The growth of Internet price search tools, notably shopbots, has reduced consumers' search costs,... more The growth of Internet price search tools, notably shopbots, has reduced consumers' search costs, allowing consumers to easily become informed of price and product characteristics among competing sellers online. While a variety of analytic models predict that increased consumer search through shopbots will lower price levels among competing retailers, there is no consensus in the empirical literature as to whether price dispersion will increase or decrease in response to increased consumer search through shopbots. Moreover, there are no papers that have analyzed this question using direct observation of variation in shopbot use over time.
37th Annual Hawaii International Conference on System Sciences, 2004. Proceedings of the, 2004
Peer-to-Peer networking is gaining popularity as a architecture for sharing information goods and... more Peer-to-Peer networking is gaining popularity as a architecture for sharing information goods and other computing resources. However, these networks suffer from a high level of free-riding, whereby some users consume network resources without providing any network resources. The high levels of free-riding observed by several recent studies have led some to suggest the imminent collapse of these communities as a viable information sharing mechanism.
2011 44th Hawaii International Conference on System Sciences, 2011
Abstract Peer influence in social networks has been studied for over four decades by social scien... more Abstract Peer influence in social networks has been studied for over four decades by social scientists and marketing researchers. Due to recent growth of internet technologies and online social networks, research on peer influence has gained even more attention over ...
Price dispersion among commodity goods is typically attributed to consumer search costs. We explo... more Price dispersion among commodity goods is typically attributed to consumer search costs. We explore the magnitude of consumer search costs using a data set obtained from a major Internet shopbot. For the median consumer, the benefits to searching lower screens are $2.24 while the cost of an exhaustive search of the offers is a maximum of $2.03. Interestingly, in our setting, consumers who search more intensively are less price sensitive than other consumers, reflecting their increased weight on retailer differentiation in ...
The creative industries have frequently expressed concern that they can't compete with freely ava... more The creative industries have frequently expressed concern that they can't compete with freely available copies of their content. Competing with free is particularly concerning for movie studios, whose content may be more prone to single-use consumption than other industries such as music. This issue has gained renewed importance recently with the advent of new digital video recording technologies, new digital distribution channels, and Internet piracy.
Peer-to-peer networks have emerged as a popular alternative to traditional client-server architec... more Peer-to-peer networks have emerged as a popular alternative to traditional client-server architectures for the distribution of information goods. Recent academic studies have observed high levels of free-riding in various peer-to-peer networks, leading some to suggest the imminent collapse of these communities as a viable information sharing mechanism. Our research develops an analytic model to analyze the behavior of P2P networks in the presence of free-riding. In contrast to previous predictions we find that P2P networks can operate effectively in the presence of significant free-riding. In future work we plan to explore how much peerto-peer network performance could be improved if free-riding were eliminated and discuss both the costs and benefits of managerial mechanisms to limit free-riding.
37th Annual Hawaii International Conference on System Sciences, 2004. Proceedings of the, 2004
Content Delivery Networks (CDNs) intelligently cache content on behalf of content providers and d... more Content Delivery Networks (CDNs) intelligently cache content on behalf of content providers and deliver this content to end users. New services have been rolled out recently by CDNs that enable content providers to deliver entire web sites from the distributed CDN servers. Using analytical models, we address the optimal pricing of these services.
Online product review networks play an important role in Internet commerce by transmitting inform... more Online product review networks play an important role in Internet commerce by transmitting information that customers can use to evaluate products in digital marketplace. These networks frequently include an explicit social component allowing consumers to view both how community members have rated individual product reviews and the social status of individual reviewers. We extend this prior work by analyzing how these social factors impact consumer responses to disaggregate review information. To do this, we use a new dataset that allows us to control for the degree to which other community members found the review helpful, and the reputation of the reviewer in the community.
Peer-to-peer (P2P) services allow users to share networked resources, notably bandwidth and conte... more Peer-to-peer (P2P) services allow users to share networked resources, notably bandwidth and content, from the edges of the network. These services have been popularized because of file sharing -particularly the sharing of unlicensed copyrighted files. Concerns about such P2P file sharing were highlighted by content owners' recent lawsuits against individual users and P2P network operators.
Internet shopbots compare prices and service levels at competing retailers, creating a laboratory... more Internet shopbots compare prices and service levels at competing retailers, creating a laboratory for analysing consumer choice. We analyse 20,268 shopbot consumers who select various books from 33 retailers over 69 days. Although each retailer o¡ers a homogeneous product, we ¢nd that brand is an important determinant of consumer choice. The three most heavily branded retailers hold a $1.72 price advantage over more generic retailers in head-to-head price comparisons. In particular, we ¢nd that consumers use brand as a proxy for retailer credibility in non-contractible aspects of the product and service bundle, such as shipping reliability.
Internet shopbots allow consumers to almost instantly compare prices and other characteristics fr... more Internet shopbots allow consumers to almost instantly compare prices and other characteristics from dozens of sellers via a single website. We estimate the magnitude of consumer search costs and benefits using data from a major shopbot for books. For the median consumer, the estimated benefit from simply scrolling down to search lower screens is $6.55. This amounts to about 60% of the observed price dispersion and suggests that consumers face significant search costs, even in this "nearly-perfect" market. Price elasticities are relatively high compared to offline markets (-7 to -10 in our base model). Furthermore, contrary to the common assumption, search intensity is not correlated with greater price sensitivity. Instead, consumers who search multiple screens put relatively more weight on non-price factors like brand.
T here have been many claims that the Internet represents a new nearly "frictionless market." Our... more T here have been many claims that the Internet represents a new nearly "frictionless market." Our research empirically analyzes the characteristics of the Internet as a channel for two categories of homogeneous products-books and CDs. Using a data set of over 8,500 price observations collected over a period of 15 months, we compare pricing behavior at 41 Internet and conventional retail outlets.
Personalization is a key component of an interactive marketing strategy. Its purpose is to adapt ... more Personalization is a key component of an interactive marketing strategy. Its purpose is to adapt a standardized product or service to an individual customer's needs. The goal is to create profit for the producer and increased value for the consumer. This goal fits nicely into traditional notions of segmentation. Applications of personalization have advanced greatly in conjunction with the Internet, since it provides an environment that is information rich and well suited to interactivity. This article reviews past research on personalization and considers some examples of personalization in practice. We discuss what we believe are key problems and directions for personalization in the future.
Information technology-enabled exchanges have enhanced the viability of a variety of secondary ma... more Information technology-enabled exchanges have enhanced the viability of a variety of secondary markets, notably markets for used books. Electronic used book exchanges, in particular, offer a wider selection, lower search costs, and significantly lower prices than physical used bookstores do. The increased viability of these used book markets has caused concern among groups such as the Book Publishers Association and Author's Guild who believe that used book markets will significantly cannibalize new book sales. This proposition, while theoretically possible, is based on speculation as opposed to empirical evidence. In this research, we use a unique dataset collected from Amazon.com's new and used marketplaces to estimate the impact of IT-enabled used book markets on new book sales. We use these data to calculate the impact of these secondary market exchanges on consumer and publisher welfare by calculating the cross-price elasticity of new books sales with respect to used book prices.
Peer-to-peer file sharing networks are becoming an important medium for the distribution of infor... more Peer-to-peer file sharing networks are becoming an important medium for the distribution of information goods. However, there is little academic research into the optimal design of these networks under real-world conditions. Our research represents an initial effort to analyze the impact of positive and negative network externalities on the optimal size of these P2P networks. Our analysis uses a unique dataset collected from the six most popular OpenNap peer-to-peer networks between December 19, 2000 and April 22, 2001. We find that users contribute value to the network in terms of additional content and additional replicas of content at a diminishing rate, while they impose costs on the network in terms of congestion on shared resources at an increasing rate. Together these results suggest that the optimal size of peer-to-peer networks is bounded -at some point the costs a marginal user imposes on the network will exceed the value they provide.
Proceedings of First Workshop on Economics of P2P, Jun 5, 2003
While attention has been paid in the computer science literature to improving efficiency of searc... more While attention has been paid in the computer science literature to improving efficiency of search algorithms in P2P networks, little attention has been paid to 1) economic incentives that guide users to share content, 2) content-based measures of similarity of interests among users, and 3) cost implications of physical location of peers on the underlying network. Our work draws on ideas from the economics literature of club goods and the information retrieval literature to propose next generation P2P file sharing architectures that rely on content-based, self organizing communities of peers to address these issues. Using the model of ultrapeers and leaf nodes in Gnutella v0.6 architecture as context, we conceptualize an ultrapeer and its network of leaf nodes as a club (in Economic terms). We specify a simple utility-based model for a peer to determine which "clubs" to join, for clubs to manage their membership, and for "clubs" to determine to which other clubs they should be connected. We simulate performance of these models using unique real world dataset collected from the Gnutella v0.6 network. Our preliminary simulations demonstrate that our enhancements result in at least 300% improvement in ultrapeers' ability to satisfy their leaf node's queries, thereby significantly decreasing congestion on the network and enabling more efficient and effective file sharing architectures.
Abstract: Shopbots are computer agents that aid consumers by comparing prices across online store... more Abstract: Shopbots are computer agents that aid consumers by comparing prices across online stores. A consumer visits a shopbot web site, inputs a product to search for, such as a book, and then the shopbot automatically queries available online stores, and tabulates and presents the results to the consumer. Consumers consider a subset of these stores by clicking upon a hyperlink displayed with the offer. This evoked consideration set is important to shopbot owners because shopbot owners are generally compensated directly for ...
The growth of Internet price search tools, notably shopbots, has reduced consumers' search costs,... more The growth of Internet price search tools, notably shopbots, has reduced consumers' search costs, allowing consumers to easily become informed of price and product characteristics among competing sellers online. While a variety of analytic models predict that increased consumer search through shopbots will lower price levels among competing retailers, there is no consensus in the empirical literature as to whether price dispersion will increase or decrease in response to increased consumer search through shopbots. Moreover, there are no papers that have analyzed this question using direct observation of variation in shopbot use over time.
The growth of Internet price search tools, notably shopbots, has reduced consumers' search costs,... more The growth of Internet price search tools, notably shopbots, has reduced consumers' search costs, allowing consumers to easily become informed of price and product characteristics among competing sellers online. While a variety of analytic models predict that increased consumer search through shopbots will lower price levels among competing retailers, there is no consensus in the empirical literature as to whether price dispersion will increase or decrease in response to increased consumer search through shopbots. Moreover, there are no papers that have analyzed this question using direct observation of variation in shopbot use over time.
37th Annual Hawaii International Conference on System Sciences, 2004. Proceedings of the, 2004
Peer-to-Peer networking is gaining popularity as a architecture for sharing information goods and... more Peer-to-Peer networking is gaining popularity as a architecture for sharing information goods and other computing resources. However, these networks suffer from a high level of free-riding, whereby some users consume network resources without providing any network resources. The high levels of free-riding observed by several recent studies have led some to suggest the imminent collapse of these communities as a viable information sharing mechanism.
2011 44th Hawaii International Conference on System Sciences, 2011
Abstract Peer influence in social networks has been studied for over four decades by social scien... more Abstract Peer influence in social networks has been studied for over four decades by social scientists and marketing researchers. Due to recent growth of internet technologies and online social networks, research on peer influence has gained even more attention over ...
Price dispersion among commodity goods is typically attributed to consumer search costs. We explo... more Price dispersion among commodity goods is typically attributed to consumer search costs. We explore the magnitude of consumer search costs using a data set obtained from a major Internet shopbot. For the median consumer, the benefits to searching lower screens are $2.24 while the cost of an exhaustive search of the offers is a maximum of $2.03. Interestingly, in our setting, consumers who search more intensively are less price sensitive than other consumers, reflecting their increased weight on retailer differentiation in ...
The creative industries have frequently expressed concern that they can't compete with freely ava... more The creative industries have frequently expressed concern that they can't compete with freely available copies of their content. Competing with free is particularly concerning for movie studios, whose content may be more prone to single-use consumption than other industries such as music. This issue has gained renewed importance recently with the advent of new digital video recording technologies, new digital distribution channels, and Internet piracy.
Peer-to-peer networks have emerged as a popular alternative to traditional client-server architec... more Peer-to-peer networks have emerged as a popular alternative to traditional client-server architectures for the distribution of information goods. Recent academic studies have observed high levels of free-riding in various peer-to-peer networks, leading some to suggest the imminent collapse of these communities as a viable information sharing mechanism. Our research develops an analytic model to analyze the behavior of P2P networks in the presence of free-riding. In contrast to previous predictions we find that P2P networks can operate effectively in the presence of significant free-riding. In future work we plan to explore how much peerto-peer network performance could be improved if free-riding were eliminated and discuss both the costs and benefits of managerial mechanisms to limit free-riding.
37th Annual Hawaii International Conference on System Sciences, 2004. Proceedings of the, 2004
Content Delivery Networks (CDNs) intelligently cache content on behalf of content providers and d... more Content Delivery Networks (CDNs) intelligently cache content on behalf of content providers and deliver this content to end users. New services have been rolled out recently by CDNs that enable content providers to deliver entire web sites from the distributed CDN servers. Using analytical models, we address the optimal pricing of these services.
Online product review networks play an important role in Internet commerce by transmitting inform... more Online product review networks play an important role in Internet commerce by transmitting information that customers can use to evaluate products in digital marketplace. These networks frequently include an explicit social component allowing consumers to view both how community members have rated individual product reviews and the social status of individual reviewers. We extend this prior work by analyzing how these social factors impact consumer responses to disaggregate review information. To do this, we use a new dataset that allows us to control for the degree to which other community members found the review helpful, and the reputation of the reviewer in the community.
Peer-to-peer (P2P) services allow users to share networked resources, notably bandwidth and conte... more Peer-to-peer (P2P) services allow users to share networked resources, notably bandwidth and content, from the edges of the network. These services have been popularized because of file sharing -particularly the sharing of unlicensed copyrighted files. Concerns about such P2P file sharing were highlighted by content owners' recent lawsuits against individual users and P2P network operators.
Internet shopbots compare prices and service levels at competing retailers, creating a laboratory... more Internet shopbots compare prices and service levels at competing retailers, creating a laboratory for analysing consumer choice. We analyse 20,268 shopbot consumers who select various books from 33 retailers over 69 days. Although each retailer o¡ers a homogeneous product, we ¢nd that brand is an important determinant of consumer choice. The three most heavily branded retailers hold a $1.72 price advantage over more generic retailers in head-to-head price comparisons. In particular, we ¢nd that consumers use brand as a proxy for retailer credibility in non-contractible aspects of the product and service bundle, such as shipping reliability.
Internet shopbots allow consumers to almost instantly compare prices and other characteristics fr... more Internet shopbots allow consumers to almost instantly compare prices and other characteristics from dozens of sellers via a single website. We estimate the magnitude of consumer search costs and benefits using data from a major shopbot for books. For the median consumer, the estimated benefit from simply scrolling down to search lower screens is $6.55. This amounts to about 60% of the observed price dispersion and suggests that consumers face significant search costs, even in this "nearly-perfect" market. Price elasticities are relatively high compared to offline markets (-7 to -10 in our base model). Furthermore, contrary to the common assumption, search intensity is not correlated with greater price sensitivity. Instead, consumers who search multiple screens put relatively more weight on non-price factors like brand.
T here have been many claims that the Internet represents a new nearly "frictionless market." Our... more T here have been many claims that the Internet represents a new nearly "frictionless market." Our research empirically analyzes the characteristics of the Internet as a channel for two categories of homogeneous products-books and CDs. Using a data set of over 8,500 price observations collected over a period of 15 months, we compare pricing behavior at 41 Internet and conventional retail outlets.
Personalization is a key component of an interactive marketing strategy. Its purpose is to adapt ... more Personalization is a key component of an interactive marketing strategy. Its purpose is to adapt a standardized product or service to an individual customer's needs. The goal is to create profit for the producer and increased value for the consumer. This goal fits nicely into traditional notions of segmentation. Applications of personalization have advanced greatly in conjunction with the Internet, since it provides an environment that is information rich and well suited to interactivity. This article reviews past research on personalization and considers some examples of personalization in practice. We discuss what we believe are key problems and directions for personalization in the future.
Information technology-enabled exchanges have enhanced the viability of a variety of secondary ma... more Information technology-enabled exchanges have enhanced the viability of a variety of secondary markets, notably markets for used books. Electronic used book exchanges, in particular, offer a wider selection, lower search costs, and significantly lower prices than physical used bookstores do. The increased viability of these used book markets has caused concern among groups such as the Book Publishers Association and Author's Guild who believe that used book markets will significantly cannibalize new book sales. This proposition, while theoretically possible, is based on speculation as opposed to empirical evidence. In this research, we use a unique dataset collected from Amazon.com's new and used marketplaces to estimate the impact of IT-enabled used book markets on new book sales. We use these data to calculate the impact of these secondary market exchanges on consumer and publisher welfare by calculating the cross-price elasticity of new books sales with respect to used book prices.
Peer-to-peer file sharing networks are becoming an important medium for the distribution of infor... more Peer-to-peer file sharing networks are becoming an important medium for the distribution of information goods. However, there is little academic research into the optimal design of these networks under real-world conditions. Our research represents an initial effort to analyze the impact of positive and negative network externalities on the optimal size of these P2P networks. Our analysis uses a unique dataset collected from the six most popular OpenNap peer-to-peer networks between December 19, 2000 and April 22, 2001. We find that users contribute value to the network in terms of additional content and additional replicas of content at a diminishing rate, while they impose costs on the network in terms of congestion on shared resources at an increasing rate. Together these results suggest that the optimal size of peer-to-peer networks is bounded -at some point the costs a marginal user imposes on the network will exceed the value they provide.
Proceedings of First Workshop on Economics of P2P, Jun 5, 2003
While attention has been paid in the computer science literature to improving efficiency of searc... more While attention has been paid in the computer science literature to improving efficiency of search algorithms in P2P networks, little attention has been paid to 1) economic incentives that guide users to share content, 2) content-based measures of similarity of interests among users, and 3) cost implications of physical location of peers on the underlying network. Our work draws on ideas from the economics literature of club goods and the information retrieval literature to propose next generation P2P file sharing architectures that rely on content-based, self organizing communities of peers to address these issues. Using the model of ultrapeers and leaf nodes in Gnutella v0.6 architecture as context, we conceptualize an ultrapeer and its network of leaf nodes as a club (in Economic terms). We specify a simple utility-based model for a peer to determine which "clubs" to join, for clubs to manage their membership, and for "clubs" to determine to which other clubs they should be connected. We simulate performance of these models using unique real world dataset collected from the Gnutella v0.6 network. Our preliminary simulations demonstrate that our enhancements result in at least 300% improvement in ultrapeers' ability to satisfy their leaf node's queries, thereby significantly decreasing congestion on the network and enabling more efficient and effective file sharing architectures.
Abstract: Shopbots are computer agents that aid consumers by comparing prices across online store... more Abstract: Shopbots are computer agents that aid consumers by comparing prices across online stores. A consumer visits a shopbot web site, inputs a product to search for, such as a book, and then the shopbot automatically queries available online stores, and tabulates and presents the results to the consumer. Consumers consider a subset of these stores by clicking upon a hyperlink displayed with the offer. This evoked consideration set is important to shopbot owners because shopbot owners are generally compensated directly for ...
The growth of Internet price search tools, notably shopbots, has reduced consumers' search costs,... more The growth of Internet price search tools, notably shopbots, has reduced consumers' search costs, allowing consumers to easily become informed of price and product characteristics among competing sellers online. While a variety of analytic models predict that increased consumer search through shopbots will lower price levels among competing retailers, there is no consensus in the empirical literature as to whether price dispersion will increase or decrease in response to increased consumer search through shopbots. Moreover, there are no papers that have analyzed this question using direct observation of variation in shopbot use over time.
Uploads
Papers by Michael Smith