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28 November 2005

Mobius on "Measuring Trust in Social Networks Through a Microfinance Field Experiment"

Markus Mobius will be speaking today on "Measuring Trust in Social Networks Through a Microfinance Field Experiment"

Monday, November 28, 2005
Bell Hall, Kennedy School of Government
12:00 - 1:30 p.m.

We propose a methodology to measure trust within a social network and apply it in a field experiment in shantytowns of Lima, Peru. We model trust as a transaction cost which an agent pays to gain permission to use someone else's asset. Social closeness reduces the transaction costs through two channels: (1) it reduces asymmetric information and makes it more likely that the asset's owner can identify the user as a 'good' responsible) type; (2) it gives the owner the ability to control the agent's use of the asset and hence reduce moral hazard.

We have designed a microfinance program where we invite a subsample of the Shantytown community to become 'sponsors'. Sponsors receive a line of credit and can use a fixed share of it to obtain loans for their own household. The rest of their credit line (the 'asset') is allocated for 'sponsoring'. Any household in the community can get a low-interest rate loan from our microfinance partner by finding a sponsor who agrees to cosign the loan application. We randomize interest rates across all client-sponsor pairs: this allows us to measure the tradeoff between accessing a socially close sponsor with a high interest rate and a socially distant sponsor with a low interest rate. A second randomization varies the extent to which a sponsor is responsible for a borrower's default which allows us to separate our two trust channels. In this paper we report early results from two communities. We find that social distance up to length three reduces transaction costs by about 1 to 4 percent in terms of monthly interest rates. Moreover, geographic distance is also highly significant.

Mp3 Podcast - Presentation PDF

Posted by David Lazer at 10:03 AM | Comments (7)

25 November 2005

Are silo's always bad?

Are more ties always a better thing from the systemic point of view? Are silo's necessarily disfunctional for organizations? A lot of popular rhetoric out there regarding silo's, and the need to move toward networked ("boundaryless") forms suggests that this is the case. However, it is also plausible that it is valuable to buffer the various parts of an organization from each other so as to maintain a healthy diversity of viewpoints, and that efforts to bridge the silo's can, in the long run, bring about an unhealthy organization-wide "groupthink." Below I link to a paper on the Social Science Research Network by Allan Friedman and myself that explores this idea.

Paper:
The Parable of the Hare and the Tortoise: Small Worlds, Diversity, and System Performance

Abstract:
Whether as team members brainstorming, or cultures experimenting with new technologies, problem solvers communicate and share ideas. This paper examines how the structure of these communication networks can affect system-level performance. We present an agent-based model of information sharing, where the less successful emulate the more successful. Results suggest that where agents are dealing with a complex problem, the more efficient the network at disseminating information, and the higher the velocity of information over that network, the better the short run and lower the long run performance of the system. The dynamic underlying this result is that an inefficient network is better at exploration than an efficient network, supporting a more thorough search for solutions in the long run. This suggests that the efficient network is the hare - the fast starter - and the poorly connected network is the tortoise - slow at the start of the race, but ultimately triumphant.

Posted by David Lazer at 11:16 AM | Comments (1)

21 November 2005

A dictum regarding social network analysis and causal inference

Figuring out the direction of the causal arrow is perhaps the major methodological issue of social science. This challenge is particularly acute in the study of social networks. Does the position in the social network affect success, or does success affect position in the social network? Do birds of a feather flock together, or do dogs and their owners starting looking alike? The strong structuralist tradition in social network analysis, which posits that networks are out of the reach of the agency of individuals, obfuscated this issue for a long time. With the increased attention to dynamic networks, and the development of tools to study how networks and individuals change at the same time (e.g., see the fine work on p* models, and related software, such as SIENA--http://stat.gamma.rug.nl/snijders/siena.html) there has been a dramatic improvement in the statistical toolkit available to deal with these issues. However:

(1) Longitudinal data do not guarantee correct conclusions regarding cause and effect. For example, one can imagine omitted variables dynamically affecting network and/or individual level variables, resulting in a spurious inference of causation in longitudinal data.

(2) Cross-sectional data can, under the correct circumstances, allow reasonable inferences of causation. Festinger’s classic study of social influence is, arguably, one such example.

(3) Despite the massive upsurge of social network related research, only a fraction of published social network research use longitudinal data, and only a fraction of a fraction of the studies that use cross-sectional data even hazard a sentence on where the network in question came from.

So, let me propose the following dictum for social network research:

Any research on the impact of social networks must at least wrestle with the factors underlying the network(s) under study, considering the possibility that (a) the network being studied was the result of the purported “impact� (i.e., reverse causation) and (b) some plausible third factor has affected both the network and potential outcome (i.e., spurious inference).

This is a pretty low bar, actually, but in many fields I would guess that close to 0% of the research exceeds it.

Posted by David Lazer at 11:44 PM | Comments (1)

19 November 2005

Google bombs - Voice option and collective action

Typing in "Failure" as a keyword and regardless of pressing "Search" or "I am feeling lucky" this links directly to the biography of US President George Bush. Some time ago the same happened when someone typed in "weapons of mass destruction". This is a "google bomb". Furthermore, it is indirectly an example of global network building and collective action of website owners and bloggers based on a common idea or opinion.

What is a google bomb?
The term "Google bomb" basically describes a misapplication of knowledge on the Google's search algorithms and results. Let's take the example of "failure". The US President's biography website is neither about failure nor is the word failure used in the content. However, other websites linked the word failure to his website so it is not a political expression by google or its employees. Without going into much detail this mainly relates to some basic principles of the Google search logic and page ranking:

1. Links are essential to determine the rank/importance of a page
2. The page weight/importance (i.e. a university > personal website)
3. Topicality (How often a website is updated)
4. Other aspects related to web or blog content

Voice Option and Collective Action
Blogs and their links seem to play an increasingly important role as they are acting as millions of voters on webcontent or on various real world issues and events. In the desrcibed case this is a worldwide opposition on the policies of US President George Bush, probably mostly related to the war and occupation of Iraq. Drawing on Hirschman's (1970) work on exit, voice and loyality we can indeed identify this as a new and emerging form of use of the voice option. Furthermore, the movement itself is an example of collective action and social network building. "Google bombs" also strengthen Wellmans (1996) argument that computer networks help forming social networks. Links, comments and emails could replace Feinberg&Johnson's (1977, 1988, 1990) physical ("milling") form of consensus building among crowds. However, this has yet to be proven. The question remains how people globally agreed on the term and adding the link to their website/blog. Was it supported by media reports? Pitcher et al (1978) , McAdam (1983) argued that protest activity first catches regimes off guard, and thus diffuses because of its success, and then is brought under control by social and other control mechanisms.

This raises some interesting questions: What can the internet community achieve with this form of voice? How will governments react to such movements of altering the search results in an unfavorable way in the future as knowledge becomes more important? How will search engine providers react? The easiest way to approach this would be to influence or enforce rules on search engine vendors. Hence, we could ask whether search engine providers need to be kept as autonomous as central banks with respect to knowledge? Further questions on "Deconstructing Google bombs: A breach of symbolic power or just a goofy prank" are raised by Clifford Tautum.

Knowledge is one of the key challenges of the 21st century. Knowledge creation and knowledge transfer will become one of the key questions to resolve. Thus, I would like to raise the attention of researchers to this emerging trend.

Posted by Alexander Schellong at 12:12 AM | Comments (3)

18 November 2005

Sunbelt 2006

Note that the deadline for submission of abstracts to the Sunbelt conference is Jan 10. Sunbelt is the pre-eminent forum for presentation of research on social networks. This year it will be taking place April 25-30 in Vancouver.

Posted by David Lazer at 2:40 PM | Comments (0)

17 November 2005

Adapting to different social circles: Are people changing their online personality depending on the social context?

When it comes to social software, a myriad of platforms and websites sprang out of the ground during the last couple of years: The Social Networking Services Meta list shows 380 different social networking platforms, covering interest areas such as business networking, dating, friend networking, pet networking, photo sharing or face-to-face facilitating sites.

It seems as if all these content areas are targeting different user groups, therefore different social circles in which the users are active.

Even though, it might be that some of the circles have overlapping neighborhoods of actors, it is more likely, that people would chose different social networking platforms for different purposes: for example, A might probably want to connect to B for dating purposes on a different platform than the one he uses with C for business contacts.

This leads to my question: Are people changing their personality (or at least are they (inter)acting differently, displaying different kinds of information = showing a different face) on different platforms? If so, where are the differences and why are they occurring?

One way of analyzing these differences would be a) to conduct a self-study or b) to collect data on people that you know of who signed up for different platforms. What would be a robust way to analyze these differences?

Looking forward to your comments :)

Posted by Ines Mergel at 4:03 PM | Comments (7)

14 November 2005

Networked government

There is a recent and increasing literature on networks and government that makes a strong case that much of what government does actually involves a complex interlocking of government (and nongovernment) actors. A key question, as ideas around “networked government� are explored, is how to draw on the rich research vein on inter-organizational networks that currently exists, most/much of which focuses on the intersection of networks and markets (economic sociology)? In short, in what ways are intergovernmental networks different, in what ways are they the same? A few differences to begin with:

(1) Governmental entities often have a monopoly over their domain. Much of the economic sociology literature effectively relies on exit (the market) to make the network (pre-existing ties) powerful—I cease to do business with you because you behaved badly with me (relational embeddedness) or someone else I know (structural embeddedness).

(2) There is less flexibility to organizational boundaries—e.g., given high levels of interdependence and potential opportunism, in the market one firm can merge with another, which is often impossible in the governmental setting.

(3) There are often limits on exchange—e.g., often it is not possible for one agency to pay another to help it achieve its policy objectives.

See the slides from this talk, listen to the podcast or watch the Video (WMV 320x240).

Posted by David Lazer at 10:01 AM | Comments (2)