Microsoft powerpoint - ppt0000002 [read-only]

What do we mean by ‘social networks’?  ‘Real world’ networks of friends, families, How does clapping evolve at the end of a  people differ in their degree of enthusiasm for the  but we all hear what others are doing  may look bad to stop when everyone else is still  but few people want to be the last one to stop Typical time path of sound intensity of applause How does volatility in financial markets  traders differ in their enthusiasm for the prospects of a  but they all see what others are doing  it may be bad to stop buying when everyone else is  but it may be just as bad to stop selling when everyone  Essentially based on a view that decisions are made rationally by people,  Agents respond to incentives, and incentives are in turn mainly based on  Not without some success, but limited in what it can actually achieve  Behavioural economics is essentially a smarter and  But it is still based on the idea of ‘agents’ deciding in  Networks recognise that agents can be influenced  A wide variety of behavioural motives for this, but for shorthand description, call this ‘copying’  Can magnify the effect of any initial change caused by  Network structure becomes an additional policy instrument; different types of structure are more/less resistant to ‘cascades’ of value change  But can also offset the effect of any initial change  And may increase the uncertainty of any change in  Salganik, Dodds, Watts, ‘Experimental study of inequality and unpredictability in an artificial cultural market’, Science, 2006  Students downloaded previously unknown songs either with or without knowledge of previous participants' choices Number of downloads of each of the 48 songs Downloads relative to the normalised mean of 100 Number of downloads of each of the 48 songs Downloads relative to the normalised mean of 100  Successful policy making is very difficult  The first step to better policy making is better understanding  A key reason for many failures is the failure to recognise that networks, values, are a key driving factor

Source: http://www.paulormerod.com/wp-content/uploads/2012/06/Networks-Values-and-Public-Policy-in-the-21st-Century.pdf