Spam: The Technology that Killed the Golden Goose

It seems like the spam is a victim of its own success. The dream of easy money, and the law of large numbers always make individuals and firms err on the... ehh.. spamming side. Spamming has always been considered a social evil. Something that we have to deal with. Something that will not go away easily.

But spamming may not be all that bad. From the perspective of the economy, it is keeping a lot of folks in business. From the perspective of loners, its a morale booster. They get some emails in their otherwise perpetually empty mailbox. From the perspective of the businesses, they can sometimes reach prospective customers. What if someone really wants to ... you know...

To again build the case for spamming, imagine if there was no spamming, viruses, or spy ware, we wont have great companies like Norton or McAfee. Microsoft wont invest any money in products like Anti Spy ware depriving thousands of people income and jobs.

Believe me, this all virus, spam and spy ware things are here to stay. It is in the interest of the big companies to maintain these social evils at certain level. What a better way for companies to make money than to keep you scared and as much money out of you.

Anyways, so there are some plus to spamming for the economy, so what’s the problem? Well even though spam is highly profitable for few companies, it is a nuisance for majority of the public and the internet companies that maintain the infrastructure. If only few companies or individuals spam, it will go unnoticed while generating large enough scare for people to buy antidotes. But when it crosses the threshold the public revolts.

The problem can be analyzed from the perspective of the, Tragedy of Commons, where the common resources are consumed to the extent they become inconsumable by everyone. So email works on a public infrastructure. Each spammer keeps sending more and more spam because it costs him or her nothing. In a course of time, the infrastructure is choked, the people become sick spending more time deleting spam than reading legitimate mails. In other words, the email becomes unusable.

So the problem statement is that we need spammers but we also want to solve the problem of the tragedy of the commons. One solution can be obviously collusion. Use of repeated games to punish spammers. But then again, the technology offers an opportunity for any individual anywhere with just a computer, and internet to become a spammer. Hum... we need a better solution. I will ponder over it later... meanwhile if you have any ideas... do post em here.

The eBay mystery

I, like many others, often use eBay to purchase someone else's junk. In the last few visits, I noticed an interesting phenomenon. Sometimes, two or more listings of similar items listed on the eBay, by the same seller, sell at different prices. One sells at the higher price than the other, even though the listings are approximately closing at the same time. So much so, sometimes, a listing ending early will be selling for $50 when the one ending later is selling at $60. This doesn't make sense. If people are interested in buying the product, why don't they just bid on the listing that is closing earlier. If I notice it again I will link it here.

Interestingly, an extension to this is the fact that, sometimes, new items selling on eBay auctions are commanding higher price than the online or retail stores elsewhere. I saw an apple ipod shuffle selling for $108 with $20 shipping on eBay when it was available at Amazon for only $94. Why would people do that? One reasoning may be that they don't like money. Nay!!! Who doesn't like money...

I noticed that the bid ending later usually has more bids than the one ending earlier, i.e., the one with more bids sells for higher price than one with lesser number of bids.

Interesting phenomenon. Right!!! I believe it is what we call as information cascade, i.e., people bidding on the items follow the leads of the other bidders. On eBay, one cannot see or touch the item before buying. So there is a whole lot of uncertainty surrounding the quality of the item and the genuinity of the sale. eBayers probably are using the number of bids on an item as a source of information to reduce their uncertainty. In other words, they are relying on other peoples bid for information about the authenticity and genuinity of the product and the seller.

The same is true in case of physical auctions as well. I once went to my college junk auction where they were selling bicycles. I, like most others, had absolutely no idea if the particular cycle was junk or not. So to bid, I let other people bid first. If there was some activity in the bidding, it would give me some idea of the quality of the cycle. So higher the number of people bidding meant good quality cycle and lower the number of people bidding meant otherwise. Remember in this case, I could touch and see the cycle but still trusted other peoples instincts more (information cascade). It is my presumption that a similar thing is happening on eBay.

Well it might or might not be true, but that is why it is a research question.