Showing posts with label markets. Show all posts
Showing posts with label markets. Show all posts

Sunday, September 4, 2011

Sociology of Information in the New York Times


Published: September 3, 2011
Why all the sharp swings in the stock market? To Robert J. Shiller, it’s a case of investors trying to guess what other investors are thinking....
Seeking not what is the case, but what others probably think is, or even what others think that others think is...
Published: September 2, 2011
When Rick Perry, the governor of Texas and a presidential hopeful, debates his rivals, his assertions on climate change, Social Security and health care could put him to the test....
Once it's out there, it's out there...
Published: August 29, 2011
The antisecrecy organization WikiLeaks published nearly 134,000 diplomatic cables, including many that name confidential sources....
Developing story -- a leak, a revelation, or just a mistake?  (See also previous posts on Wikileaks.)

Friday, April 22, 2011

Data Exhaust and Informational Efficiency

Heard an interesting talk by Paul Kedrosky a few weeks ago at PARC titled Data Exhaust, Ladders, and Search.

The gist of the talk is that human behaviors of all kinds leave traces which constitute latent datasets about that activity. Social scientists have long had a name for gathering this type of data: unobtrusive observation. Perhaps the most famous example is looking at carpet wear in a museum as a way of figuring out which exhibits captured the most visitor attention or garbology and related "trace measures used by anthropologist W. Rathje in the 70s and 80s.

One of Kedrosky's nicer examples was comparing aerial view of Wimbledon center court at the end of a recent tournament with one from the 1970s. The total disappearance of the net game from professional tennis was clearly visible in the wear patterns on the grass court.
In addition to a number of neat examples of using various techniques to capture "data exhaust" (indeed, he suggests, it's the entire principle behind google), he asks the question: What are the consequences of an instrumented planet? That is, a planet on which more and more data exhaust is captured and analyzed, permitting better decisions and more efficient choices.

In fact, one of the comments on Kedrosky's blog post about the talk (by one J Slack) suggests a continuing move toward "informational efficiency" -- with more and more instrumentation generating data and more and more connectivity, he suggests, "we'll be continuously approaching an asymptotic efficiency, though never quite getting there."

A standard definition of informational efficiency is "the speed and accuracy with which prices reflect new information" (TheFreeDictionary.com).  But there is some circularity here -- in this context it's only information if it does affect the price, otherwise it's mere noise.  And so we're still left with the challenge of sorting out the signal from the noise even after the data has been extracted from the exhaust.  And the more of everything the more of a job it is.

Bottom line: I think "data exhaust" is a great concept, but I don't think perfecting is capture and analysis gets you to a fully efficient use of information about the world (even asymptotically).  The second law of thermodynamics kicks in along the way for starters, but the boundedness of human cognition finishes the job.

Somebody is probably going to point out that evolution already does this.  But it takes big numbers and lots of time to do it and the result, though beautiful, is messy.

More to think about here, to be sure.

Friday, March 12, 2010

Regulating the Supply of Law

From the "Friends and Relatives of the Department" Files...
The ways that states regulate professions is a topic of sociological interest.  The degree to which citizens have access to legal services to solve legal problems is a topic of sociological interest. As argued previously on this blog("Equality, Information and the Courts Redux," "Democracy and the Information Order," "Courts and the Information Order," "Suing for Information"), the way the courts work is a topic of sociology of information interest. In this op-ed, these issues come together in a sociologically interesting way. You may recognize the author of the piece as my sometime co-author (and wife).
-- Dan.

A case for legal aid at Wal-Mart

By Gillian Hadfield
Friday, March 12, 2010

The United States stands largely alone in advanced-market democracies in drastically restricting where and how people can get help with their legal problems. In all states, under rules created by bar associations and state supreme courts, only people with law degrees and who are admitted to the state bar can provide legal advice and services of any kind. [Read More]

Monday, November 17, 2008

Information and Fairness

Insider trading is a classic example of the instrumental value of information and it reminds us of how markets are socially constructed (not in the sense that they are figments of the collective imagination but in the sense that they generally need the support of some social norms, rules, and laws in order to function well.)

The Times just reported (in "S.E.C. Accuses Mark Cuban of Insider Trading") that Mark Cuban, owner of the Dallas Mavericks, has been accused of selling all of his shares in a company a few hours after receiving confidential inside information suggesting the stock price would drop. At first glance it would appear that the "bottom line" is the monetary value of the information (that Cuban had but others did not), but consider how a source explained things, as quoted by the article's writer: "It is fundamentally unfair for someone to use access to nonpublic information to improperly gain an edge on the market." The "technical" reason for prohibiting insider trading is that markets can fail if people think others have private information, but this comment suggests that there's a social norm at work too: it's just not informationally fair.