Florian Bersier - Working Papers & Publications

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The Internet & Information Economics

Towards Better Policy and Practice using Real-Time Data, March 2010

Can Search Engines (SE) queries and Tweets help predict economic activity? Can Social Networking Services (SNS) help understand time use and help predict online activity? Clearly, those two questions address different issues, but both emphasize the use of (near) real-time data to refine and improve the comprehension of our Society. Indeed, in a fast changing world such as the one we live in, it appears more and more crucial for policy and practice to be aware of what is going on in the very present in view of proposing responsive and relevant solutions in the near future. One very innovative and promising way to achieve this is by using online real-time data. Real-time data denotes information that is delivered immediately after collection, meaning there is no delay or extremely small delay in the time-line of information provided. For example, thanks to the Twitter API , it is nowadays possible to easily gather data on what people are doing/thinking right now. Besides, tools like Google Trends provide a very simple way to collect hourly, daily or weekly data on the volume of queries related to various keywords. Now, those tools enable researchers to get a fantastic amount of data on an extremely large set of topics. For instance, an economist could use SE queries related to a specific industry (e.g. cars) in a specific part of the world (e.g. France) to refine his seasonal autoregressive model for this industry in this country. Similarly, it could be interesting to analyse SE queries and tweets making reference to ‘job interviews’ or to online job platforms such as ‘monster.com’ to help predict global and local unemployment rates. Finally, data gathering on the individuals’ online activity, that is, for example, the number of tweets and retweets per units of time (e.g. minutes) or the number of Facebook status updates per units of time could help understand when people are the most active online and, performed together with a contents’ semantic analysis, could help understand for what purpose. This short paper aims at proposing methods to enhance current policy and practice. The first section is interested in enhancing current forecasting methods for macroeconomic activity by taking into account real-time data. The second section proposes and discusses methods using real time data to examine the time use of individuals or groups of individuals. Finally, conclusion takes place in the last section.

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Cooperation and Trust in e-Research. Identification of a Pareto-Digital Paradox by Network Externalities, December 2009

One of the major challenges faced by electronic Research (e-Research hereafter) is the lack of collaboration or cooperation will among researchers. Up to now, the literature dealing with the topic has mainly explained the latter observation by emphasizing (i) the importance of physical or face-to-face communications to create trust and then collaboration among individuals (ii) the heterogeneity in ICT adoptions/skills among researchers and (iii) the prominence of an (old) academic `culture’ which tends to only consider or reward single accomplishments. This short piece of work aims at proposing another perspective on the issue by adopting an economic approach. Indeed, we argue that researchers invest in relationships/links with their peers by taking into account the externalities that could result from such links. To do so, we develop a model, in which players (i.e. researchers) agree (bilaterally) to create links in a first period (t=0) and have to make investment decisions regarding the maintenance of those links during the following periods (t >= 1). The benefits to collaborate are parametrized by the exchange of some non-rival information hold and earned by players, whereas the costs to maintain a research collaboration are captured by the play of a standard Prisoner’s Dilemma game and then depend on the cooperative behaviour of both players. After characterization of the efficient outcomes and equilibria of the game, we identify the existence of a paradox between the Pareto efficiency requirements and the equilibrium existence conditions implied by the architecture and features of electronic or digital networks. Indeed, we show that the only social efficient outcome existing for non-empty networks that induces collaborative behaviours is not sustainable (i.e. is not an equilibrium) in large networks such as the ones created by the Internet, where many researchers may be linked to many others (i.e. asymmetric architecture of the network). This essay proposes then to explain the lack of collaboration potentially observed in e-Research by the mismatch existing between the requirements needed to have cooperation as a social efficient outcome and the necessary structural conditions to fulfill in order to be in equilibrium.

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eTrust Determinants and Mechanisms, August 2009

The objective of this paper is to provide a theoretically grounded framework for trust in electronic environments, e-trust. Throughout the paper, e-trust is considered as the willingness of an electronic agent (i.e. the trustor) to rely on an electronic provider (i.e. the trustee), based on the belief in the capability of this e-provider to act dependably, securely, relevantly and reliably within a fastly moving but specified context. Thus, it is argued that e-trust is both ‘objectively’ and ‘subjectively’ determined. The ‘objective’ basis of trust rests on the online reputation of the trustee–reputation mechanisms being crucial to lower information asymmetry present in digital environments– whereas the ‘subjective’ ground of trust is parametrized by the electronic experience of the trustor. The paper introduces and uses models of reputation that stick to the diverse specificities of an online economy and that feature adverse selection and Bayesian updating processes to identify the different mechanisms in play.

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The Impacts of the Internet on the Financial Markets, March 2008

Technology and even more Information Technology (IT) always had an impact on financial markets. The paper starts by chronologically enumerating and describing the important different technological evolutions, from the Chappe’s telegraph to the actual Internet, which allowed changing the information flows’ features. This historical and descriptive approach allows understanding what the Internet really is, how it slots in the continuity of two centuries of innovation and how it is nowadays tending towards the unification of all the other modern ways of communication and all the media technologies. A same historical and descriptive approach is used to define and understand what financial markets are and why these ones are interested - since their early age - in every innovation allowing an improvement of information exchanges. This done, the principal impacts that the Internet implies for the Markets are identified and explained within a theoretical perspective (mainly an economic one); it is thus shown that the Internet dramatically facilitates information flows and communication between agents, allows more direct access for all agents to markets, democratizes the trading process, creates new services, products, interactions but destructs some others à la Schumpeter, globally enhances markets efficiency, increases the liquidity of financial exchanges, smoothes competitive frictions but intensifies competition, promotes a winner-takes-most world, countenances innovation and deeply changes the internal and external organization of financial markets. The author then decides to carry on the investigation with a more empirical approach or perspective, focusing in a first time his attentiveness on the impacts that the Internet can imply for each market participant, investor, issuer or intermediary. It is so observed that each category of actors benefits -often differently- from the use of the Internet. This new telecommunication technology empowers investors and leads to more investments than ever before; increase also largely explained by the adaptation of the financial intermediaries to the Internet and the creation of the online brokerage; as for issuers, they principally have the possibility to (geographically) expand their activities and to attract more investors than before. In a second time, an investigation of the capital markets is completed and permits to verify the previous conclusions and to confirm the financial markets’ actual tendency to go to a “non-physical” state-of-the-world. A particular focus is finally devoted to the e-Trading phenomenon, this financial revolution crystallizing in a certain way the information revolution due to the Internet. The study ends with a critical perspective, in which the main issues and challenges left by the Internet Information Revolution on financial markets are considered. The vagueness of the legislation, the privacy and security concerns, the overflow of information problem, the present and future development of the Web (Web 2.0 and Web 3.0) are thus discussed.

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The Economics of Online Advertising; An Overview, with M. Deleval (Google) & G. Moineville (Mines ParisTech), March 2008

Three main business models exist to monetize the Internet: access contribution (AOL, Orange), services directly paid online by each user (Meetic, Le Monde, Ebay), or get paid through advertising (Search Engines, Facebook...). Online advertising is related to the latter, which sees its importance growing sharply today. From the first simple banner sold in 1994 to the very elaborated products available now, this sector has shown a complex evolution. Today's actors integrate a wide range of services for web users and advertisers, and it is difficult to know in this dematerialized context who provides what. This study aims at providing a general description of the sector, historical backround and tools to analyse it further using strategy and economics. Very few data about actual revenues composition and market shares are available online, but we have tried to distinguish who were the biggest actors online, their relative position and their exact competences and rôles on the net. In the first part we describe the whole chain surrounding online advertising, the main actors at stake and the products menu. The second part zooms in on the providers of these products; it intends to provide a definition of the market and an analysis of its structure. The third mentions briefly other points that could be used to carry on this study, using game theory and information economics.

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Development Economics

Education in Rural India: Perspective from a North Indian Village, August 2008 [Awarded Paper]

Today, 72.2% of the Indian population lives in rural areas, that is, around 750 millions of people with respect to the 2001 Census. Although it is obvious that the Millennium Development Goals regarding education won’t be achieved in overall India and more especially in the rural segments of this country, one notes since more than two decades a strong and increasing willingness of the Indian government to improve the access to its schooling system, especially to its elementary education. This is achieved by a constantly growing mobilization of resources and the succession of important and original initiatives such as the Mid-Day meal Scheme, for instance. However, Indian society and even more rural Indian society are still heavily characterized by specific features such as castes, religion, gender asymmetries, household organization, and so on. The first aim of this paper is then to put in perspective the positive changes that are expected to have occurred in the rural-Indian primary education with respect to the main socio-cultural characteristics governing these rural communities; this over a 25 years period, by taking three ‘snapshots’ of the schooling situation in a North Indian village at three different points in time, 1983, 1993 and 2008. In a second time and following a large and growing literature which tends to show that government education policies are not the primary determinants of enrollment, one is interested in explaining the schooling decision as a household decision, taking again into account the main features that make a rural Indian household.