald Reagan, search costs, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Simon Kuznets, six sigma, Skype, software patent, sovereign wealth fund, speech recognition, statistical model, Steve Jobs, Steven Pinker, Stuxnet, supply-chain management, TaskRabbit, technological singularity, telepresence, The Bell Curve by Richard Herrnstein and Charles Murray, the Cathedral and the Bazaar, the long tail, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Vernor Vinge, warehouse robotics, Watson beat the top human players on Jeopardy!, winner-take-all economy, Y2K

If these markets merge into a single global market, top performers have an opportunity to win more customers, while the next-best performers face harsher competition from all directions. A similar dynamic comes into play when technologies like Google or even Amazon’s recommendation engine reduce search costs. Suddenly second-rate producers can no longer count on consumer ignorance or geographic barriers to protect their margins. Digital technologies have aided the transition to winner-take-all markets, even for products we wouldn’t think would have superstar status. In a traditional camera store, cameras typically are not ranked number one versus number ten.

…

Make More Matches Although job sites like Monster.com and Aftercollege.com and networking sites like LinkedIn have made it easier for employers and employees to find one another, the vast majority of our students that graduate each year still rely primarily on word of mouth recommendations from friends, relatives, and, yes, professors, to make introductions. We must find ways to reduce the friction and search costs that make it unnecessarily difficult to match people with jobs. LinkedIn is developing a real-time database that describes the skills sought by companies and matches those skills with the training that students and other potential employees have. Sometimes simply rewording a few concepts on a resume can make the difference: companies looking for app developers for Android phones, for example, may not realize that a software development class on a student’s resume used that operating system.

The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities by Mancur Olson

barriers to entry, British Empire, business cycle, California gold rush, collective bargaining, correlation coefficient, David Ricardo: comparative advantage, full employment, income per capita, Kenneth Arrow, market clearing, Norman Macrae, Pareto efficiency, Phillips curve, price discrimination, profit maximization, rent-seeking, Robert Solow, Sam Peltzman, search costs, selection bias, Simon Kuznets, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, urban decay, working poor

If this type of unemployment were somehow prohibited, the national output and welfare would decline in the long run, since the worker in question presumably knows his interests and situation better than anyone else. On the other hand, if there is a social institution or public policy that inefficiently increases search costs or time spent in job queues, the extra searching is then required by the institution or policy, and this extra searching is no longer an investment that generates a social gain: any extra search unemployment due to such arrangements is defined to be involuntary. Suppose, arbitrarily, that only OX workers are employed; there is then strictly involuntary unemployment of XQ workers, as that many have a marginal revenue product in excess of the marginal cost of their time.

…

On the other hand, when an economy reaches the point where distributional coalitions are ubiquitous and the fixprice sector is large in relation to the flexprice sector, the theory offered here predicts that the macroeconomic situation will be different. An unexpected deflation or disinflation will then bring widespread losses and suffering from forced movement from the fixprice to the flexprice sector, from falling prices in the, flexprice sector, from unemployment of those who could not or would not move, from increases in queueing and searching costs, and at the same time substantial losses of real demand that further aggravate problems because the vector of relative prices diverges far from the predeflation vector for that society and even farther from the ideal vector. The economy that has a dense network of narrow special-interest organizations will be susceptible during periods of deflation or disinflation to depression or stagflation.

Ghost Work: How to Stop Silicon Valley From Building a New Global Underclass by Mary L. Gray, Siddharth Suri

"World Economic Forum" Davos, Affordable Care Act / Obamacare, AlphaGo, Amazon Mechanical Turk, Apollo 13, augmented reality, autonomous vehicles, barriers to entry, basic income, benefit corporation, Big Tech, 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, cognitive load, collaborative consumption, collective bargaining, computer vision, corporate social responsibility, cotton gin, crowdsourcing, data is the new oil, data science, deep learning, DeepMind, deindustrialization, deskilling, digital divide, do well by doing good, do what you love, don't be evil, Donald Trump, Elon Musk, employer provided health coverage, en.wikipedia.org, equal pay for equal work, Erik Brynjolfsson, fake news, financial independence, Frank Levy and Richard Murnane: The New Division of Labor, fulfillment center, future of work, gig economy, glass ceiling, global supply chain, hiring and firing, ImageNet competition, independent contractor, industrial robot, informal economy, information asymmetry, Jeff Bezos, job automation, knowledge economy, low skilled workers, low-wage service sector, machine translation, market friction, Mars Rover, natural language processing, new economy, operational security, passive income, pattern recognition, post-materialism, post-work, power law, race to the bottom, Rana Plaza, recommendation engine, ride hailing / ride sharing, Ronald Coase, scientific management, search costs, 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, TED Talk, The Future of Employment, The Nature of the Firm, Tragedy of the Commons, transaction costs, two-sided market, union organizing, universal basic income, Vilfredo Pareto, Wayback Machine, women in the workforce, work culture , Works Progress Administration, Y Combinator, Yochai Benkler

Those doing ghost work who make the most money spend hours monitoring their dashboards and scrolling through pages upon pages of job postings. Joan, like so many others who are trying to make MTurk a core source of income, turns to free software tools and workers’ online forums to reduce some of the search costs that are an unpaid part of the job.18 They must be ready to snap up a well-paying or fast-and-easy task the second it pops on their screen, lest another worker click on the link and accept it first. “I’ve worked harder at this than I ever did at any office job,” she says. To enhance her speed, Joan arranged her web browser’s display of the MTurk dashboard to show 25 tasks or HITs at a time, and she uses keyboard shortcuts she created to flip through the pages quickly.

…

The mantra of “less talk, more work” through the magic of automation seems synonymous with “scaling up” and, ultimately, market dominance in delivering goods and services on demand. Platform designers assume that better-matching algorithms, atomization of work, and the complete elimination of hands-on management are key to reducing the search costs that come with labor markets, for both buyers and sellers. We argue that companies cannot eliminate workers’ desire to invest in their jobs as something beyond a payment transaction. No system can erase workers’ needs for connection, validation, recognition, and feedback without damaging both the worker and what they produce.

Remix: Making Art and Commerce Thrive in the Hybrid Economy by Lawrence Lessig

Aaron Swartz, Amazon Web Services, Andrew Keen, Benjamin Mako Hill, Berlin Wall, Bernie Sanders, Brewster Kahle, carbon tax, Cass Sunstein, collaborative editing, commoditize, disintermediation, don't be evil, Erik Brynjolfsson, folksonomy, Free Software Foundation, Internet Archive, invisible hand, Jeff Bezos, jimmy wales, John Perry Barlow, Joi Ito, Kevin Kelly, Larry Wall, late fees, Mark Shuttleworth, Netflix Prize, Network effects, new economy, optical character recognition, PageRank, peer-to-peer, recommendation engine, revision control, Richard Stallman, Ronald Coase, Saturday Night Live, search costs, SETI@home, sharing economy, Silicon Valley, Skype, slashdot, Steve Jobs, the long tail, The Nature of the Firm, thinkpad, transaction costs, VA Linux, Wayback Machine, yellow journalism, Yochai Benkler

See Erik Brynjolfsson, Yu Jeffrey Hu, and Duncan Simester, “Goodbye Pareto Principle, Hello Long Tail: The Effect of Search Costs on the Concentration of Product Sales,” MIT Center for Digital Business Working Paper (2007); Paul L. Caron, “The Long Tail of Legal Scholarship,” Yale Law Journal 116 Pocket Part 38 (2006); Anita Elberse and Felix Oberholzer-Gee, “Superstars and Underdogs: An Examination of the Long Tail Phenomenon in Video Sales,” Harvard Business School No. 07-015 Working Paper Series; Indiana Resource Sharing Task Force, “Wagging the Long Tail: Sharing More of Less; Recommendations for Enhancing Resource Sharing in Indiana,” White Paper (2007); Anindya Ghose and Bin Gu, “Search Costs, Demand Structure and Long Tail in Electronic Markets: Theory and Evidence,” NET Institute Working Paper No. 06-19 (2006); Teruyasu Murakami, “The Long Tail and the Lofty Head of Video Content: The Possibilities of ‘Convergent Broadcasting,’ ” Nomura Research Institute, NRI Papers No. 113 (2007). 18.

The Little Book That Builds Wealth: The Knockout Formula for Finding Great Investments by Pat Dorsey

Airbus A320, barriers to entry, book value, business process, call centre, carbon tax, creative destruction, credit crunch, discounted cash flows, intangible asset, John Bogle, knowledge worker, late fees, low cost airline, Network effects, pets.com, price anchoring, risk tolerance, risk/return, rolodex, search costs, shareholder value, Stewart Brand

Think about Bayer aspirin—it’s the same chemical compound as other aspirins, but Bayer can charge almost twice as much as generic aspirin. That’s a powerful brand. Of course, the ability to brand a true commodity product is relatively rare—most brands are attached to differentiated products like Coke, Oreo cookies, or Mercedes-Benz cars. In these cases, the brand is valuable because it reduces a customer’s search costs, but it doesn’t necessarily give the company pricing power. In other words, you know what a soft drink will taste like if it is labeled “Coke,” and you know that a car will be luxurious and durable because it is made by Daimler AG—but Cokes don’t cost more then Pepsis, and Mercedes-Benzes don’t cost more than BMWs.

The Wealth of Networks: How Social Production Transforms Markets and Freedom by Yochai Benkler

affirmative action, AOL-Time Warner, barriers to entry, bioinformatics, Brownian motion, business logic, call centre, Cass Sunstein, centre right, clean water, commoditize, commons-based peer production, dark matter, desegregation, digital divide, East Village, Eben Moglen, fear of failure, Firefox, Free Software Foundation, game design, George Gilder, hiring and firing, Howard Rheingold, informal economy, information asymmetry, information security, invention of radio, Isaac Newton, iterative process, Jean Tirole, jimmy wales, John Markoff, John Perry Barlow, Kenneth Arrow, Lewis Mumford, longitudinal study, machine readable, Mahbub ul Haq, market bubble, market clearing, Marshall McLuhan, Mitch Kapor, New Journalism, optical character recognition, pattern recognition, peer-to-peer, power law, precautionary principle, pre–internet, price discrimination, profit maximization, profit motive, public intellectual, radical decentralization, random walk, Recombinant DNA, recommendation engine, regulatory arbitrage, rent-seeking, RFID, Richard Stallman, Ronald Coase, scientific management, search costs, Search for Extraterrestrial Intelligence, SETI@home, shareholder value, Silicon Valley, Skype, slashdot, social software, software patent, spectrum auction, subscription business, tacit knowledge, technological determinism, technoutopianism, The Fortune at the Bottom of the Pyramid, the long tail, The Nature of the Firm, the strength of weak ties, Timothy McVeigh, transaction costs, vertical integration, Vilfredo Pareto, work culture , Yochai Benkler

It also explains the cost of denying to anyone the right to use the symbol, now a signifier of general social meaning, in ways that do not confuse consumers in the traditional trademark sense, but provide cultural criticism of the message signified. 786 Ironically, the increase in the power of trademark owners to control uses of their trademark comes at a time when its functional importance as a mechanism for reducing search costs is declining. Traditional trademark's most important justification was that it reduced information collection costs and thereby facilitated welfare-enhancing trade. In the context of the Internet, this function is significantly less important. General search costs are lower. Individual items in commerce can provide vastly greater amounts of information about their contents and quality. Users can use machine processing to search and sift through this information and to compare views and reviews of specific items.

…

Users can use machine processing to search and sift through this information and to compare views and reviews of specific items. Trademark has become less, rather than more, functionally important as a mechanism for dealing with search costs. When we move in the next few years to individual-item digital marking, such as with RFID (radio frequency identification) tags, all the relevant information about contents, origin, and manufacture down to the level of the item, as opposed to the product line, will be readily available to consumers in real space, by scanning any given item, even if it is not otherwise marked at all. In this setting, where the information qualities of trademarks will significantly decline, the antidilution law nonetheless assures that owners can control the increasingly important cultural meaning of trademarks.

Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants by Maurice E. Stucke, Ariel Ezrachi

"Friedman doctrine" OR "shareholder theory", affirmative action, Airbnb, Alan Greenspan, Albert Einstein, Andrei Shleifer, behavioural economics, Bernie Sanders, Boeing 737 MAX, Cambridge Analytica, Cass Sunstein, choice architecture, cloud computing, commoditize, corporate governance, Corrections Corporation of America, Credit Default Swap, crony capitalism, delayed gratification, disinformation, Donald Trump, en.wikipedia.org, fake news, Garrett Hardin, George Akerlof, gig economy, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google Chrome, greed is good, hedonic treadmill, incognito mode, income inequality, income per capita, independent contractor, information asymmetry, invisible hand, job satisfaction, labor-force participation, late fees, loss aversion, low skilled workers, Lyft, mandatory minimum, Mark Zuckerberg, market fundamentalism, mass incarceration, Menlo Park, meta-analysis, Milgram experiment, military-industrial complex, mortgage debt, Network effects, out of africa, Paradox of Choice, payday loans, Ponzi scheme, precariat, price anchoring, price discrimination, profit maximization, profit motive, race to the bottom, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Shiller, Ronald Reagan, search costs, shareholder value, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Stanford prison experiment, Stephen Hawking, sunk-cost fallacy, surveillance capitalism, techlash, The Chicago School, The Market for Lemons, The Myth of the Rational Market, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Davenport, Thorstein Veblen, Tim Cook: Apple, too big to fail, Tragedy of the Commons, transaction costs, Uber and Lyft, uber lyft, ultimatum game, Vanguard fund, vertical integration, winner-take-all economy, Yochai Benkler

As IAC tells investors, one competitive risk is if “a meaningful number of users” return to offline dating, which includes everything from “social networks to bars, churches, nosey aunts, prying neighbors and concerned parents.”49 Thus, to remain successful, IAC’s leading online dating platforms must “continue to provide dating products that users find more efficient, effective, comfortable and convenient relative to traditional means of meeting people.”50 From a potential dater’s perspective, this sounds like heaven. FIRST, the dating platform reduces one’s search costs. Rather than go to spin classes, bars, and funerals (or dinner at your aunt’s) where we will meet a few potential matches, if that, we can, in a matter of hours, scan hundreds of potential candidates to find good prospects. SECOND, unlike the lemon markets, online dating increases transparency.

…

., 271 Russia and US social media, 216 Ryanair, 57–58 safety net, 269–72 salaries of college football coaches 135–137 Division I versus NESCAC 139 sale pricing, 82 Sandberg, Sheryl, 204–5 Sandel, Michael, 246 Sanders, Bernie, 175 Santos, Laurie, 34 Schiff, Adam, 159 Schmidt, Eric, 220 search costs, 109 self-interest, 243–44 self-regulation in food industry, United Kingdom, 273–74 seller response to choice overload, 101–8 shock treatment experiment, 279–82, 285 Singer, William “Rick,” 30–31 slave labor, 54–56 Smith, Adam, 3–4, 235, 236–37 Smith, Greg, 274–76 social, moral, and ethical values competition ideology does not excuse lack of, 271 competition undermining, xiii–xiv, 235–36, 237, 245–46, 274 complementing the competitive process, 252 enhancing the marketplace, 237 fairness, 144, 242–44, 252 farms with a social purpose, 290–91 as means to increase profits, 276–78 morality continuum, 257–58 morality through self-interest, 257 shaping behavior of others, 284–87 Smith on need for, 236–37 zero-sum competition vs., 249–51 social ideal, noble competition as, 259–60 socialism for the rich, 231 social outcome of markets, 124, 125 social values.

Breakfast of Champions by Kurt Vonnegut

Albert Einstein, British Empire, dematerialisation, Maui Hawaii, search costs, traveling salesman

He lay down to rest for a moment, and a drunk automobile worker mistook him for a kitchen match. He killed Kago by trying to strike him repeatedly on the underside of the bar. • • • Trout received only one fan letter before 1972. It was from an eccentric millionaire, who hired a private detective agency to discover who and where he was. Trout was so invisible that the search cost eighteen thousand dollars. The fan letter reached him in his basement in Cohoes. It was hand-written, and Trout concluded that the writer might be fourteen years old or so. The letter said that Plague on Wheels was the greatest novel in the English language, and that Trout should be President of the United States.

Willful: How We Choose What We Do by Richard Robb

activist fund / activist shareholder / activist investor, Alvin Roth, Asian financial crisis, asset-backed security, Bear Stearns, behavioural economics, Bernie Madoff, Brexit referendum, capital asset pricing model, cognitive bias, collapse of Lehman Brothers, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, delayed gratification, diversification, diversified portfolio, effective altruism, endowment effect, Eratosthenes, experimental subject, family office, George Akerlof, index fund, information asymmetry, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, lake wobegon effect, loss aversion, market bubble, market clearing, money market fund, Paradox of Choice, Pareto efficiency, Paul Samuelson, Peter Singer: altruism, Philippa Foot, principal–agent problem, profit maximization, profit motive, Richard Thaler, search costs, Silicon Valley, sovereign wealth fund, survivorship bias, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, transaction costs, trolley problem, ultimatum game

See also purposeful choice rationalization, 15, 43–44, 55, 159–162, 178, 194–195 readiness potential, 161 real estate, 80 redistribution, 109 reference points, 168 regret, 127–128, 129 religious faith, 49–50, 116 remorse, 128–129 repeat dealing, 105 repentance, 128 reputation, 105–106, 134, 183 retirement, 19, 41, 185, 206 Ricardo, David: personal investments, 71, 205 theory of comparative advantage, 185 risk: above-market returns linked to, 70 aversion to, 17, 51, 96, 168, 199 diversification and, 64 in efficient market hypothesis, 69, 70 in human-life valuation, 139 low asset prices linked to, 96 modeling of, 69, 76 rivalry, 201 Rockefeller, John D., 211–212n12 Rotten Kid Theorem, 108–110, 125 Russell, Bertrand, 62 salience, 29 Sartre, Jean-Paul, 128–129 satisficing, 42–43 Saul of Tarsus, 63 Schopenhauer, Arthur, 5, 161, 209n5 Schwartz, Barry, 172 scientific knowledge, 61 scientific method, 49–50, 53 search costs, 9 Searle, John, 141–142 Securities and Exchange Commission (SEC), 16 selfish altruism, 104, 105–106, 109, 123, 125, 135 Seligman, Martin, 202 Sen, Amartya, 169 Shafir, Eldar, 174 Shane (film), 169 Sharpe, William, 65 short-term trading, 78 Siddhartha Gautama, 63 Simon, Herbert, 42 Singer, Peter, 110 Smith, Adam, 73, 82, 112, 171 Smith, Al, 211–212n12 Smith, Barbara Herrnstein, 47 social cost, 28–29, 133 social norms, 104, 106–108, 123 social relations, 28 rational choice explanations of, 104 Sodom and Gomorrah, 117–118 “soft selling,” 170 sovereign wealth funds, 74 speed limits, 138–140 spite, 126–127 spontaneity, 19–20, 202 altruistic, 28–29, 114–115, 119, 203 in spite, 127 stable preferences, 33, 115, 147, 207, 208 status symbols, 31 staying in the game, 179–181 stock-picking, 64–66 Strangers Drowning (MacFarquhar), 214n6 strategic competition, 125 structured credit, 15, 93 Strulovici, Bruno H., 217n1 Sturges, Preston, 7 subprime mortgages, 96–97 substitution effect, 187 survivor bias, 180 Taylor, Michael, 133 terrorism, 126 Thaler, Richard, 33–34 Thanet Offshore Wind, 83–90 Thus Spoke Zarathustra (Nietzsche), 43 tit-for-tat, in repeated games, 105 transaction costs, 64, 70, 78 transitivity of preferences, 158–159 Treatise of Human Nature (Hume), 209n5 “tricky profit,” 18–21 trolley problem, 133, 135–137 tulipmania, 212n1 Tversky, Amos, 168, 174 Twain, Mark, 60 ultimatum game, 107–108, 207 uncertainty, about future, 25, 153, 181–185 unique events, 70–71, 72–73, 74, 94 United Kingdom, 181 Energy Ministry of, 88 unemployment, 186 unemployment benefits, 188 university endowments, 74 University of Chicago, 8–9 unobserved care, 108, 112–113, 124, 125–126 utilitarianism, 135–136, 197–198 utility, 5–6, 18, 153–154, 196 vaccination, 58–59 values, 190–191 Van Gogh, Vincent, 79 Veblen, Thorstein, 167 veil of ignorance, 136 vengeance, 125, 126 venture capital, 27, 91–92, 100 Vestas Wind Systems, 84–88 video games, 180 Viner, Jacob, 219n2 Vogt, John, 117 wages, 154, 186, 187–188 waiting in line, 179 walk-a-thons, 178 “warm glow effect,” 114 wealth effect, 187 Wellington (Arthur Wellesley), Duke of, 71 Whitman, Walt, 50 The Will to Power (Nietzsche), 209n5 Williams, Bernard, 7 wind energy, 82–90 work-sports, 191–192 The World as Will and Idea (Schopenhauer), 209n5 Yavapai Indians, 133 Zarnowski, Frank, 191 Zeckhauser, Richard, 70–72 zero risk bias, 24

The Joys of Compounding: The Passionate Pursuit of Lifelong Learning, Revised and Updated by Gautam Baid

Abraham Maslow, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, Albert Einstein, Alvin Toffler, Andrei Shleifer, asset allocation, Atul Gawande, availability heuristic, backtesting, barriers to entry, beat the dealer, Benoit Mandelbrot, Bernie Madoff, bitcoin, Black Swan, book value, business process, buy and hold, Cal Newport, Cass Sunstein, Checklist Manifesto, Clayton Christensen, cognitive dissonance, collapse of Lehman Brothers, commoditize, corporate governance, correlation does not imply causation, creative destruction, cryptocurrency, Daniel Kahneman / Amos Tversky, deep learning, delayed gratification, deliberate practice, discounted cash flows, disintermediation, disruptive innovation, Dissolution of the Soviet Union, diversification, diversified portfolio, dividend-yielding stocks, do what you love, Dunning–Kruger effect, Edward Thorp, Elon Musk, equity risk premium, Everything should be made as simple as possible, fear index, financial independence, financial innovation, fixed income, follow your passion, framing effect, George Santayana, Hans Rosling, hedonic treadmill, Henry Singleton, hindsight bias, Hyman Minsky, index fund, intangible asset, invention of the wheel, invisible hand, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, Jeff Bezos, John Bogle, Joseph Schumpeter, junk bonds, Kaizen: continuous improvement, Kickstarter, knowledge economy, Lao Tzu, Long Term Capital Management, loss aversion, Louis Pasteur, low interest rates, Mahatma Gandhi, mandelbrot fractal, margin call, Mark Zuckerberg, Market Wizards by Jack D. Schwager, Masayoshi Son, mental accounting, Milgram experiment, moral hazard, Nate Silver, Network effects, Nicholas Carr, offshore financial centre, oil shock, passive income, passive investing, pattern recognition, Peter Thiel, Ponzi scheme, power law, price anchoring, quantitative trading / quantitative finance, Ralph Waldo Emerson, Ray Kurzweil, Reminiscences of a Stock Operator, reserve currency, Richard Feynman, Richard Thaler, risk free rate, risk-adjusted returns, Robert Shiller, Savings and loan crisis, search costs, shareholder value, six sigma, software as a service, software is eating the world, South Sea Bubble, special economic zone, Stanford marshmallow experiment, Steve Jobs, Steven Levy, Steven Pinker, stocks for the long run, subscription business, sunk-cost fallacy, systems thinking, tail risk, Teledyne, the market place, The Signal and the Noise by Nate Silver, The Wisdom of Crowds, time value of money, transaction costs, tulip mania, Upton Sinclair, Walter Mischel, wealth creators, Yogi Berra, zero-sum game

Think Budweiser, Tide, and Maggi. They lower search costs for consumers and offer psychological advantages. They make prospective customers switch from a system 2 type of slow, reasoned, reflective thinking to a system 1 type of fast, automatic, reflexive thinking through mental association and Pavlovian conditioning. Some brands (such as Rolex or Rolls-Royce) create positional value, while others (such as Nielsen Holdings or Gartner) confer legitimacy. Although positional and legitimacy brands are based on strong social consensus, the incumbent brands, which merely lower search costs through traditional shelf-space distribution advantages, are much more vulnerable to threats from disruptive online startups.

Algorithms in C++ Part 5: Graph Algorithms by Robert Sedgewick

Erdős number, functional programming, linear programming, linked data, NP-complete, reversible computing, search costs, sorting algorithm, traveling salesman

The correctness of the algorithm depends on this fundamental fact. For example, Figure 18.18 illustrates a different search of the graph, starting from a different vertex, that (of course) finds the same bridges. Despite Property 18.6, when we examine different DFS trees for the same graph, we see that some search costs may depend not just on properties of the graph but also on properties of the DFS tree. For example, the amount of space needed for the stack to support the recursive calls is larger for the example in Figure 18.18 than for the example in Figure 18.17. As we did for regular connectivity in Program 18.4, wemaywish to use Program 18.7 to build a class for testing whether a graph is edge-connected or to count the number of edge-connected components.

…

A.end(); t = A.nxt()) traverseR(D, t); } We rarely use a full traversal of this kind, however, because we normally want to take advantage of the same economies that save space in a DAG to save time in traversing it (for example, by marking visited nodes in a normal DFS). The same idea applies to a search, where we make a recursive call for only one link incident on each vertex. In such an algorithm, the search cost will be the same for the DAG and the tree, but the DAG uses far less space. Because they provide a compact way to represent trees that have identical subtrees, we often use DAGs instead of trees when we represent computational abstractions. In the context of algorithm design, the distinction between the DAG representation and the tree representation of a program in execution is the essential distinction behind dynamic programming (see, for example, Figure 19.18 and Exercise 19.78).

The Plundered Planet: Why We Must--And How We Can--Manage Nature for Global Prosperity by Paul Collier

agricultural Revolution, Berlin Wall, business climate, carbon tax, Doha Development Round, energy security, food miles, G4S, Global Witness, information asymmetry, Kenneth Arrow, megacity, new economy, offshore financial centre, oil shock, price elasticity of demand, profit maximization, rent-seeking, Ronald Coase, Scramble for Africa, search costs, sovereign wealth fund, stem cell, Stewart Brand, Tragedy of the Commons

The fallacy in that analysis is that a substantial part of the risks of prospecting are not geological, but political: the government itself is the unknown that the company has to take into account, discounting what the search rights are worth by the risk that the government will renege on its commitments. Obviously, if the government itself finances the search costs it does not bear these risks and so it is more cost-effective. This does not imply that the government should itself run the prospecting process. The typical government of the bottom billion is drastically short of management capacity and prospecting is a highly skilled and specialized activity.

Designing Search: UX Strategies for Ecommerce Success by Greg Nudelman, Pabini Gabriel-Petit

access to a mobile phone, Albert Einstein, AltaVista, augmented reality, barriers to entry, Benchmark Capital, business intelligence, call centre, cognitive load, crowdsourcing, folksonomy, information retrieval, Internet of things, Neal Stephenson, Palm Treo, performance metric, QR code, recommendation engine, RFID, search costs, search engine result page, semantic web, Silicon Valley, social graph, social web, speech recognition, text mining, the long tail, the map is not the territory, The Wisdom of Crowds, web application, zero-sum game, Zipcar

The exchange of goods and services is elevated into an experience that’s entertaining, educational, and inspiring. These vibrant markets offer stark contrast to the suburban shopping mall, an odious place I avoid like the plague. On a rare visit, as I physically drag my cadaver from rack to rack, store to store, anchor to anchor, I am painfully aware of the search costs of modern meatspace, which is why I do most of my shopping online. Of course, a similar spectrum exists in ecommerce, with many more bad stores than good. The difference is in the distance. On the Web, every shop is just a click away. Location isn’t what it used to be. And, since low cost often leads to low profit, smart sellers have learned that insanely great user experiences, especially in search and discovery, are the new keys to the kingdom of sustainable competitive advantage.

The Paradox of Choice: Why More Is Less by Barry Schwartz

accounting loophole / creative accounting, attribution theory, Atul Gawande, availability heuristic, Cass Sunstein, Daniel Kahneman / Amos Tversky, endowment effect, framing effect, hedonic treadmill, income per capita, job satisfaction, loss aversion, medical residency, mental accounting, Own Your Own Home, PalmPilot, Paradox of Choice, Pareto efficiency, peak-end rule, positional goods, price anchoring, psychological pricing, RAND corporation, Richard Thaler, science of happiness, search costs, The Wealth of Nations by Adam Smith

Imagining all the ways in which we could be feeling worse might prevent us from taking for granted (adapting to) how good we actually feel. So, to be better prepared for, and less disappointed by adaptation: As you buy your new car, acknowledge that the thrill won’t be quite the same two months after you own it. Spend less time looking for the perfect thing (maximizing), so that you won’t have huge search costs to be “amortized” against the satisfaction you derive from what you actually choose. Remind yourself of how good things actually are instead of focusing on how they’re less good than they were at first. 9. Control Expectations OUR EVALUATION OF EXPERIENCE IS SUBSTANTIALLY INFLUENCED BY how it compares with our expectations.

How Boards Work: And How They Can Work Better in a Chaotic World by Dambisa Moyo

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Airbnb, algorithmic trading, Amazon Web Services, AOL-Time Warner, asset allocation, barriers to entry, Ben Horowitz, Big Tech, bitcoin, Black Lives Matter, blockchain, Boeing 737 MAX, Bretton Woods, business cycle, business process, buy and hold, call centre, capital controls, carbon footprint, collapse of Lehman Brothers, coronavirus, corporate governance, corporate social responsibility, COVID-19, creative destruction, cryptocurrency, deglobalization, don't be evil, Donald Trump, fake news, financial engineering, gender pay gap, geopolitical risk, George Floyd, gig economy, glass ceiling, global pandemic, global supply chain, hiring and firing, income inequality, index fund, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Jeff Bezos, knowledge economy, labor-force participation, long term incentive plan, low interest rates, Lyft, money: store of value / unit of account / medium of exchange, multilevel marketing, Network effects, new economy, old-boy network, Pareto efficiency, passive investing, Pershing Square Capital Management, proprietary trading, remote working, Ronald Coase, Savings and loan crisis, search costs, shareholder value, Shoshana Zuboff, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, SoftBank, sovereign wealth fund, surveillance capitalism, The Nature of the Firm, Tim Cook: Apple, too big to fail, trade route, Travis Kalanick, uber lyft, Vanguard fund, Washington Consensus, WeWork, women in the workforce, work culture

Rather than hiring a board candidate because of a quota system, boards would be better off committing their time and budget toward identifying the women and minorities with the best potential to rise to a seat on the board. The cost of a search for the best and the brightest women and minority candidates may be high—particularly if the criteria for a board seat is narrow. However, with determination, boards can identify candidates with diverse backgrounds and experiences and reduce their board-search costs without creating suboptimal results. Quotas should only be used to help identify talented, competent, and experienced candidates who had previously gone unnoticed. Quotas that advocate for female or minority representation regardless of ability and potential contribution seem to me shortsighted and against the long-term interests of the business, society, and even the individual who ostensibly benefits from the arrangement.

Starstruck: The Business of Celebrity by Currid

barriers to entry, Bernie Madoff, Big Tech, Donald Trump, income inequality, index card, industrial cluster, Mark Zuckerberg, Metcalfe’s law, natural language processing, place-making, Ponzi scheme, post-industrial society, power law, prediction markets, public intellectual, Renaissance Technologies, Richard Florida, Robert Metcalfe, Robert Solow, rolodex, search costs, shareholder value, Silicon Valley, slashdot, Stephen Fry, the long tail, The Theory of the Leisure Class by Thorstein Veblen, transaction costs, Tyler Cowen, upwardly mobile, urban decay, Vilfredo Pareto, Virgin Galactic, winner-take-all economy

The reason we don’t go trolling iTunes for another blond pop star to listen to is that Britney Spears is already ranked number one on the chart. There is only a slim chance that the time we would spend looking for a similar type of musician would result in a significantly better musician. Superstars limit our search costs for what to read, watch, listen to, wear, eat, or hang on our walls. Superstars like Hirst and Koons are beneficiaries of the bandwagon effect: We tend to like what everyone else likes and we look for signals that tell us what is “good art” because we are not necessarily sure of our own judgment.26 Even if we love art, most of us don’t have art history degrees or regularly read exhibition reviews.

The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home by Dan Ariely

Alvin Roth, An Inconvenient Truth, assortative mating, Bear Stearns, behavioural economics, Burning Man, business process, cognitive dissonance, Cornelius Vanderbilt, corporate governance, Daniel Kahneman / Amos Tversky, Demis Hassabis, end world poverty, endowment effect, Exxon Valdez, first-price auction, Ford Model T, Frederick Winslow Taylor, George Akerlof, happiness index / gross national happiness, hedonic treadmill, IKEA effect, Jean Tirole, job satisfaction, knowledge economy, knowledge worker, loss aversion, name-letter effect, Peter Singer: altruism, placebo effect, Richard Thaler, Saturday Night Live, search costs, second-price auction, Skinner box, software as a service, subprime mortgage crisis, sunk-cost fallacy, The Wealth of Nations by Adam Smith, ultimatum game, Upton Sinclair, young professional

Additional readings Steven Bellman, Eric Johnson, Gerald Lohse and Naomi Mandel, “Designing Marketplaces of the Artificial with Consumers in Mind: Four Approaches to Understanding Consumer Behavior in Electronic Environments,” Journal of Interactive Marketing 20, no. 1 (2006): 21–33. Rebecca Hamilton and Debora Thompson, “Is There a Substitute for Direct Experience? Comparing Consumers’ Preferences after Direct and Indirect Product Experiences,” Journal of Consumer Research 34, no. 4 (2007): 546–555. John Lynch and Dan Ariely, “Wine Online: Search Costs Affect Competition on Price, Quality, and Distribution,” Marketing Science 19, no. 1 (2000): 83–103. Michael Norton, Joan DiMicco, Ron Caneel, and Dan Ariely, “AntiGroupWare and Second Messenger,” BT Technology Journal 22, no. 4 (2004): 83–88. Chapter 9: On Empathy and Emotion: Why We Respond to One Person Who Needs Help but Not to Many Based on Deborah Small and George Loewenstein, “The Devil You Know: The Effects of Identifiability on Punishment,” Journal of Behavioral Decision Making 18, no. 5 (2005): 311–318.

How to Fix Copyright by William Patry

A Declaration of the Independence of Cyberspace, barriers to entry, big-box store, borderless world, bread and circuses, business cycle, business intelligence, citizen journalism, cloud computing, commoditize, content marketing, creative destruction, crowdsourcing, death of newspapers, digital divide, en.wikipedia.org, facts on the ground, Frederick Winslow Taylor, George Akerlof, Glass-Steagall Act, Gordon Gekko, haute cuisine, informal economy, invisible hand, John Perry Barlow, Joseph Schumpeter, Kickstarter, knowledge economy, lone genius, means of production, moral panic, new economy, road to serfdom, Ronald Coase, Ronald Reagan, search costs, semantic web, shareholder value, Silicon Valley, The Chicago School, The Wealth of Nations by Adam Smith, trade route, transaction costs, trickle-down economics, Twitter Arab Spring, Tyler Cowen, vertical integration, winner-take-all economy, zero-sum game

But as much attention as unauthorized uses on the Internet receive, the largest problems facing authors today are not unauthorized uses but the obstacles put in the way of buyers willing to pay for access to or copies of the work. These obstacles have caused a huge loss of income for composers, performers, and photographers (given the sheer volume of works they create). For 184 HOW TO FIX COPYRIGHT these creators, the costs of enforcing rights are substantial, and involve search costs for identifying infringers, enforcement costs for suing infringers, transaction costs for negotiating licenses with users, and collection costs for obtaining payment from licensees. Innovative services that wish to offer the public authorized, paid access, or copies have been impeded or shut down by licensing difficulties.

The New Harvest: Agricultural Innovation in Africa by Calestous Juma

agricultural Revolution, Albert Einstein, barriers to entry, bioinformatics, business climate, carbon footprint, clean water, colonial rule, conceptual framework, creative destruction, CRISPR, double helix, electricity market, energy security, energy transition, export processing zone, global value chain, high-speed rail, impact investing, income per capita, industrial cluster, informal economy, Intergovernmental Panel on Climate Change (IPCC), Joseph Schumpeter, knowledge economy, land tenure, M-Pesa, microcredit, mobile money, non-tariff barriers, off grid, out of africa, precautionary principle, precision agriculture, Recombinant DNA, rolling blackouts, search costs, Second Machine Age, self-driving car, Silicon Valley, sovereign wealth fund, structural adjustment programs, supply-chain management, synthetic biology, systems thinking, total factor productivity, undersea cable

The mobile penetration rate (number of subscriptions per 100 inhabitants) in Africa is expected to reach 69% by the end of 2014.21 Much of this growth in cell phone use—as much as 45% annually from 2002 through 2011—coincided with economic growth in the region. It is estimated that every 10% growth in mobile phones can raise up to 1.5% in GDP growth. There are five ways in which mobile phone access boosts microeconomic performance: reducing search costs and therefore improving overall market efficiency, improving productive efficiency of firms, creating new jobs in telecommunications-based industries, increasing social networking capacity, and allowing for mobile development projects to enter the market.22 Advances in Science, Technology, and Engineering 49 Mobile phones cut out the opportunity costs, replacing several hours of travel with a two-minute phone call and also allowing firms and producers to get up-to-date information on demand.

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World by Sandra Navidi

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, assortative mating, bank run, barriers to entry, Bear Stearns, Bernie Sanders, Black Swan, Blythe Masters, Bretton Woods, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, commoditize, conceptual framework, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, digital divide, diversification, Dunbar number, East Village, eat what you kill, Elon Musk, eurozone crisis, fake it until you make it, family office, financial engineering, financial repression, Gini coefficient, glass ceiling, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google bus, Gordon Gekko, haute cuisine, high net worth, hindsight bias, income inequality, index fund, intangible asset, Jaron Lanier, Jim Simons, John Meriwether, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Roose, knowledge economy, London Whale, Long Term Capital Management, longitudinal study, Mark Zuckerberg, mass immigration, McMansion, mittelstand, Money creation, money market fund, Myron Scholes, NetJets, Network effects, no-fly zone, offshore financial centre, old-boy network, Parag Khanna, Paul Samuelson, peer-to-peer, performance metric, Peter Thiel, plutocrats, Ponzi scheme, power law, public intellectual, quantitative easing, Renaissance Technologies, rent-seeking, reserve currency, risk tolerance, Robert Gordon, Robert Shiller, rolodex, Satyajit Das, search costs, shareholder value, Sheryl Sandberg, Silicon Valley, social intelligence, sovereign wealth fund, Stephen Hawking, Steve Jobs, subprime mortgage crisis, systems thinking, tech billionaire, The Future of Employment, The Predators' Ball, The Rise and Fall of American Growth, too big to fail, Tyler Cowen, women in the workforce, young professional

The Influence of Personal Connections According to a Harvard Business School study titled Assess the Value of Your Networks, personal ties based on social, educational, employment, and gender backgrounds strongly influence the flow and quality of information. Often people distrust public information and prefer familiar and trusted sources. Particularly in recruiting and job searches, executives rely on each other’s opinion and discretion, which ensures better results and lower search costs.17 Another Harvard study called The Power of Alumni Networks examined how information flows affect stock prices by comparing the performance of investments into connected firms, where senior officials had common school ties, to nonconnected firms without such ties. Their results revealed that managers place larger and more successful bets on companies whose executives attended the same schools.

The Price of Everything: And the Hidden Logic of Value by Eduardo Porter

Alan Greenspan, Alvin Roth, AOL-Time Warner, Asian financial crisis, Ayatollah Khomeini, banking crisis, barriers to entry, behavioural economics, Berlin Wall, British Empire, capital controls, carbon tax, Carmen Reinhart, Cass Sunstein, clean water, Credit Default Swap, Deng Xiaoping, Easter island, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, financial engineering, flying shuttle, Ford paid five dollars a day, full employment, George Akerlof, Glass-Steagall Act, Gordon Gekko, guest worker program, happiness index / gross national happiness, housing crisis, illegal immigration, immigration reform, income inequality, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Joshua Gans and Andrew Leigh, junk bonds, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, longitudinal study, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, Michael Milken, Monkeys Reject Unequal Pay, new economy, New Urbanism, peer-to-peer, pension reform, Peter Singer: altruism, pets.com, placebo effect, precautionary principle, price discrimination, price stability, rent-seeking, Richard Thaler, rising living standards, risk tolerance, Robert Shiller, Ronald Reagan, search costs, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, superstar cities, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, transatlantic slave trade, ultimatum game, unpaid internship, urban planning, Veblen good, women in the workforce, World Values Survey, Yom Kippur War, young professional, zero-sum game

If competition is a consumer’s best friend, corporations’ favorite countervailing strategy is to keep consumers from figuring out where they can get the best available deal. Unlike the competitive utopia described in economic models, where consumers can effortlessly compare competing products to make their choices, the real world is plagued with what Nobel laureate George Stigler called search costs. It is difficult for consumers to find out what a given product costs in all the shops in town—let alone everything available on the Internet. It is even tougher if the goods are not identical. This is a shortcoming that businesses can exploit. For many companies, evading competition is a question of survival.

The New Science of Asset Allocation: Risk Management in a Multi-Asset World by Thomas Schneeweis, Garry B. Crowder, Hossein Kazemi

asset allocation, backtesting, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, book value, business cycle, buy and hold, capital asset pricing model, collateralized debt obligation, commodity trading advisor, correlation coefficient, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, diversification, diversified portfolio, financial engineering, fixed income, global macro, high net worth, implied volatility, index fund, interest rate swap, invisible hand, managed futures, market microstructure, merger arbitrage, moral hazard, Myron Scholes, passive investing, Richard Feynman, Richard Feynman: Challenger O-ring, risk free rate, risk tolerance, risk-adjusted returns, risk/return, search costs, selection bias, Sharpe ratio, short selling, statistical model, stocks for the long run, survivorship bias, systematic trading, technology bubble, the market place, Thomas Kuhn: the structure of scientific revolutions, transaction costs, value at risk, yield curve, zero-sum game

Closer up, he pointed out, the line is not nearly as clean or consistent and spaces appear. He walked up and put his face within inches of the graph. “And from here,” he pointed out, “this graph looks real ugly!” The same could be said for the process of investment and the market in which investment products exist. Moreover, the search costs of finding, monitoring, and assessing risk and return are extensive, continuous, and variable. Richard Feynman of physics fame (remember the O-ring and the Challenger story in which Feynman, instead of a lengthy discussion, simply put the rubber O-ring into a cold class of water, pulled it out, showed how inflexible it was when too cold, and thereby showed how cold temperature made it fail—end of story) has pointed out that what works at the “macro” may not work at the “micro” and that “things on a small scale behave nothing like things on a large scale.”

Radical Markets: Uprooting Capitalism and Democracy for a Just Society by Eric Posner, E. Weyl

3D printing, activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Amazon Mechanical Turk, anti-communist, augmented reality, basic income, Berlin Wall, Bernie Sanders, Big Tech, Branko Milanovic, business process, buy and hold, carbon footprint, Cass Sunstein, Clayton Christensen, cloud computing, collective bargaining, commoditize, congestion pricing, Corn Laws, corporate governance, crowdsourcing, cryptocurrency, data science, deep learning, DeepMind, Donald Trump, Elon Musk, endowment effect, Erik Brynjolfsson, Ethereum, feminist movement, financial deregulation, Francis Fukuyama: the end of history, full employment, gamification, Garrett Hardin, George Akerlof, global macro, global supply chain, guest worker program, hydraulic fracturing, Hyperloop, illegal immigration, immigration reform, income inequality, income per capita, index fund, informal economy, information asymmetry, invisible hand, Jane Jacobs, Jaron Lanier, Jean Tirole, Jeremy Corbyn, Joseph Schumpeter, Kenneth Arrow, labor-force participation, laissez-faire capitalism, Landlord’s Game, liberal capitalism, low skilled workers, Lyft, market bubble, market design, market friction, market fundamentalism, mass immigration, negative equity, Network effects, obamacare, offshore financial centre, open borders, Pareto efficiency, passive investing, patent troll, Paul Samuelson, performance metric, plutocrats, pre–internet, radical decentralization, random walk, randomized controlled trial, Ray Kurzweil, recommendation engine, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Ronald Coase, Rory Sutherland, search costs, Second Machine Age, second-price auction, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, special economic zone, spectrum auction, speech recognition, statistical model, stem cell, telepresence, Thales and the olive presses, Thales of Miletus, The Death and Life of Great American Cities, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, trickle-down economics, Tyler Cowen, Uber and Lyft, uber lyft, universal basic income, urban planning, Vanguard fund, vertical integration, women in the workforce, Zipcar

Gordon, The Agency Costs of Agency Capitalism: Activist Investors and the Revaluation of Governance Rights, 113 Columbia Law Review 863 (2011). 39. We tread speculatively in this paragraph. The industry is complex, fluid, and poorly understood. 40. See Ali Hortaçsu & Chad Syverson, Product Differentiation, Search Costs, and Competition in the Mutual Fund Industry: A Case Study of S&P 500 Index Funds, 119 Quarterly Journal of Economics 403 (2004); John C. Coates IV & R. Glenn Hubbard, Competition in the Mutual Fund Industry: Evidence and Implications for Policy, 33 Journal of Corporate Law 151 (2007). 41. John Y.

Is the Internet Changing the Way You Think?: The Net's Impact on Our Minds and Future by John Brockman

A Declaration of the Independence of Cyberspace, Albert Einstein, AltaVista, Amazon Mechanical Turk, Asperger Syndrome, availability heuristic, Benoit Mandelbrot, biofilm, Black Swan, bread and circuses, British Empire, conceptual framework, corporate governance, Danny Hillis, disinformation, Douglas Engelbart, Douglas Engelbart, Emanuel Derman, epigenetics, Evgeny Morozov, financial engineering, Flynn Effect, Frank Gehry, Future Shock, Google Earth, hive mind, Howard Rheingold, index card, information retrieval, Internet Archive, invention of writing, Jane Jacobs, Jaron Lanier, John Markoff, John Perry Barlow, Kevin Kelly, Large Hadron Collider, lifelogging, lone genius, loss aversion, mandelbrot fractal, Marc Andreessen, Marshall McLuhan, Menlo Park, meta-analysis, Neal Stephenson, New Journalism, Nicholas Carr, One Laptop per Child (OLPC), out of africa, Paul Samuelson, peer-to-peer, pneumatic tube, Ponzi scheme, power law, pre–internet, Project Xanadu, Richard Feynman, Rodney Brooks, Ronald Reagan, satellite internet, Schrödinger's Cat, search costs, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, Skype, slashdot, smart grid, social distancing, social graph, social software, social web, Stephen Hawking, Steve Wozniak, Steven Pinker, Stewart Brand, synthetic biology, Ted Nelson, TED Talk, telepresence, the medium is the message, the scientific method, the strength of weak ties, The Wealth of Nations by Adam Smith, theory of mind, trade route, upwardly mobile, Vernor Vinge, Whole Earth Catalog, X Prize, Yochai Benkler

The bounty of mating opportunities in today’s computational sphere yields some tangible benefits. It allows people to secure better mating fits—access to that special someone who shares your unique interests in underground rock bands, obscure novelists, or unheard-of foreign movies. It can abbreviate search costs, eliminating the nonstarters without forcing you to slog through the cumbersome dating maze. The Internet affords practice (the stuttering and shy in person can be eloquently bold on the keyboard). Because of the surfeit of opportunity, the Internet may yield good bargains on the mating market, a maximization of one’s mate value, or access to the otherwise unattainable.

Superminds: The Surprising Power of People and Computers Thinking Together by Thomas W. Malone

Abraham Maslow, agricultural Revolution, Airbnb, Albert Einstein, Alvin Toffler, Amazon Mechanical Turk, Apple's 1984 Super Bowl advert, Asperger Syndrome, Baxter: Rethink Robotics, bitcoin, blockchain, Boeing 747, business process, call centre, carbon tax, clean water, Computing Machinery and Intelligence, creative destruction, crowdsourcing, data science, deep learning, Donald Trump, Douglas Engelbart, Douglas Engelbart, driverless car, drone strike, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, experimental economics, Exxon Valdez, Ford Model T, future of work, Future Shock, Galaxy Zoo, Garrett Hardin, gig economy, happiness index / gross national happiness, independent contractor, industrial robot, Internet of things, invention of the telegraph, inventory management, invisible hand, Jeff Rulifson, jimmy wales, job automation, John Markoff, Joi Ito, Joseph Schumpeter, Kenneth Arrow, knowledge worker, longitudinal study, Lyft, machine translation, Marshall McLuhan, Nick Bostrom, Occupy movement, Pareto efficiency, pattern recognition, prediction markets, price mechanism, radical decentralization, Ray Kurzweil, Rodney Brooks, Ronald Coase, search costs, Second Machine Age, self-driving car, Silicon Valley, slashdot, social intelligence, Stephen Hawking, Steve Jobs, Steven Pinker, Stewart Brand, technological singularity, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Tim Cook: Apple, Tragedy of the Commons, transaction costs, Travis Kalanick, Uber for X, uber lyft, Vernor Vinge, Vilfredo Pareto, Watson beat the top human players on Jeopardy!

If you have a broken laser pointer in your attic, it might have value to someone somewhere. But if the cost of finding that person is more than the laser pointer would be worth to him or her, then the broken laser pointer has no economic value. It’s worthless to you, and you might as well throw it away. But if a new technology (like the eBay platform) can reduce the search cost to almost zero, then suddenly the broken laser pointer has economic value. Now, imagine this same kind of thing happening not with the junk in your attic but with your time. If you are unemployed and would rather be working, then your time is wasted, just like a broken laser pointer in your attic would be.

A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang

"there is no alternative" (TINA), Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, antiwork, AOL-Time Warner, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Bear Stearns, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, Charles Babbage, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, corporate raider, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial engineering, financial innovation, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, Great Leap Forward, greed is good, Gunnar Myrdal, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, information asymmetry, intangible asset, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land bank, land reform, liberation theology, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Neal Stephenson, Nelson Mandela, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, Pareto efficiency, Paul Samuelson, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, proprietary trading, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, scientific management, Scramble for Africa, search costs, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Vilfredo Pareto, Washington Consensus, working-age population, World Values Survey

This may be a good thing, if the country has high unemployment and it is unemployed unskilled workers who emigrate. However, those workers usually find it difficult to emigrate because immigrant-receiving countries want people with skills and because emigration costs money, which these workers don’t have (e.g., search costs, application fees, air tickets). So very often it is the ‘wrong’ people who emigrate – skilled workers. This is known as brain drain. Some of those skilled workers may learn even more skills in their destination countries and eventually come back home, teaching others new skills. This is known as brain gain, but the evidence for it is limited.

Drunk: How We Sipped, Danced, and Stumbled Our Way to Civilization by Edward Slingerland

agricultural Revolution, Alexander Shulgin, Any sufficiently advanced technology is indistinguishable from magic, Burning Man, classic study, collective bargaining, coronavirus, COVID-19, Day of the Dead, delayed gratification, Deng Xiaoping, disruptive innovation, Drosophila, experimental economics, germ theory of disease, global pandemic, Google Hangouts, hive mind, invention of agriculture, John Markoff, knowledge worker, land reform, lateral thinking, lockdown, lone genius, meta-analysis, microdosing, Picturephone, placebo effect, post-work, Ralph Waldo Emerson, search costs, Silicon Valley, Skype, social intelligence, Steve Ballmer, Steve Jobs, Steven Pinker, sugar pill, TED Talk, Tragedy of the Commons, WeWork, women in the workforce, work culture , Zenefits

“The Kava Ceremonial as a Dream Structure.” In Mary Douglas (Ed.), Constructive Drinking: Perspectives on Drink from Anthropology (pp. 182–204). Cambridge: Cambridge University Press. Boudreau, K. J., T. Brady, I. Ganguli, P. Gaule, E. Guinan, A. Hollenberg, and K. R. Lakhani. (2017). “A field experiment on search costs and the formation of scientific collaborations.” Review of Economics and Statistics, 99(4), 565–576. Bourguignon, Erika. (1973). Religion, Altered States of Consciousness, and Social Change. Columbus: Ohio State University Press. Boyd, Robert, Peter Richerson, and Joseph Henrich. (2011). “The cultural niche: Why social learning is essential for human adaptation.”

The Crux by Richard Rumelt

activist fund / activist shareholder / activist investor, air gap, Airbnb, AltaVista, AOL-Time Warner, Bayesian statistics, behavioural economics, biodiversity loss, Blue Ocean Strategy, Boeing 737 MAX, Boeing 747, Charles Lindbergh, Clayton Christensen, cloud computing, cognitive bias, commoditize, coronavirus, corporate raider, COVID-19, creative destruction, crossover SUV, Crossrail, deep learning, Deng Xiaoping, diversified portfolio, double entry bookkeeping, drop ship, Elon Musk, en.wikipedia.org, financial engineering, Ford Model T, Herman Kahn, income inequality, index card, Internet of things, Jeff Bezos, Just-in-time delivery, Larry Ellison, linear programming, lockdown, low cost airline, low earth orbit, Lyft, Marc Benioff, Mark Zuckerberg, Masayoshi Son, meta-analysis, Myron Scholes, natural language processing, Neil Armstrong, Network effects, packet switching, PageRank, performance metric, precision agriculture, RAND corporation, ride hailing / ride sharing, Salesforce, San Francisco homelessness, search costs, selection bias, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, Snapchat, social distancing, SoftBank, software as a service, statistical model, Steve Ballmer, Steve Jobs, stochastic process, Teledyne, telemarketer, TSMC, uber lyft, undersea cable, union organizing, vertical integration, WeWork

One writer exclaimed that “Searching for ‘mermaid’ in the wedding gown category of Etsy returns 1,299 results, ranging from a $6,882 gown made by Project Runway’s Leanne Marshall to one purportedly handmade lace dress going for $65.”6 Nevertheless in 2020, Etsy was valued at $6 billion on earnings of $76 million. It shows growth in merchandise revenue of more than 20 percent per year. Its revenue comes from a 5 percent charge on sales, a 3 percent charge for payment processing, and a 20-cent listing fee for four months. WHEN WE THINK about edge or advantage, we tend to look at search costs as well as stickiness, or switching costs. That is, how well does the platform meet the buyer’s need to easily search for a desired category or item? And how easy is it for a buyer or seller to switch to a different platform? With Uber, search is fast and easy, though one can get caught with fares three times normal if there is a rush.

No Slack: The Financial Lives of Low-Income Americans by Michael S. Barr

active measures, asset allocation, Bayesian statistics, behavioural economics, business cycle, Cass Sunstein, cognitive load, conceptual framework, Daniel Kahneman / Amos Tversky, financial exclusion, financial innovation, Home mortgage interest deduction, income inequality, information asymmetry, it's over 9,000, labor-force participation, late fees, London Interbank Offered Rate, loss aversion, low interest rates, machine readable, market friction, mental accounting, Milgram experiment, mobile money, money market fund, mortgage debt, mortgage tax deduction, New Urbanism, p-value, payday loans, race to the bottom, regulatory arbitrage, Richard Thaler, risk tolerance, Robert Shiller, search costs, subprime mortgage crisis, the payments system, transaction costs, unbanked and underbanked, underbanked

The top spenders, however, take up a disproportionate share of overall spending. We also show that although annual outlays on financial services are low, on average, some LMI households incur significant nonpecuniary costs to obtain and use banking services. These households often pay bills in person and incur large search costs to avoid the most expensive options. When asked what features of financial services would motivate them to change behavior, they cite convenience and speed before costs. Moreover, banked households use a wide range of alternative financial services, and most of the outlays of the median banked household are for alternative financial services.

People, Power, and Profits: Progressive Capitalism for an Age of Discontent by Joseph E. Stiglitz

affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, AlphaGo, antiwork, barriers to entry, basic income, battle of ideas, behavioural economics, Berlin Wall, Bernie Madoff, Bernie Sanders, Big Tech, business cycle, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, carried interest, central bank independence, clean water, collective bargaining, company town, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crony capitalism, DeepMind, deglobalization, deindustrialization, disinformation, disintermediation, diversified portfolio, Donald Trump, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, fake news, 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, Glass-Steagall Act, global macro, global supply chain, greed is good, green new deal, 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 interest rates, low skilled workers, Mark Zuckerberg, market fundamentalism, mass incarceration, meta-analysis, minimum wage unemployment, moral hazard, new economy, New Urbanism, obamacare, opioid epidemic / opioid crisis, 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 Solow, Ronald Reagan, Savings and loan crisis, search costs, secular stagnation, self-driving car, shareholder value, Shoshana Zuboff, Silicon Valley, Simon Kuznets, South China Sea, sovereign wealth fund, speech recognition, Steve Bannon, Steve Jobs, surveillance capitalism, TED Talk, 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, Yochai Benkler

“Pursuing the American Dream,” Pew Mobility Project. CHAPTER 3: EXPLOITATION AND MARKET POWER 1.There has also been an increase in our understandings of the limitations of the competitive equilibrium model. It is not robust—slight changes in assumptions (the presence of small fixed sunk costs, or small search costs or small information costs combined with small amounts of information imperfections) lead to large changes in results, e.g., the persistence of large amounts of market power. Even small market power in multiple industries can add up to having large effects. Information economics, game theory, and behavioral economics have all had profound effects on how we think about the economy.

The Master Switch: The Rise and Fall of Information Empires by Tim Wu

accounting loophole / creative accounting, Alfred Russel Wallace, Andy Rubin, AOL-Time Warner, Apple II, barriers to entry, British Empire, Burning Man, business cycle, Cass Sunstein, Clayton Christensen, commoditize, corporate raider, creative destruction, disinformation, disruptive innovation, don't be evil, Douglas Engelbart, Douglas Engelbart, Eben Moglen, Ford Model T, Howard Rheingold, Hush-A-Phone, informal economy, intermodal, Internet Archive, invention of movable type, invention of the telephone, invisible hand, Jane Jacobs, John Markoff, Joseph Schumpeter, Menlo Park, open economy, packet switching, PageRank, profit motive, radical decentralization, road to serfdom, Robert Bork, Robert Metcalfe, Ronald Coase, scientific management, search costs, seminal paper, sexual politics, shareholder value, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, Telecommunications Act of 1996, The Chicago School, The Death and Life of Great American Cities, the long tail, the market place, The Wisdom of Crowds, too big to fail, Upton Sinclair, urban planning, vertical integration, Yochai Benkler, zero-sum game

We might understand perfectly well how block booking and vertical integration reduced the costs of industrial production, while understanding nothing of what these innovations meant for film as a form of expression. Interestingly, when it comes to products like film, such inefficiencies as “higher search costs” might be a good thing, if the result is greater variety in what gets seen and heard. As the film critic Pauline Kael wrote in 1980, “there are certain kinds of business in which the public interest is more of a factor than it is in the manufacture of neckties.”39 THE TURNING POINT Few realize that 1926, before the triumph of the “talkies,” was the turning point for American film.

Creating a Life Together: Practical Tools to Grow Ecovillages and Intentional Communities by Diana Leafe Christian

A Pattern Language, back-to-the-land, benefit corporation, Community Supported Agriculture, double entry bookkeeping, intentional community, land reform, off grid, search costs, sharing economy, Silicon Valley, systems thinking, the built environment, urban sprawl

Group members each get pre-qualified for mortgages on their individual housing units. The group chooses a likely property, puts a 60- to 120-day option on it, and arranges a feasibility study to determine whether this parcel of land will work for them. They pay for legal fees, promotional expenses, land-search costs, and the option fee. In the pre-construction phase, they conduct the feasibility study, pay for any tests, surveys, permits, and fees, and get any necessary zoning changes. If they decide to buy the property, they usually pay a certain amount down and arrange with the seller to pay the balance when they secure a construction loan, which can be up to a year later.

Convergence Culture: Where Old and New Media Collide by Henry Jenkins

barriers to entry, Bear Stearns, Cass Sunstein, citizen journalism, collective bargaining, Columbine, content marketing, deskilling, digital divide, disinformation, Donald Trump, game design, George Gilder, global village, Howard Rheingold, informal economy, means of production, military-industrial complex, moral panic, new economy, no-fly zone, profit motive, Robert Metcalfe, Saturday Night Live, search costs, SimCity, slashdot, Steven Pinker, tacit knowledge, technological determinism, the long tail, the market place, Y Combinator

Skenovano pro studijni ücely 76 Buying into American Idol advice of an older brother, an uncle, a father, or perhaps a neighbor, today opportunities for such insights are relatively scarce.To the extent that information about military service shapes the career plans of young Americans today, these decisions are influenced by movies, magazines, books, and advertising Consequently, it is not surprising that young Americans with little or no contact with Soldiers are less likely to include Soldiering as a potential career. To counter this situation, the game's originator reasoned that the Army would reduce search costs by framing information about Soldiering within the entertaining and immersive context of a game A game would provide virtual experiences and insights into the development, organization, and employment of Soldiers in America's Army. 1 The America's Army project has the ambitious vision of developing itself as a general popular culture brand for all kinds of media, hoping to extend outward to include comic books, television series, youth organizations, perhaps even feature films, though the game will continue to be the hub for this brand identity.

Superintelligence: Paths, Dangers, Strategies by Nick Bostrom

agricultural Revolution, AI winter, Albert Einstein, algorithmic trading, anthropic principle, Anthropocene, anti-communist, artificial general intelligence, autism spectrum disorder, autonomous vehicles, backpropagation, barriers to entry, Bayesian statistics, bioinformatics, brain emulation, cloud computing, combinatorial explosion, computer vision, Computing Machinery and Intelligence, cosmological constant, dark matter, DARPA: Urban Challenge, data acquisition, delayed gratification, Demis Hassabis, demographic transition, different worldview, Donald Knuth, Douglas Hofstadter, driverless car, Drosophila, Elon Musk, en.wikipedia.org, endogenous growth, epigenetics, fear of failure, Flash crash, Flynn Effect, friendly AI, general purpose technology, Geoffrey Hinton, Gödel, Escher, Bach, hallucination problem, Hans Moravec, income inequality, industrial robot, informal economy, information retrieval, interchangeable parts, iterative process, job automation, John Markoff, John von Neumann, knowledge worker, Large Hadron Collider, longitudinal study, machine translation, megaproject, Menlo Park, meta-analysis, mutually assured destruction, Nash equilibrium, Netflix Prize, new economy, Nick Bostrom, Norbert Wiener, NP-complete, nuclear winter, operational security, optical character recognition, paperclip maximiser, pattern recognition, performance metric, phenotype, prediction markets, price stability, principal–agent problem, race to the bottom, random walk, Ray Kurzweil, recommendation engine, reversible computing, search costs, social graph, speech recognition, Stanislav Petrov, statistical model, stem cell, Stephen Hawking, Strategic Defense Initiative, strong AI, superintelligent machines, supervolcano, synthetic biology, technological singularity, technoutopianism, The Coming Technological Singularity, The Nature of the Firm, Thomas Kuhn: the structure of scientific revolutions, time dilation, Tragedy of the Commons, transaction costs, trolley problem, Turing machine, Vernor Vinge, WarGames: Global Thermonuclear War, Watson beat the top human players on Jeopardy!, World Values Survey, zero-sum game

Social pressures may encourage AIs to expose their source code, and to modify themselves to render themselves transparent—especially if being transparent is a precondition to being trusted and thus to being given the opportunity to partake in beneficial transactions. Cf. Hall (2007). 41. Some other issues that seem relatively minor, especially in cases where the stakes are enormous (as they are for the key global coordination failures), include the search cost of finding policies that could be of mutual interest, and the possibility that some agents might have a basic preference for “autonomy” in a form that would be reduced by entering into comprehensive global treaties that have monitoring and enforcement mechanisms attached. 42. An AI might perhaps achieve this by modifying itself appropriately and then giving observers read-only access to its source code.

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

affirmative action, Affordable Care Act / Obamacare, airline deregulation, Alan Greenspan, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Bear Stearns, behavioural economics, Berlin Wall, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, electricity market, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, Great Leap Forward, income inequality, income per capita, indoor plumbing, inflation targeting, information asymmetry, invisible hand, jobless men, John Bogle, John Harrison: Longitude, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, London Interbank Offered Rate, lone genius, low interest rates, low skilled workers, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, negative equity, obamacare, offshore financial centre, paper trading, Pareto efficiency, patent troll, Paul Samuelson, Paul Volcker talking about ATMs, payday loans, Phillips curve, price stability, profit maximization, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, search costs, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, stock buybacks, subprime mortgage crisis, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, Tragedy of the Commons, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, wealth creators, women in the workforce, zero-sum game

Event, 24% More Than Planned,” Bloomberg, April 28, 2011, available at http://www.bloomberg.com/news/2011-04-28/mcdonald-s-hires-62-000-during-national-event-24-more-than-planned.html (accessed March 5, 2012). 39. Indeed, there is an argument that unemployment insurance might actually enhance the efficiency of the labor search market, since those who were least desirous of a job and least likely to get a job would be the first to drop out. In doing so, search costs were lowered for others, and those who did get a job were more likely to be better matched. I am indebted to George Akerlof for discussions on this point. 40. Growth of real GDP (percent change from preceding year) for 2010: United States (2.9), Sweden (5.3), Germany (3.5). Employment growth (percent change from preceding year) for 2010: United States (–0.6), Sweden (1.0), Germany (0.5).

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski

"there is no alternative" (TINA), Adam Curtis, Alan Greenspan, Alvin Roth, An Inconvenient Truth, Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, bond market vigilante , bread and circuses, Bretton Woods, Brownian motion, business cycle, capital controls, carbon credits, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, democratizing finance, disinformation, do-ocracy, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, Flash crash, full employment, George Akerlof, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, information asymmetry, invisible hand, Jean Tirole, joint-stock company, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kickstarter, knowledge economy, l'esprit de l'escalier, labor-force participation, liberal capitalism, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, Pareto efficiency, Paul Samuelson, payday loans, Philip Mirowski, Phillips curve, Ponzi scheme, Post-Keynesian economics, precariat, prediction markets, price mechanism, profit motive, public intellectual, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, savings glut, school choice, sealed-bid auction, search costs, Silicon Valley, South Sea Bubble, Steven Levy, subprime mortgage crisis, tail risk, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, tontine, too big to fail, transaction costs, Tyler Cowen, vertical integration, Vilfredo Pareto, War on Poverty, Washington Consensus, We are the 99%, working poor

., pp. 120–21. 78 Ehrenreich, “Turning Poverty into an American Crime.” 79 See www.indybay.org/newsitems/2010/02/05/18637084.php. 80 Knight, “Gary Lures Hollywood with a Bounty of Decay.” 81 Lieber, “Last Plea on Student Loans.” 82 Hacker and Dreifus, “The Debt Crisis at American Colleges.” 83 One must acknowledge that there have been various “epicycles” proposed to the neoclassical model to supposedly cover these phenomena, from “search costs” to ‘“asymmetric information” to “lemon models” and beyond; but two observations render them moot. First, they really are epicycles, and have never been incorporated into the core microeconomic model. One reason may be that there is no consensus technique to correctly incorporate “information” into the model of the economic agent (Mirowski, “Why There Is (as Yet) No Such Thing as an Economics of Knowledge”).

Expected Returns: An Investor's Guide to Harvesting Market Rewards by Antti Ilmanen

Alan Greenspan, Andrei Shleifer, asset allocation, asset-backed security, availability heuristic, backtesting, balance sheet recession, bank run, banking crisis, barriers to entry, behavioural economics, Bernie Madoff, Black Swan, Bob Litterman, bond market vigilante , book value, Bretton Woods, business cycle, buy and hold, buy low sell high, capital asset pricing model, capital controls, carbon credits, Carmen Reinhart, central bank independence, classic study, collateralized debt obligation, commoditize, commodity trading advisor, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, deal flow, debt deflation, deglobalization, delta neutral, demand response, discounted cash flows, disintermediation, diversification, diversified portfolio, dividend-yielding stocks, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, fiat currency, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, framing effect, frictionless, frictionless market, G4S, George Akerlof, global macro, global reserve currency, Google Earth, high net worth, hindsight bias, Hyman Minsky, implied volatility, income inequality, incomplete markets, index fund, inflation targeting, information asymmetry, interest rate swap, inverted yield curve, invisible hand, John Bogle, junk bonds, Kenneth Rogoff, laissez-faire capitalism, law of one price, London Interbank Offered Rate, Long Term Capital Management, loss aversion, low interest rates, managed futures, margin call, market bubble, market clearing, market friction, market fundamentalism, market microstructure, mental accounting, merger arbitrage, mittelstand, moral hazard, Myron Scholes, negative equity, New Journalism, oil shock, p-value, passive investing, Paul Samuelson, pension time bomb, performance metric, Phillips curve, Ponzi scheme, prediction markets, price anchoring, price stability, principal–agent problem, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, reserve currency, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, riskless arbitrage, Robert Shiller, savings glut, search costs, selection bias, seminal paper, Sharpe ratio, short selling, sovereign wealth fund, statistical arbitrage, statistical model, stochastic volatility, stock buybacks, stocks for the long run, survivorship bias, systematic trading, tail risk, The Great Moderation, The Myth of the Rational Market, too big to fail, transaction costs, tulip mania, value at risk, volatility arbitrage, volatility smile, working-age population, Y2K, yield curve, zero-coupon bond, zero-sum game

Within major asset classes, small-cap stocks are less liquid than large-caps, emerging markets are less liquid than developed markets, and corporate or securitized bonds are less liquid than government bonds. Most alternative assets (private equity, direct real estate, other real assets, and many hedge funds) are much less liquid than traditional asset classes. Fundamentally, market liquidity reflects the ease of finding counterparties to trade with. Higher search costs for counterparties—whether those naturally needing to take the opposite position, or financial intermediaries or arbitrage capital looking for attractive opportunities—raise the cost of trading. Liquidity differences can often be explained by varying degrees of information asymmetry—a key determinant of illiquidity that can in extreme situations cause market breakdowns.

The Irrational Bundle by Dan Ariely

accounting loophole / creative accounting, air freight, Albert Einstein, Alvin Roth, An Inconvenient Truth, assortative mating, banking crisis, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, Broken windows theory, Burning Man, business process, cashless society, Cass Sunstein, clean water, cognitive dissonance, cognitive load, compensation consultant, computer vision, Cornelius Vanderbilt, corporate governance, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, delayed gratification, Demis Hassabis, Donald Trump, end world poverty, endowment effect, Exxon Valdez, fake it until you make it, financial engineering, first-price auction, Ford Model T, Frederick Winslow Taylor, fudge factor, Garrett Hardin, George Akerlof, Gordon Gekko, greed is good, happiness index / gross national happiness, hedonic treadmill, IKEA effect, Jean Tirole, job satisfaction, John Perry Barlow, Kenneth Arrow, knowledge economy, knowledge worker, lake wobegon effect, late fees, loss aversion, Murray Gell-Mann, name-letter effect, new economy, operational security, Pepsi Challenge, Peter Singer: altruism, placebo effect, price anchoring, Richard Feynman, Richard Thaler, Saturday Night Live, Schrödinger's Cat, search costs, second-price auction, Shai Danziger, shareholder value, Silicon Valley, Skinner box, Skype, social contagion, software as a service, Steve Jobs, subprime mortgage crisis, sunk-cost fallacy, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tragedy of the Commons, ultimatum game, Upton Sinclair, Walter Mischel, young professional

Additional readings Steven Bellman, Eric Johnson, Gerald Lohse and Naomi Mandel, “Designing Marketplaces of the Artificial with Consumers in Mind: Four Approaches to Understanding Consumer Behavior in Electronic Environments,” Journal of Interactive Marketing 20, no. 1 (2006): 21–33. Rebecca Hamilton and Debora Thompson, “Is There a Substitute for Direct Experience? Comparing Consumers’ Preferences after Direct and Indirect Product Experiences,” Journal of Consumer Research 34, no. 4 (2007): 546–555. John Lynch and Dan Ariely, “Wine Online: Search Costs Affect Competition on Price, Quality, and Distribution,” Marketing Science 19, no. 1 (2000): 83–103. Michael Norton, Joan DiMicco, Ron Caneel, and Dan Ariely, “AntiGroupWare and Second Messenger,” BT Technology Journal 22, no. 4 (2004): 83–88. Chapter 9: On Empathy and Emotion: Why We Respond to One Person Who Needs Help but Not to Many Based on Deborah Small and George Loewenstein, “The Devil You Know: The Effects of Identifiability on Punishment,” Journal of Behavioral Decision Making 18, no. 5 (2005): 311–318.

Data Mining: Concepts and Techniques: Concepts and Techniques by Jiawei Han, Micheline Kamber, Jian Pei

backpropagation, bioinformatics, business intelligence, business process, Claude Shannon: information theory, cloud computing, computer vision, correlation coefficient, cyber-physical system, database schema, discrete time, disinformation, distributed generation, finite state, industrial research laboratory, information retrieval, information security, iterative process, knowledge worker, linked data, machine readable, natural language processing, Netflix Prize, Occam's razor, pattern recognition, performance metric, phenotype, power law, random walk, recommendation engine, RFID, search costs, semantic web, seminal paper, sentiment analysis, sparse data, speech recognition, statistical model, stochastic process, supply-chain management, text mining, thinkpad, Thomas Bayes, web application

The FP-growth method transforms the problem of finding long frequent patterns into searching for shorter ones in much smaller conditional databases recursively and then concatenating the suffix. It uses the least frequent items as a suffix, offering good selectivity. The method substantially reduces the search costs. When the database is large, it is sometimes unrealistic to construct a main memory-based FP-tree. An interesting alternative is to first partition the database into a set of projected databases, and then construct an FP-tree and mine it in each projected database. This process can be recursively applied to any projected database if its FP-tree still cannot fit in main memory.