Talk:Lecture 2

Lecture 2 Discussion

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Open Source Impact On Research

I was wondering what sort of impact the open source movement had on research and development in the IT world? It seems to me that the IT culture of sharing tools and resources in an "open" environment may be a factor of increasing technology advances even with little money spent on Research and Development. I would think this would not be the case with other industries; perhaps because other industries can’t produce these tools at “zero cost”. I understand that many "open source" projects have been funded by industry, and university alike, but it is also my perception, maybe it is a misperception that a large number of private individuals contribute to the open source community. It would be interesting to see information to prove or disprove this theory, and to see in the future if the open source culture will continue to grow or if it will give way to perhaps a more standard economic model.

Are you considering pieces of open-source software to be "technology advances" themselves, or are you focusing on how open-source tools and libraries make it easier to write new software? Are you using "technology advance" in a narrow sense that includes only clever things like rsync and bayesian spam filtering, or does any improvement over competing software constitute a technology advance? I believe that proprietary, hidden-source software is a more recent phenomenon than open-source software. By the way, I am one of those "private individuals" who contributes to open-source software (specifically, Mozilla and Firefox). --Jesse Ruderman

SMM: We'll try to get to this stuff on Open Source night. For now, it's interesting to note that many goods -- like drugs -- have substantial information content, so the OS game ought to work almost as well in other places. To some extent it does, only we fail to notice. See the Eric Von Hippel reading. But it's also worth thinking about how to stretch the model. Why individuals participate is a great empirical question, you might want to think about this as a paper topic. It's true that open software is older, but that was natural since it grew up in a government labs/university world.

Not sure about the distinction you're making on technology. There's an interesting question whether OS needs some buggy program as a nucleus to get started with. In that sense, it might be less fundamental. For most purposes, I'd say "an advance is an advance." If OS does any kind of advance well, that's good to know!

Matching royalties instead of fixed subsidies

In lecture, we saw how subsidies supplementing patent royalties can cause desirable research to happen. The research is desirable because v - c > 0, but it doesn't happen without help because πv - c < 0. (π is the fraction of value that the patent holder can receive in royalties.) As we can see from the graphs on page 3 of the slides, subsidies fund some useless projects (v - c < 0) unless the funder requires matching payments, and more importantly, subsidies fail to fund some expensive research where v - c is small but positive. I have an idea that seems to solve both of these problems: promise to match patent royalties paid by other companies at a fixed ratio. If the funder estimates π correctly and chooses the ratio m such that (1+m)π = 1, then projects will procede when and only when v - c > 0. --Jesse Ruderman

Avichal 14:39, 8 Oct 2004 (PDT) I found this idea quite interesting. Now I confess, I'm in IT, and my knowledge about Economy is shaky at best. But the idea seems intriguing, ofcourse there is the standard problem of observability - apart from judging that (v - c)>0, sponsor would also have to judge π. And there is the problem from the innovator side, that since the matching occurs 'ex post', there has to be significant assurance that the sponsor would not renege.

Avichal 08:07, 9 Oct 2004 (PDT) After thinking a bit further on this, I think I see one problem. How will the price be determined? And price and π are inter-related.

The incentive mechanism draws away the natural forces in the market which self-regulate it. If I hold a patent on , say a business process. I wouldn't sell it for too high, since very few people would buy it. I wouldn't sell it for too low since I would not make enough profit. However if I am going to be incented based on π then I may not care, and I may set the price really high. Since I know I will be incented by the sponsor instead.

Maybe this is simply a long way of stating that it is difficult to observe, and decide these values (π, v - c) 'ex ante'. But still since the incentive mechanism may affect the price and hence π, it may make it overly difficult for it to be adopted.

WA State education and Classification of Research

Avichal 14:54, 8 Oct 2004 (PDT) I browsed through the slides which we could not cover (and I would encourage others to do so, if they haven't already), and the data presented about the state of education in WA state was alarming, to say the least. Actually, I must say, the tone of the whole lecture was a bit like a 'prophecy of doom'. But really if you look at the statistics, you do wonder, "How the hell have we managed to stay afloat so far?"

Coming back to WA state, the data basically shows that we have been importing talent from elsewhere to fill the jobs created in WA state (uh..thanks Microsoft for doing that almost single-handedly).

To jump on another topic, we discussed how research in DARPA Cyber Security research being classified and it's impacts. Now I don't remember the source (uh..my fading memory :-)), probably in the Asprey book, but there was something about Non-residents not being able to work on federally-funded university research projects (presumably the ones related to specific fields). Well, I think that would be catastrophic - given what I just learnt from the last slide (#113) that "roughly half of the Ph.D.s in engineering and computer science were awarded to non-residents"