Making sense of Internet Platforms: Network Effects and Two Sided Markets

It seems like the quickest way to make a billion dollars at the moment is to create a successful internet platform. Companies like Facebook, eBay, Airbnb, Twitter and Paypal are platforms that have gone from obscurity to internet giants in a matter of years. So what are these platforms and how are they making so much money? A lot of starry-eyed tech entrepreneurs wax lyrical with theories that equate the technology revolution to a revolution in business and economics. But the typical way an internet platform makes profit is by acting as a two sided market, which is a type of business that existed long before the internet.

Two sided markets are naturally able to thrive at huge scales and platforms have been taking advantage of this, attaining unbelievable valuations. It is useful to view internet platforms through the lens of a two sided market because it explains the incentive structure of the platform and how the companies orient themselves in terms of product decisions. Continue reading

Wavelets 4 Dummies: Signal Processing, Fourier Transforms and Heisenberg

Wavelets have recently migrated from Maths to Engineering, with Information Engineers starting to explore the potential of this field in signal processing, data compression and noise reduction. What’s interesting about wavelets is that they are starting to undermine a staple mathematical technique in Engineering: the Fourier Transform. In doing this they are opening up a new way to make sense of signals, which is the bread and butter of Information Engineering. Continue reading

What are Fractals and why should I care?

Fractal geometry is a field of maths born in the 1970′s and mainly developed by Benoit Mandelbrot. If you’ve already heard of fractals, you’ve probably seen the picture below. It’s called the Mandelbrot Set and is an example of a fractal shape.

mandelbrot

The geometry that you learnt in school was about how to make shapes; fractal geometry is no different. While the shapes that you learnt in classical geometry were ‘smooth’, such as a circle or a triangle, the shapes that come out of fractal geometry are ‘rough’ and infinitely complex. However fractal geometry is still about making shapes, measuring shapes and defining shapes, just like school.

There are two reasons why you should care about fractal geometry: Continue reading

To lobby or not to lobby: How to economically decide whether you should manipulate your government

A company will lobby government in order to influence a decision that will effect them. This effect is usually economic, so the company will lobby in order to give themselves the best economic outcome. However there is a trade-off for the company: they can lobby government to benefit themselves economically, however lobbying costs money which isn’t economically beneficial. So when does a company decide to lobby or not? And how do they decide the amount of money to spend on lobbying? This blog post shall explore the question from an economic point of view. First it shall describe supply-demand, externalities and Pigovian tax, then it shall describe how a company can make a decision based on this framework. Continue reading

Principal Component Analysis 4 Dummies: Eigenvectors, Eigenvalues and Dimension Reduction

Having been in the social sciences for a couple of weeks it seems like a large amount of quantitative analysis relies on Principal Component Analysis (PCA). This is usually referred to in tandem with eigenvalues, eigenvectors and lots of numbers. So what’s going on? Is this just mathematical jargon to get the non-maths scholars to stop asking questions? Maybe, but it’s also a useful tool to use when you have to look at data. This post will give a very broad overview of PCA, describing eigenvectors and eigenvalues (which you need to know about to understand it) and showing how you can reduce the dimensions of data using PCA. As I said it’s a neat tool to use in information theory, and even though the maths is a bit complicated, you only need to get a broad idea of what’s going on to be able to use it effectively. Continue reading

DNA legislation: how the courts view your identity.

As part of a job application last month I wrote a draft blog post about DNA legislation. I thought I would put it here for posterity’s sake:

Last month the United States Supreme Court made a ruling that was in direct opposition to the European Court of Human Rights. The ruling, bought by the case ‘Maryland vs King’, was in regard to the collection of DNA of those in custody. It held that ‘taking and analyzing a cheek swab of the arrestee’s DNA is, like fingerprinting and photographing, a legitimate police booking procedure that is reasonable under the Fourth Amendment’. In contrast, the case ‘S and Marper v United Kingdom’, brought to the European Court of Human Rights in 2008, ruled that DNA collection of those in custody was in direct breach of Article 8 of the European Convention on Human Rights, which guarantees ‘the right to respect for his private and family life, his home and his correspondence’. In the ruling the

European Court said Article 8 ‘would be unacceptably weakened if the use of modern scientific techniques in the criminal justice system were allowed at any cost and without carefully balancing the potential benefits of the extensive use of such techniques against important private-life interests.  This disagreement between the courts highlights the ethical ambiguities that have arisen from the widespread adoption of DNA databases in the last 15 years.  Where should we draw the line between the state’s duty to maintain law and order and the individual’s right to privacy?

Continue reading

Data Compression: What it is and how it works

Data compression is used everywhere. Mp3, mp4, rar, zip, jpg and png files (along with many others) all use compressed data. Without data compression a 3 minute song would be over 100Mb and a 10 minute video would easily be over 1Gb. Data compression condenses large files into much smaller ones. It does this by getting rid of data that isn’t needed while retaining the information in the file.

Does that mean information is different to data? Yes. Lets take an example: I ask Bob who won the Arsenal game. He then launches into a 30 minute monologue about the match, detailing every pass, throw-in, tackle etc. Right at the end he tells me Arsenal won. I only wanted to know who won, so all the data Bob gave me about the game was useless. He could have compressed the data he sent into two words, ‘Arsenal won’, because that’s all the information I needed. Data compression works on the same principle. Continue reading