Electronic Commerce

» Competitive Dynamics of Web Sites (PDF 480 K)
Sebastian M. Maurer and Bernardo A. Huberman (2000)
Competitive dynamics on the web unfold in surprising ways, leading to a sudden transition to winner-take-all markets.

Abstract

We present a dynamical model of web site growth in order to explore the effects of competition among web sites and to determine how they affect the nature of markets. We show that under general conditions, as the competition between sites increases, the model exhibits a sudden transition from a regime in which many sites thrive simultaneously, to a "winner take all market" in which a few sites grab almost all the users, while most other sites go nearly extinct. This prediction is in agreement with recent measurements on the nature of electronic markets.

» Enhancing Privacy and Trust in Electronic Communities (PDF 166K)
Bernardo A. Huberman, Matt Franklin and Tad Hogg (1999)
How do you keep privacy while using reputations to select recommendations?

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AUTHOR = "Bernardo A. Huberman, Matt Franklin and Tad Hogg",
TITLE = "Enhancing Privacy and Trust in Electronic Communities",
BOOKTITLE = "Proceedings of the ACM Conference on Electronic Commerce (EC99)",
PAGES = "78-86",
PUBLISHER = "ACM Press",
ADDRESS = "NY",
YEAR = "1999"}

Abstract

A major impediment to using recommendation systems and collective knowledge for electronic commerce is the reluctance of individuals to reveal preferences in order to find groups of people that share them. An equally important barrier to fluid electronic commerce is the lack of agreed upon trusted third parties. We propose new non-third party mechanisms to overcome these barriers. Our solutions facilitate finding shared preferences, discovering communities with shared values, removing disincentives posed by liabilities, and negotiating on behalf of a group. We adapt known techniques from the cryptographic literature to enable these new capabilities.

» The Economics of Surfing (PDF)
Eytan Adar and Bernardo A. Huberman (1999)
Information providers can exploit the differences in surfing behavior exhibited by web users.

Abstract

We have established that depending on the domain of inquiry, users display different and regular patterns of surfing. This difference can be exploited in order to benefit information providers. We propose mechanisms for implementing temporal discrimination in surfing by dynamically configuring sites and versioning information services.

» Restart Strategies and Internet Congestion (PDF 345K)
Sebastian M. Maurer and Bernardo A. Huberman (1999)
What happens to congestion when many users use a clever restart strategy?

Abstract

We recently presented a methodology to quantitatively reduce the average time and variance in the time required to execute electronic transactions in a network environment such as the Internet. In the language of portfolio theory, time to complete a transaction and its variance replace the expected return and risk associated with a security, whereas restart times replace combinations of securities. While such a strategy works well with single users, the question remains as to its usefulness when used by many. By using mean field arguments and agent-based simulations, we determine that a restart strategy remains advantageous even when everybody uses it.

Journal of Economic Dynamics & Control 25 (2001) 641-654

» The Nature of Markets in the World Wide Web (PDF 160K)
Lada A. Adamic and Bernardo A. Huberman (1999)
Quarterly Journal of Electronic Commerce, 1 (2000), p. 5-12. Markets in the World Wide Web display winner-take-all characteristics.

Abstract

We studied the statistics in the number of visitors to sites of the World Wide Web by examining usage logs covering one hundred and twenty thousand sites. We found out that both in the case of all sites and sites in specific categories, the distribution of visitors per site follows a universal power law, characteristic of winner-take-all markets. We developed a dynamical theory of site popularity which takes into account the stochastic nature of user decisions to visit given sites as well as the fact that newer sites are appearing at an ever increasing rate. The model accounts for the observed power law behavior and naturally provides the amplification factor responsible for the increased performance of the top performers.

» An Economics Approach to Hard Computational Problems (log on required, subscribers only)
B. A. Huberman, R. M. Lukose and T. Hogg (1997)
A novel methodology, based on notions of risk in economics, for creating computational portfolios that can be effective in the solution of hard problems.

@ARTICLE {,
AUTHOR = " Bernardo A. Huberman and Rajan M. Lukose and Tad Hogg",
TITLE = "An Economics Approach to Hard Computational Problems",
JOURNAL = "Science",
VOLUME = "275",
PAGES = "51-54",
MONTH = "January 3",
YEAR = "1997"}
See also the Research News Story, "Hedging Bets on Hard Problems" on page 31.

Abstract

A general method for combining existing algorithms into new programs that are unequivocally preferable to any of the component algorithms is presented. This method, based on notions of risk in economics, offers a computational portfolio design procedure that can be used for a wide range of problems. Tested by solving a canonical NP-complete problem, the method can be used for problems ranging from the combinatorics of DNA sequencing to the completion of tasks in environments with resource contention, such as the World Wide Web.

Available through Science-on-Line.

» A Methodology for Managing Risk in Electronic Transactions over the Internet (postcript 488K)
Rajan M. Lukose and Bernardo A. Huberman (1997)
Modern portfolio theory can be used to help manage electronic transactions over the Internet

Abstract

The explosive growth of the Internet has made possible an economic transformation in which commerce will become largely electronic. In this vision, the medium of communication and negotiation becomes a distributed network of computers equipped with robust, secure and trusted cash mechanisms. It is thus of paramount importance to design mechanisms that will ensure timely and reliable transactions in cyberspace. In this paper we present a methodology for quantitatively managing the risk and cost of executing transactions in a distributed network environment, and illustrate it with several concrete examples under different pricing schemes.