Nobel Prize

Let’s talk about Nobel Prize. Those who have won Nobel Prize are definitely the best of the best scholars ; however, I think for most of us, instead of focusing what this person has achieved to win the prize, we should focus on which field of study wins the prize and this is important because usually the field which wins the prize is the field which is most needed at the moment. Nobel chemistry prize this year was rewarded to lithium-ion battery scientists, the Physics prize was rewarded to astrophysicists, the economics prize for this year has not been announced but last year it was rewarded to environmental economists. We can see that these research fields are highly demanded and gain lots of attention now in our society, and the actual work that helped them win the prizes was done years before they won the prizes.

When we are looking at the Nobel Prize, it is not just telling us how much the scientists have achieved, more importantly it also tells which field is highly demanded for further research.

Extremism and Gap in Beliefs

Being extreme is never a good thing, but we are seeing many more extreme activists on streets. What pushes people to become extremists? Extreme activities generally create costs to the society. Due to extreme activities, the society needs to spend more policing, lots of inconvenience is caused and lives can be lost in most extreme cases. I think that it is fair to say, although we think many extremists are not rational, their activities still follow some certain strategies to help them achieve the goals they want. When they are conducting these extreme activities, they have costs as well and the only sensible reason for them to do so is that they believe something that they strongly oppose (or support) has an extraordinary cost (or benefit) to the society, giving up some private costs they put into extreme activities will help the society reduce the cost (or increase the benefit) and they will also gain from their extreme activities by “correcting the wrongdoing”.

Then we have two steps to tackle extremism. The first step is to study whether these extremists hold some reasonable thoughts. Although these extremists are highly likely to overweight their beliefs, it is possible for us to underestimate the importance of some issues to some degree (e.g. environment). If the society generally underestimate the importance, then it is our responsibility to correct our estimation. This may not satisfy the extremists, but it can help to reduce the degree of extremism. The second step is to correct the estimation of extremists. This is very difficult, but this is I think the key to eliminate extremism. 

In my opinion, the extremism is caused by the gap between the society belief and the extremists’ belief, once we are able to close this gap, we are able to eliminate extremism.

Pay for time

People always face time constraints; for example, when they are make purchases on Amazon, after a certain number of searches, they stop searching and make their purchase decisions. Although search may not have a monetary cost, the time spent on searching is another type of cost and time can be valued by money. How much money you are willing to receive in order to give up a given period of time is the money value you give to this particular period of time. Moreover, we can also measure the monetary value of time by how much money you are willing to pay for stopping waiting or getting a holiday.
Sometimes we voluntarily pay for an agent to help us to do something which is time consuming. For example, we sometimes choose to pay extra money to get our orders prioritised because we may need the order urgently (such as flying business class for a urgent business meeting, or paying for Amazon Prime). However, sometimes we are forced into a situation where we have to choose between time and money. It may be caused by accident.  For example, an unexpected disruption in train service may force us to choose more expensive travel option. However, sometimes it is caused by intentional behaviour. For example, London underground strike is powerful because it makes the people living in London very inconvenient and people (represented by the government) are forced to choose between spending more time on road and pay more to the underground workers.
 for time
People always face time constraints; for example, when they are make purchases on Amazon, after a certain number of searches, they stop searching and make their purchase decisions. Although search may not have a monetary cost, the time spent on searching is another type of cost and time can be valued by money. How much money you are willing to receive in order to give up a given period of time is the money value you give to this particular period of time. Moreover, we can also measure the monetary value of time by how much money you are willing to pay for stopping waiting or getting a holiday.
Sometimes we voluntarily pay for an agent to help us to do something which is time consuming. For example, we sometimes choose to pay extra money to get our orders prioritised because we may need the order urgently (such as flying business class for a urgent business meeting, or paying for Amazon Prime). However, sometimes we are forced into a situation where we have to choose between time and money. It may be caused by accident.  For example, an unexpected disruption in train service may force us to choose more expensive travel option. However, sometimes it is caused by intentional behaviour. For example, London underground strike is powerful because it makes the people living in London very inconvenient and people (represented by the government) are forced to choose between spending more time on road and pay more to the underground workers.

Notes: Digital Economics (Goldfarb & Tucker, 2019)

This is a literature review paper covering lots of information about digital economics and I would like to recommend anyone who is interested in digital businesses to read this paper. It is a literature review paper, so it is not packed with theoretical and statistical models and the language is very friendly to understand. Moreover, it just got published this year, so its content is very up-to-day.

Among the literature it covers, there are two topics which are the most interesting to me. One is how digital companies sell their products profitably and the other is why privacy is so important. How do digital companies sell their products profitably? This question is closely correlated to the issue of piracy and can be transferred into how digital companies fight piracy. The existing literature points out that bundling many products together can help to fight piracy and it can boost revenues, especially given customers have different prospects about products’ prices. And bundling thousands of products is only possible for large companies, and this significantly reduces competition. Relating to bundling, music subscription is an example of digital bundling. Although music subscription reduces piracy and boosts sales, it increases legal music consumption balance and eventually the firms providing music subscription service like Spotify do not generate huge profits.

The other answer is why people are valuing their privacy more and more. This is answered by the existing literature. When the market is not very competitive, firms can use the information collected from customers to exploit their customers, so customers tend to hide their information from firms. Therefore, we are valuing our privacy more and more shows some tech companies are gaining enormous market power which enables them to use the information collected from us to exploit us. This provides a solution for tech companies’ mishandling our private information, which is to increase the market competition.

Overall, this literature review paper includes lots of interesting topics studied by the existing literature about digital economics. It is a great paper that provides a picture about how the existing literature explores digital economics so far in the simplest and clearest way.

Software and hardware

The word “tech” has become a magic word that all kinds of businesses want to associate themselves with this word. To be a “tech”, many companies try to add more features to their products. Moreover, some companies also want their customers and investors to see them more innovative than their competitors, so they try to achieve higher frequencies of upgrading their products than their competitors. There are two approaches of upgrade, one is hardware upgrade, the other is software upgrade.
Both types of upgrade have their constraints. Hardware upgrade faces constraints from nature of materials. Hardware developers and researchers are not god’s, they cannot adjust the properties of materials given by the nature; therefore, after reaching some certain level, developers and researchers have to look for new materials to achieve better performance, and such process is cost and time consuming. On the other hand, software faces constraints from hardware. There is always an upper boundary created by hardware for what software is capable of. However, different industries may find one approach may be easier than the other. For example, how does Tesla makes itself distinguished from other  automakers? The answer is its software. Cars from other brands also have radars and cameras, but Tesla cars use their radars and cameras to enable the autopilot capability.
The importance of software is becoming more significant, especially when the development of hardware is slowing down. Software determines how we experience a product. Hardware determines the limit of a product; however, this limit may not be as limited as we including its maker believe due to our imagination. Better software can dig more potentials out of the hardware. For example, iPhone does not have the largest battery among smartphones, but it uses its operating system to achieve a longer battery life than many other smartphones with larger batteries.
Overall, when the development of hardware is slowing, it does not mean the rate of exploring what we can achieve by technology is slowing. The development in software is pushing hardware and exploring the hardware's capability that we never thought of.