nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2019‒04‒01
eight papers chosen by
Walter Frisch
Universität Wien

  1. The European framework for regulating telecommunications: a 25-year appraisal By Cave, Martin; Genakos, Christos; Valletti, Tommaso
  2. Externalities in knowledge production: Evidence from a randomized field experiment By Hinnosaar, Marit; Hinnosaar, Toomas; Kummer, Michael; Slivko, Olga
  3. The Economics of Social Data By Dirk Bergemann; Alessandro Bonatti
  4. Innovative Events By Max Nathan; Anna Rosso
  5. Migration and the Value of Social Networks By Blumenstock, Joshua; Chi, Guanghua; Tan, Xu
  6. Corporate Capture of Blockchain Governance By Daniel Ferreira; Jin Li; Radoslawa Nikolowa
  7. Stress Testing Networks: The Case of Central Counterparties By Berner, Richard; Cecchetti, Stephen G; Schoenholtz, Kermit
  8. Memory and Representativeness By Pedro Bordalo; Katherine Coffman; Nicola Gennaioli; Frederik Schwerter; Andrei Shleifer

  1. By: Cave, Martin; Genakos, Christos; Valletti, Tommaso
    Abstract: The European telecommunications sector has been radically transformed in the past 25 years: from a group of state monopolies to a set of increasingly competitive markets. In this paper we summarize how this process has unfolded—for both fixed and mobile telecommunications—by focusing on the evolution of the regulatory framework and by drawing some parallels with the evolution of the sector in the US. Given the major strategic importance of the sector, we highlight some of the challenges that lie ahead.
    Keywords: European Union; Fixed and mobile telecommunication networks; Institutional design; Telecommunications regulation
    JEL: L43 L50 L96 O52
    Date: 2019–02–26
  2. By: Hinnosaar, Marit; Hinnosaar, Toomas; Kummer, Michael; Slivko, Olga
    Abstract: Do contributions to online content platforms induce a feedback loop of ever more user-generated content or will they discourage future contributions? To assess this, we use a randomized field experiment which added content to some pages in Wikipedia while leaving similar pages unchanged. We find that adding content has a negligible impact on the subsequent long-run growth of content. Our results have implications for information seeding and incentivizing contributions, implying that additional content does not generate sizable externalities, neither by inspiring nor by discouraging future contributions.
    Keywords: knowledge accumulation,user-generated content,Wikipedia
    JEL: C93 L17 L86
    Date: 2019
  3. By: Dirk Bergemann (Cowles Foundation, Yale University); Alessandro Bonatti (MIT)
    Abstract: Large internet platforms collect data from individual users in almost every interaction on the internet. Whenever an individual browses a news website, searches for a medical term or for a travel recommendation, or simply checks the weather forecast on an app, that individual generates data. A central feature of the data collected from the individuals is its social aspect. Namely, the data captured from an individual user is not only informative about this speci?c individual, but also about users in some metric similar to the individual. Thus, the individual data is really social data. The social nature of the data generates an informational externality that we investigate in this note.
    Keywords: Individual Data, Social Data, Informational Externality, Internet Platforms, Data Collection, Data Markup
    JEL: D80 D82 D83
    Date: 2019–03
  4. By: Max Nathan; Anna Rosso
    Abstract: We take a fresh look at firms' innovation-productivity linkages, using novel data capturing new aspects of innovative activity. We combine UK administrative microdata, media and website content to develop experimental metrics - new product/service launches - for a large panel of SMEs. Extensive validation and descriptive exercises show that launches complement patents, trademarks and innovation surveys. We also establish connections between launches and previous innovative activity. We then link IP, launches and productivity, controlling for media exposure and firm heterogeneity. Launch activity is associated with higher SME productivity, especially in the service sector. High-quality launches and medium-size firms help drive this result.
    Keywords: innovation, productivity, ICT, data science
    JEL: L86
    Date: 2019–03
  5. By: Blumenstock, Joshua; Chi, Guanghua; Tan, Xu
    Abstract: What is the value of a social network? Prior work suggests two distinct mechanisms that have historically been difficult to differentiate: as a conduit of information, and as a source of social and economic support. We use a rich 'digital trace' dataset to link the migration decisions of millions of individuals to the topological structure of their social networks. We find that migrants systematically prefer 'interconnected' networks (where friends have common friends) to 'expansive' networks (where friends are well connected). A micro-founded model of network-based social capital helps explain this preference: migrants derive more utility from networks that are structured to facilitate social support than from networks that efficiently transmit information.
    Keywords: Big Data; Development; migration; networks; social capital; Social Networks
    JEL: D85 O12 O15 R23 Z13
    Date: 2019–03
  6. By: Daniel Ferreira (London School of Economics, CEPR and ECGI); Jin Li (Hong Kong University, CEP); Radoslawa Nikolowa (Queen Mary University of London)
    Abstract: We develop a theory of blockchain governance. In our model, the proof-of-work system, which is the most common set of rules for validating transactions in blockchains, creates an industrial ecosystem with specialized suppliers of goods and services. We analyze the two-way interactions between blockchain governance and the market structure of the industries in the blockchain ecosystem. Our main result is that the proof-of-work system leads to a situation where the governance of the blockchain is captured by a large firm.
    Keywords: Governance, Blockchain, Proof-of-Work, Industrial Ecosystem
    JEL: G30 L13 M20
    Date: 2019–01–22
  7. By: Berner, Richard; Cecchetti, Stephen G; Schoenholtz, Kermit
    Abstract: Stress tests applied to individual institutions are an important tool for evaluating financial resilience. However, financial systems are typically complex, heterogeneous and rapidly changing, raising questions about the adequacy of conventional tests. In this paper, we interpret the current stress test practice from a network perspective, highlighting central counterparties (CCPs) as an example of a critical network hub. Networks that include CCPs involve deep and broad interconnections, making stress testing a challenging task. We propose supplementing both private and supervisory CCP stress tests with a high-frequency indicator constructed from a market-based estimate of the conditional capital shortfall (SRISK) of the CCP's clearing members. Applying our measure to two large CCPs, we analyze how they can transmit and amplify shocks across borders, conditional on the exhaustion of prefunded resources. Our results highlight how the network created by central clearing can act as an important transmission mechanism for shocks emanating from Europe.
    Keywords: CCP; central counterparties; financial network; financial regulation; Financial Stability; Resolution; SRISK; Stress Testing
    JEL: G18 G23 G28 G32
    Date: 2019–03
  8. By: Pedro Bordalo; Katherine Coffman; Nicola Gennaioli; Frederik Schwerter; Andrei Shleifer
    Abstract: We explore the idea that judgment by representativeness reflects the workings of episodic memory, especially interference. In a new laboratory experiment on cued recall, participants are shown two groups of images with different distributions of colors. We find that i) decreasing the frequency of a given color in one group significantly increases the recalled frequency of that color in the other group, ii) for a fixed set of images, different cues for the same objective distribution entail different interference patterns and different probabilistic assessments. Selective retrieval and interference may offer a foundation for the representativeness heuristic, but more generally for understanding the formation of probability judgments from experienced statistical associations.
    JEL: D03 D81 D83
    Date: 2019–03

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