second-price auction

A Beautiful Mind

by Sylvia Nasar  · 11 Jun 1998  · 998pp  · 211,235 words

dark anxieties about mankind’s survival,2 Nash proved himself, in the words of the eminent geometer Mikhail Gromov, “the most remarkable mathematician of the second half of the century.”3 Games of strategy, economic rivalry, computer architecture, the shape of the universe, the geometry of imaginary spaces, the mystery of

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academic career. Nash’s doubts that one could make a living as a mathematician took some time to overcome. But by the middle of his second year he was concentrating almost exclusively on mathematics. The Westinghouse scholarship administrators were unhappy with Nash’s switch to mathematics, but by the time they

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, adapted more quickly.24 With shrinking opportunities for research in Europe during the Depression, and mounting restrictions on Jews in German universities, they stayed. A second act of philanthropy, more serendipitous than the Rockefeller enterprise, resulted in the creation of the independent Institute for Advanced Study in Princeton.25 The Bambergers

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universities, and growing fears of another world war. After three years of delicate negotiation, Einstein, the biggest star of them all, agreed to become the second member of the Institute’s School of Mathematics, causing one of his friends in Germany to quip, “The pope of physics has moved and the

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it.”39 4 School of Genius Princeton, Fall 1948 Conversation enriches the understanding, but solitude is the school of genius. — EDWARD GIBBON ON NASH’S SECOND AFTERNOON in Princeton, Solomon Lefschetz rounded up the first-year graduate students in the West Common Room.1 He was there to tell them the

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examination, a qualifying examination on five topics, three determined by the department, two by the candidate, at the end of the first, or at latest, second year. However, even the generals were sometimes tailored to the strengths and weaknesses of a student.22 If, for example, it was known that a

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Pyne Tower, was lucky to get a private room, one of the perks of his fellowship.28 About fifteen or twenty of the mathematics students, second- and third-year as well as first-year students, and a couple of instructors lived in the college at the time. Life was masculine, monastic

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tables, and formal portraits of eminent Princetonians on the walls; the evening prayer was led by Sir Hugh Taylor, the college’s dean, or his second in command, the college’s master. There were no candles and no wine, but the food was excellent. Gowns were no longer required as before

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in tight little figure eights or ever-smaller concentric circles.19 He paced around the interior quadrangle of the college. He glided along the gloomy second-floor hallway of Fine, his shoulder pressed firmly against the wall, like a trolley never losing contact with the dark paneled walls.20 He would

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than most doctoral dissertations, was published in the Annals in 1950. Milnor also dazzled the department — and Nash — by winning the Putnam competition in his second semester at Princeton (in fact, he went on to win it two more times and was offered a Harvard scholarship).51 Nash was choosy about

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his time doing mathematics, including visiting lectures by Einstein, and returning to Budapest at the end of every semester to take examinations. He published his second mathematics paper, in which he gave the modern definition of ordinal numbers which superseded Cantor’s, at age nineteen.24 By age twenty-five he

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without, or with, the consent of others affected by his actions. In a wide sense, the first species of action may be called war; the second contract. Obviously, parties to a bargain were acting on the expectation that cooperation would yield more than acting alone. Somehow, the parties reached an agreement

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emotional isolation. This was not the case, however. Nash, like all human beings, wanted to be close to someone, and at the beginning of his second year at Princeton he had finally found what he was looking for. The friendship with Lloyd Shapley, an older student, was the first of a

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the game was to produce psychological mayhem, and, apparently it often did. McCarthy remembers losing his temper after Nash cold-bloodedly dumped him on the second-to-last round, and Nash was absolutely astonished that McCarthy could get so emotional. “But I didn’t need you anymore,” Nash kept saying,

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dated 1953, says Shapley “perhaps lacked the where-withal to develop a theory and depended on others for ideas,” but added that he thought him “second only to the creator of the theory of games, John von Neumann.”37 A letter from von Neumann dated January 1954 said: “I know Shapley

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all the new inventions of warfare — radar, infrared detection devices, bomber aircraft, long-range rockets, torpedoes with depth charges, as well as the atomic bomb. Second, the military had only the vaguest of ideas about how to use these inventions… . Someone had to devise new techniques for these new weapons, new

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bomber attack, has not yet engaged his original target, then at the option of the ground controller he may be vectored back to engage a second attack. The attacker has a stock of N bombers and A bombs. The attacker chooses two points to attack and sends N1 bombers including A1

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bomb carriers on the first attack and t minutes later he sends N2 = N – N1 bombers including A2 = A – A1 carriers on the second attack. The payoff to the attacker is the number of bomb carriers that are not destroyed by the fighters. Solution Both players have pure optimal

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a paranoia in the military establishment that seeped into the body politic and wound up as national hysteria over the supposed “missile gap” in the second half of the 1950s. The RAND report, Fred Kaplan writes, “legitimized a basic fear of the enemy and the unknown through mathematical calculation and

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academics with Defense Department affiliations seeking to avoid the draft. Rigby also promised that, should the branch office action fail, “we will then make a second try directly with the national selective service organization,” adding, however, that in all likelihood “this will not be necessary.”10 The concerted effort to save

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immense number and sheer variety of manifolds would seem to make it inherently unlikely that all could be described in so relatively simple a fashion. Second, believing that one could prove such a thing also involves daring, even hubris. The result Nash was aiming for would have seemed “too strong”

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, a polymath of great originality who made stunning contributions in pure mathematics up until the beginning of World War II and then embarked on a second and equally astounding career in applied mathematics.24 Like von Neumann, Wiener is known to the public for his later work. He was, among

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the seven years of his teaching career at MIT, he seems to have taught only three graduate courses, all introductory, one in logic in his second year, one in probability, and a third, in the fall of 1958, in game theory.3 Mostly, it seems, he taught different sections of

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in which students weren’t just learning manipulations but rather absolutely solid proofs of statements and how to construct such proofs. Between the first and second semesters of the yearlong course, the number of students dwindled from about thirty to five. Kohn recalled: “He gave a one-hour test. He

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instructor at MIT, put it forty years later, “That covered a lot of territory.”64 18 Experiments RAND, Summer 1952 ONE AFTERNOON during Nash’s second summer in Santa Monica, he and Harold N. Shapiro, another mathematician from RAND, were swimming in the surf off Santa Monica Beach just south of

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players play the game repeatedly, the authors concluded, players tend to “regard a run of plays as a single play of a more complicated game.” Second, like the Prisoner’s Dilemma experiment devised by Melvin Dresher and Merrill Flood in 1950, it showed that players’ decisions were often motivated by concerns

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shopping with him.”6 They walked over to Jay’s Department Store together. Nash followed her up to the coat department, which was on the second floor. He kept staring at her, not saying much, waiting for her to choose a coat. She started to enjoy herself. “John was very

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Eleanor strongly suspected that she was pregnant. On Thanksgiving, when she invited Nash to come to her place, she was absolutely certain, having missed a second period by then. Nash seemed, oddly enough, more pleased than panicked.13 He seemed proud of fathering a child. In fact, he made it clear

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and, before World War II, was chairman of a League of Nations committee. Once he served as El Salvador’s consul in San Francisco. His second wife, Alicia Lopez Harrison, came from a wealthy, socially prominent family; Alicia’s maternal grandmother was the wife of an English diplomat. Mrs. Larde

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and nephews.11 Alicia, or Lichi, as her family called her, was born on New Year’s Day, 1933, in San Salvador. She was the second of Carlos and Alicia’s children. Her brother Rolando, five years older, was eventually confined to an institution. A half-brother from her father’s

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knew Nash by reputation but reacted even more skeptically than Nirenberg. “Nash had learned from Nirenberg the importance of extending the Holder estimates known for second-order elliptic equations with two variables and irregular coefficients to higher dimensions,” Hörmander recalled in 1997.33 “He came to see me several times, ’What

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end of his year in New York. Jack Schwartz recalled conversations with Nash on the subject in the Courant common room.22 Jerome Neuwirth, a second-year graduate student at MIT in 1957–58, remembered that Nash had developed a very proprietary feeling about the problem around that time.23 Neuwirth

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New York on the lie de France.39 Their ultimate destination was Edinburgh, where the World Congress of Mathematics was to take place in the second week of August. Nash was giving a lecture on nonlinear theory. Many colleagues from MIT and Princeton would be there, and Nash was able

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men ignored the women, who sat together in the backseat gossiping (at that time, Eva recalled, “Nash wouldn’t talk to women”).42 On the second, rainy day of the drive, Felix managed to dent the Mercedes, prompting Nash to repeat incessantly for the rest of the trip that “this car

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was really of himself? Two ways, he explained. First because John wasn’t the pope’s given name but a name that he had chosen. Second, because twenty-three was Nash’s “favorite prime number.” Almost the strangest thing, Vasquez later recalled, was that Calabi kept on lecturing as if nothing

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Stearns wrote to Bradley. “He was straightforward and frank and of course is anxious to get out.”57 Around May 20, ten days before the second, forty-day, phase of Nash’s commitment was due to expire, Stearns went back a third time to study the commitment papers and the record

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and presumably with tacit approval at higher levels of the State Department. The final curtain came down on December 15. Nash was arrested, for the second time.66 He adamantly refused, as he had at the time of his first arrest, to return to the United States, and continued to demand

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isn’t the most distinguished … Harvard ranks much higher.”31 Throughout the spring he would fret about being forced to take a position at a second-rate institution: “I hope to avoid stepping down in social status because it may be difficult to come up again.” As early as the beginning

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white stones representing Confucians and black stones representing Muhammadans. The “first-order” game was being played by his sons, John David and John Charles. The “second-order,” derivative game was “an ideological conflict between me, personally and the Jews collectively.”15 A few weeks later he was thinking of another go

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is being recognized.”44 Nash was not, however, invited to the prize ceremony in Washington.45 Instead, Alan Hoffman, a mathematician at IBM and the second member of the prize committee, went down to Princeton to present Nash with the award.46 He said: “We gathered in Al Tucker’s office

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solution too. It was extraordinary.” Johnny wrote a joint paper with Nathanson that became the first chapter of his dissertation.49 He then wrote a second paper on his own, which Nathanson called “beautiful” and which also became part of the thesis.50 His third paper was an important generalization of

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demands for explanations. But Weibull, who is standing near the table with the microphones, manages to catch Lindbeck’s eye for a fraction of a second. The relief is overwhelming. “Lindbeck didn’t signal or anything like that,” he said later, “but I saw right away that everything had turned

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respect accorded her by doctors and relatives.26 The Nobel Prize committee did not take up the matter again until 1987, when it commissioned a second report, this time from Weibull.27 After he submitted it, Lindbeck told him that the committee wanted to ask him some questions and asked him

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session, on whether game theory was just a fad or really an important tool for investigating a wide range of interesting economic problems. By the second meeting, however, Lindbeck, the committee chairman, zeroed in on Nash. Was what Nash did merely mathematics? Lindbeck asked. Did he simply formalize ideas that economists

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fraction of the number who turn out for the physics or chemistry prizes, the other two Nobel awards administered by the academy — assemble in the second week of October largely for the pleasure of hearing a distinguished lecture on the proposed candidates’ contributions to scientific progress. As one academy member put

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to allow this is quite difficult,” writes Paul Milgrom, one of the economists who designed the FCC auction of which Gore was speaking.17 A second source of complexity, Milgrom says, is that the purpose of the licenses is to create businesses for new services with unknown technology and unknown consumer

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to be costly flops and political disasters illustrated that the devil really was in the details. In New Zealand, the government ran a so-called second price auction, and newspapers were full of stories about winners who paid far below their bids. In one case, the high bid was NZ$7 million, the

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most of our lives.” After Mayor Carole Carson pronounced them man and wife, John was asked to kiss his bride again for the camera. “A second take?” he quipped. “Just like a movie.” A few moments before the ceremony Alicia’s cousin spoke to me about “the amazing metamorphosis” he

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s ceremony, he gossiped happily with a mathematician and an engineer he first met in his twenties. He and Alicia were going to spend their second honeymoon among friends in Switzerland, where John will be giving a talk at a memorial celebration for Jürgen Moser, who died last year. John has

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., pp. 26–28. 14. Von Neumann and Morgenstern used the axiomatic method to derive their theory of expected or von Neumann-Morgenstern utilities in the second, 1947, edition of The Theory of Games and Economic Behavior. The first application to a problem in social sciences, I believe, was Kenneth J.

Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor

by John Kay  · 24 May 2004  · 436pp  · 76 words

France-such as L'Oreal and LVMH distribute the productsfragrances, wines, haute couture-traditionally associated with France. Carrefour is, after Wal-Mart, the world's second-largest retailer; Aventis makes many of the pills in the bags with the green cross; St. Gobain makes glass and other construction materials for a

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exactly is GNI? And what is the explanation of the extraordinarily wide range of economic performance that they record? This book is directed toward the second of these questions, but it is necessary to begin by answering the first. { 36} John Kay Box 4.1 INEQUALITY IN WORLD INCOME DISTRIBUTION Is

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This is one of the great puzzles of economic history. Earlier in the millennium, Chinese technology had fully matched that of the West. In the second half of the eighteenth century, the two regions had many similarities-in industrial structure, agricultural techniques, in capital per head, and the mild but increasing

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blight had centered on Beijing-and perhaps this is the right way to see it. Culture and Prosperity { 67} Productive Economies, Rich States ••••••••••••••••••••••••••••••••••••• In the second half of the eighteenth century, there was little difference between living standards in Western Europe and those in the rest of the world. 27 The

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last chapter I considered the first part of the allocation of scarce resources among competing ends-issues of production and exchange. This chapter reviews the second part-how the goods and services that are the result of production and exchange are assigned to individuals and households. Portrait of Dr. Gachet poses

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all the bids. The judge discards all except the highest two and gives the object to the highest bidder at the price offered by the second-highest bidder. Iri that auction, you should bid whatever you think the object is worth. Suppose that amount is $100. If the highest bid from

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lose by bidding your true valuation, but you { 102} John Kay might lose out if you enter a false value. Alone among bidding procedures, this "second-price auction" has the property of incentive compatibility: there is no benefit from strategic behavior. The mechanism sounds arcane and theoretical. It was proposed by an American

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paper magnate represented by the Japanese dealer, would have been willing to pay, nor did Christie's auctioneer. We only know that the maximum the second-highest bidder was ready to put on the table was $74 million. And Mr. Saito won the painting for a "nominal" $1 million more. 19

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a few days later for $78.5 million. Saito paid not only the highest dollar sum ever paid for a work of art, but the second-highest sum as well. Perhaps he hoped-wronglythat Dr. Gachet would appreciate in value. Maybe he derived satisfaction from the ownership of a masterpiece, or

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of those who might ever want to buy a machine had one. Growth fell, and then sales actually declined, sustained only by replacement demand and second purchases. Matching Supply and Demand for Electricity ••••••••••••••••••••••••••••••••••••• Until 1990, the control room of the National Grid received full details of the availability and running costs

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can be regulated and controlled. Double-entry bookkeeping put the discipline in disciplined pluralism. Double-entry bookkeeping is to economic and commercial life what the second law of thermodynamics is to the physical world, and it has the same role in deflating pretensions of dreamers and fantasists. The claims made by

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policies. If Keynes was the most influential economist of the first half of the twentieth century, Paul Samuelsonn was the most influential economist of the second half. While others, such as Milton Friedman, may be better known to a wide public, Samuelson is the economists' economist, whose influence is evident in

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possible. The Rawlsian approach not only justifies substantial redistribution, but requires it. If the first fundamental theorem of welfare economics was written for Nozick, the second was written for Rawls. We stand behind the veil of ignorance, in search of a just mechanism for allocating scarce resources between competing ends. We

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are bound to choose a Pareto efficient outcome. The choice between Pareto efficient outcomes will be determined by the maximin principle. The second fundamental theorem of welfare economics-any Pareto efficient outcome can be achieved by an appropriate allocation of resources-tells us that all we need do

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efficiency of the American business model. A competitive market equilibrium is just simply by virtue of being a competitive market equilibrium. And Rawls and the second fundamental theorem argue for a more moderate version of political economy-redistributive market liberalism-to which I will return in chapter 28. With appropriate redistribution

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children; Sudanese youths starve because their country is riven by a dispute over Islamic law; an Egyptian farmer sells a clover field to take a second wife. Economists insist on rationality because they do not like the alternatives. 5 Self-regarding materialism is a better predictor of behavior than altruism; 6

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optimize within constraints. He should do just the amount of calculation needed to find the best strategy in the light of his knowledge that every second devoted to calculation increases the chances ofbeing caught by the bear. 18 Borrowing Herbert Simon's term (but for a very different concept), Oliver Williamson

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were no offers. I went to see the agent and told him that we were unhappy. We were professional economists, and supply and demand were second nature to us. If no one wanted to rent our property at £27 per square foot, we should try something lower. How about £22 per

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game to play if you want to prove your mettle. It is the big leagues. If you do not play there, by definition you are second rate." 9 In the most extreme versions of the American business model, it is a mistake to deplore materialism and regard selfishness as a vice

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Simon) assumes that the impossibility of assembling sufficient information constrains, largely arbitrarily, the possibilities considered, and so people choose alternatives that are "good enough." The second (popularized by Oliver Williamson) supposes that rational choices are made from within a subset of all possibilities that are themselves rationally chosen, i.e., balancing

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the World: The Annual Survey ofPolitical Rights and Civil Liberties. New York: Freedom. Freeland, C. 2000. Sale of the Century: The Inside Story of the Second Russian Revolution. New York: Times Books. Freiberger, P., and M. Swaine. 2000. Fire in the Valley: The Making of the Personal Computer. New York: McGraw

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, 146-48, 149, 151-52 Say,Jean-Baptiste, 174, 175, 179 Scherer, Mike, 334 Scholes, Myron, 159, 160-61, 237, 359 Scottish Enlightenment, 83, 126 "second-price auction," 102, 103 securities markets, 91, 92, 148 bonds, 50, 167-69 derivatives, 160-61, 237 and efficient market hypothesis, 236 "equity premium," 235 inception of

Mining of Massive Datasets

by Jure Leskovec, Anand Rajaraman and Jeffrey David Ullman  · 13 Nov 2014

that the data is too large to fit in main memory, and two applications: recommendation systems and Web advertising, each vital in e-commerce. This second edition includes new and extended coverage on social networks, machine learning and dimensionality reduction. Written by leading authorities in database and web technologies, it is

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essential reading for students and practitioners alike. Mining of Massive Datasets Second Edition JURE LESKOVEC Stanford University ANAND RAJARAMAN Milliways Labs JEFFREY DAVID ULLMAN Stanford University University Printing House, Cambridge CB2 8BS, United Kingdom Cambridge University Press

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highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781107077232 First edition © A. Rajaraman and J. D. Ullman 2012 Second edition © J. Leskovec, A. Rajaraman and J. D. Ullman 2014 This publication is in copyright. Subject to statutory exception and to the provisions of relevant

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collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2012 Second edition 2014 Printed in the United Kingdom by CPI Group Ltd, Croydon CR0 4YY A catalogue record for this publication is available from the British

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task generated and passed to other tasks. It can then restart a failed task and ignore those files when the restarted version produces them a second time. 2.4.3Pregel Another approach to managing failures when implementing recursive algorithms on a computing cluster is represented by the Pregel system. This system

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tends to be very simple, often linear in the size of its input. The typical interconnect speed for a computing cluster is one gigabit per second. That may seem like a lot, but it is slow compared with the speed at which a processor executes instructions. Moreover, in many cluster

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for the size of each picture). That’s 1018 bytes, or one exabyte. To communicate this amount of data over gigabit Ethernet would take 1010 seconds, or about 300 years.9 Fortunately, this algorithm is only the extreme point in a spectrum of possible algorithms. We can characterize these algorithms by

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(n3) arithmetic operations. The two-pass method naturally has more overhead managing tasks than does the one-job method. On the other hand, the second pass of the two-pass algorithm applies a Reduce function that is associative and commutative. Thus, it might be possible to save some communication cost

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have components from any set. EXAMPLE 3.16The Hamming distance between the vectors 10101 and 11110 is 3. That is, these vectors differ in the second, fourth, and fifth components, while they agree in the first and third components.□ 3.5.7Exercises for Section 3.5 ! EXERCISE 3.5.1On

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cameras produce images with lower resolution than satellites, but there can be many of them, each producing a stream of images at intervals like one second. London is said to have six million such cameras, each producing a stream. Internet and Web Traffic A switching node in the middle of

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called computing “moments,” involves the distribution of frequencies of different elements in the stream. We shall define moments of all orders and concentrate on computing second moments, from which the general algorithm for all moments is a simple extension. 4.5.1Definition of Moments Suppose a stream consists of elements chosen

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active storage. One strategy to dealing with streams is to maintain summaries of the streams, sufficient to answer the expected queries about the data. A second approach is to maintain a sliding window of the most recently arrived data. ✦Sampling of Streams: To create a sample of a stream that

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shall focus upon when measuring the running time of a frequent-itemset algorithm. 6.2.2Use of Main Memory for Itemset Counting There is a second data-related issue that we must examine, however. All frequent-itemset algorithms require us to maintain many different counts as we make a pass

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would otherwise be available to store counts. However, if most buckets are infrequent, we expect that the number of pairs being counted on the second pass will be much smaller than the total number of pairs of frequent items. Thus, PCY can handle some data sets without thrashing during the

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first pass of PCY. After that pass, the frequent buckets are identified and summarized by a bitmap, again the same as in PCY. But the second pass of Multistage does not count the candidate pairs. Rather, it uses the available main memory for another hash table, using another hash function.

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infrequent pairs in PCY as in the version of Multihash suggested above. We would therefore expect Multihash to have a smaller memory requirement for the second pass than would PCY. But these upper bounds do not tell the complete story. There may be many fewer frequent buckets than the maximum

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by making two passes over the baskets. On the first pass, we count the items themselves, and then determine which items are frequent. On the second pass, we count only the pairs of items both of which are found frequent on the first pass. Monotonicity justifies our ignoring other pairs. ✦

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one whose count is at least the support threshold) on the first pass. ✦The Multistage Algorithm: We can insert additional passes between the first and second pass of the PCY Algorithm to hash pairs to other, independent hash tables. At each intermediate pass, we only have to hash pairs of frequent

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passes. ✦The Multihash Algorithm: We can modify the first pass of the PCY Algorithm to divide available main memory into several hash tables. On the second pass, we only have to count a pair of frequent items if they hashed to frequent buckets in all hash tables. ✦Randomized Algorithms: Instead

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that all frequent itemsets for the segment can be found in main memory. Candidate itemsets are those found frequent for at least one segment. A second pass allows us to count all the candidates and find the exact collection of frequent itemsets. This algorithm is especially appropriate in a MapReduce setting

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data, perhaps hierarchically, so there are k clusters. Pick a point from each cluster, perhaps that point closest to the centroid of the cluster. The second approach requires little elaboration. For the first approach, there are variations. One good choice is: Pick the first point at random; WHILE there are fewer

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, as the name implies. EXAMPLE 7.10Figure 7.12 is an illustration of two clusters. The inner cluster is an ordinary circle, while the second is a ring around the circle. This arrangement is not completely pathological. A creature from another galaxy might look at our solar system and observe

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Proc. Intl. Conf. on Data Engineering, pp. 502–511, 1999. [4]H. Garcia-Molina, J.D. Ullman, and J. Widom, Database Systems: The Complete Book Second Edition, Prentice-Hall, Upper Saddle River, NJ, 2009. [5]S. Guha, R. Rastogi, and K. Shim, “CURE: An efficient clustering algorithm for large databases,” Proc

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be discussed. We shall therefore digress to discuss these two algorithmic issues – greediness and on-line algorithms – in general, before tackling the adwords problem. A second interesting on-line advertising problem involves selecting items to advertise at an on-line store. This problem involves “collaborative filtering,” where we try to find

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an advertiser’s ad, the advertiser is charged the amount they bid. This policy is known as a first-price auction. In reality, search engines use a more complicated system known as a second-price auction, where each advertiser pays approximately the bid of the advertiser who placed immediately behind them in the auction. For

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example, the first-place advertiser for a search might pay the bid of the advertiser in second place, plus one cent. It has been shown that second-price auctions are less susceptible to being gamed by advertisers than first-price auctions and lead to higher revenues for the search engine. 8.4.5A Lower Bound on

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will print only the articles it believes the most people will be interested in. In the first case, sales figures govern the choices, in the second case, editorial judgement serves. The distinction between the physical and on-line worlds has been called the long tail phenomenon, and it is suggested

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coupled with normalization and a few other tricks. The winning entry was actually a combination of several different algorithms that had been developed independently. A second team, which submitted an entry that would have won, had it been submitted a few minutes earlier, also was a blend of independent algorithms.

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and other information was not useful. One possible reason is the machine-learning algorithms were able to discover the relevant information anyway, and a second is that the entity resolution problem of matching movie names as given in NetFlix and IMDB data is not that easy to solve exactly. Time

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of the user to those. One class of recommendation system is content-based; it measures similarity by looking for common features of the items. A second class of recommendation system uses collaborative filtering; these measure similarity of users by their item preferences and/or measure similarity of items by the users

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that is, . (2)x is orthogonal to the eigenvector associated with the smallest eigenvalue. Moreover, the value of x that achieves this minimum is the second eigenvector. When L is a Laplacian matrix for an n-node graph, we know something more. The eigenvector associated with the smallest eigenvalue is 1

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analysis Figure 10.17 The Laplacian matrix for Fig. 10.16 Figure 10.18 Eigenvalues and eigenvectors for the matrix of Fig. 10.17 The second eigenvector has three positive and three negative components. It makes the unsurprising suggestion that one group should be {1, 2, 3}, the nodes with

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x that minimizes xTLx, subject to the constraint that it is orthogonal to all previous eigenvectors. This constraint generalizes the constraints we described for the second eigenvector in a natural way. As a result, while each eigenvector tries to produce a minimum-sized cut, the fact that successive eigenvectors have to

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matrix. (b)The degree matrix. (c)The Laplacian matrix. ! EXERCISE 10.4.2For the Laplacian matrix constructed in Exercise 10.4.1(c), find the second-smallest eigenvalue and its eigenvector. What partition of the nodes does it suggest? !! EXERCISE 10.4.3For the Laplacian matrix constructed in Exercise 10.4

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two parts of similar size with a small cut value. For one example, putting the nodes with a positive component in the eigenvector with the second-smallest eigenvalue into one set and those with a negative component into the other is usually good. ✦Overlapping Communities: Typically, individuals are members of

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We then modify the matrix to, in effect, remove the principal eigenvector. The result is a new matrix whose principal eigenvector is the second eigenvector (eigenvector with the second-largest eigenvalue) of the original matrix. The process proceeds in that manner, removing each eigenvector as we find it, and then using power

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iteration, we compute The Frobenius norm of the result is 6.971, so we divide to obtain We are converging toward a normal vector whose second component is twice the first. That is, the limiting value of the vector that we obtain by power iteration is the principal eigenvector: Finally,

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PageRank, the small inaccuracies did not matter, but when we try to compute all eigenpairs, inaccuracies accumulate if we are not careful.□ To find the second eigenpair we create a new matrix M∗ = M − λ1xxT. Then, use power iteration on M∗ to compute its largest eigenvalue. The obtained x∗ and

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λ∗ correspond to the second largest eigenvalue and the corresponding eigenvector of matrix M. Intuitively, what we have done is eliminate the influence of a given eigenvector by setting its

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28x + 30y = 58y Both equations tell us the same thing: x = y. Thus, the unit eigenvector corresponding to the principal eigenvalue 58 is For the second eigenvalue, 2, we perform the same process. Multiply out to get the two equations 30x + 28y = 2x 28x + 30y = 2y Both equations tell us

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(the one corresponding to the largest eigenvalue) is the most significant; formally, the variance of points along that axis is the greatest. The second axis, corresponding to the second eigenpair, is next most significant in the same sense, and the pattern continues for each of the eigenpairs. If we want to transform

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! EXERCISE 11.2.2Prove that if M is any matrix, then MTM and MMT are symmetric. 11.3Singular-Value Decomposition We now take up a second form of matrix analysis that leads to a low-dimensional representation of a high-dimensional matrix. This approach, called singular-value decomposition (SVD), allows an

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result as a close approximation to the principal eigenvector. By modifying the matrix, we can then use the same iteration to get the second eigenpair (that with the second-smallest eigenvalue), and similarly get each of the eigenpairs in turn, in order of decreasing value of the eigenvalue. ✦Principal-Component Analysis:

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its transpose has eigenpairs, and the principal eigenvector can be viewed as the direction in the space along which the points best line up. The second eigenvector represents the direction in which deviations from the principal eigenvector are the greatest, and so on. ✦Dimensionality Reduction by PCA: By representing the

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we could, the period of repetition would most likely be so large that we would want to terminate the algorithm long before we repeated. A second issue regarding termination is that even if the training data is linearly separable, the entire dataset might not be linearly separable. The consequence is

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units of their components. Thus, we shall consider how to minimize the particular function (12.4) The first term encourages small w, while the second term, involving the constant C that must be chosen properly, represents the penalty for bad points in a manner to be explained below. We assume

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252, 297, 298 Feature selection, 421 Feature vector, 416, 455 Fetterly, D., 67 Fikes, A., 67 File, 21, 198, 215 Filtering, 130 Fingerprint, 107 First-price auction, 279 Fixedpoint, 96, 182 Flajolet, P., 153 Flajolet–Martin Algorithm, 134, 376 Flow graph, 39 Fortunato, S., 382 Fotakis, D., 382 French, J.C., 265

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Schapire, R.E., 458 Schema, 30 Schutze, H., 18 Score, 105 Search ad, 268 Search engine, 166, 181 Search query, 125, 155, 176, 268, 285 Second-price auction, 279 Secondary storage, see Disk Selection, 31, 33 Sensor, 124 Sentiment analysis, 422 Set, 76, 112, see also Itemset Set difference, see Difference Shankar, S

The Man From the Future: The Visionary Life of John Von Neumann

by Ananyo Bhattacharya  · 6 Oct 2021  · 476pp  · 121,460 words

sales in Hungary, much as Sears had done earlier in the United States. The Heller family had the run of the whole first floor. The second and third floors were occupied by Kann’s four daughters and their families. Today, on the corner of the building, next to the entrance to

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von Neumann Whitman. The Minta’s methods were successful enough to be widely copied by other schools including the older ‘Fasori’ Lutheran gymnasium, regarded as second only to the Minta itself. The Lutheran school was open to boys (there were scant educational opportunities for girls) of all faiths. Because the professional

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in which the last of Euclid’s five statements – his ‘parallel postulate’ – was not true. Compared with the other postulates, the fifth stood out. The second postulate, for example, says that any line segment may be extended indefinitely. That is difficult for even the most querulous to argue with. The fifth

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momentum or, conversely, momentum by position gives slightly different results. The difference (less than a trillionth of a trillionth of a billionth of 1 joule-second) is far too small to be noticed in everyday life but is large enough to be significant at the atomic scale. Pondering the physical meaning

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card, issued by the University of Berlin. Courtesy of Marina von Neumann Whitman. As well as the vibrant nightlife of Berlin, the scientific culture was second to none. German, not English, was the language of science in the 1920s. Practically all the founding papers of quantum mechanics were written in it

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being measured (the cup of coffee); part II, the measuring device (thermometer); and part III, the light from the device and the observer. In the second case, part I is the cup and the thermometer; part II includes the path of light from the thermometer to the observer’s retina; and

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the same hidden variable values (otherwise a measurement on an ensemble would always give the same result); in physics terms, they cannot be homogeneous. A second explanation is that contemporary quantum theory is correct, and the results of measurement are randomly distributed (so hidden variables are not necessary). What von Neumann

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. Bell could not read German and an English translation of von Neumann’s book would not be available for another three years. He accepted the second-hand accounts he read. That changed in 1952. ‘I saw the impossible done,’ Bell said.66 In two papers the American physicist David Bohm

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rolled in after von Neumann and Wigner left Germany in 1930. In September, the Nazi Party garnered more than 6 million votes to become the second-largest party in the Reichstag. At the next election, two years later, they received 13.7 million votes, and Hitler was appointed Chancellor of

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years his junior, came to von Neumann’s attention. Alan Turing’s first paper, published in April 1935, developed work in von Neumann’s fifty-second, on group theory, which had appeared the previous year. Coincidentally, this was exactly when von Neumann arrived in Cambridge, England, where Turing had a

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be oblivious to the emotional needs of those around him,’ she says. ‘My mother, accustomed to being the centre of attention, didn’t like playing second fiddle to anyone or anything, even when the competition was her spouse’s supercreative mind.’11 What was obvious to Ulam and Marina was not

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If there is enough material to sustain a chain reaction, a ‘critical mass’, huge amounts of energy are released within a few millionths of a second. Frisch and theoretical physicist Rudolf Peierls had calculated that just a few pounds of one uranium isotope, U-235, would explode with the energy of

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the stray neutrons in the core start splitting atoms, a chain reaction starts, and the bomb detonates. Neddermeyer’s team, however, was understaffed and played second fiddle to the gun projects. Furthermore, their early experiments were unpromising. Hollow iron tubes wrapped with explosives collapsed as they hoped into dense bars. But

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experiments, he explained, could be made more symmetrical by simply increasing the explosive charge surrounding the tubes. A more sophisticated approach to testing was required. Second, von Neumann suggested a better design for the implosion device, consisting of wedge-shaped charges arranged around the plutonium. Detonated simultaneously, the charges would produce

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‘tamper’. Its purpose was to delay the expansion of the plutonium core inside, so allowing the chain reaction to proceed for a fraction of a second longer after detonation. For every 10 nanoseconds the tamper held the core together, another generation of neutrons would blossom inside the fissioning plutonium, violently converting

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. The shock wave then reaches the centre of the pit, crushing the initiator and blending polonium with beryllium. In the following ten billionths of a second, nine or ten neutrons are liberated. It is enough. About a kilogram of the liquefied plutonium and some of the uranium tamper, fissions. A

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looking directly at the explosion, was temporarily blinded by the flash. A few streaks of gold to the east had heralded the sunrise. Now a second, more menacing sun rose to challenge it. Those observing through the tinted welder’s glasses provided first saw an upturned yellow hemisphere twice as wide

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This was no idle concern. Shortly after the end of the war, Stalin asked Truman to grant his ‘modest wish’ to occupy Hokkaido, Japan’s second-largest island. Truman refused. Possession of the atom bomb had stiffened the resolve of the American government. Groves assembled a committee to establish a list

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I hope not.’41 Unfortunately for the young Marina, her father’s schedule became, if anything, more frenetic. His peripatetic life placed stress on his second marriage. When he was at home, he and Klári argued, the rows tempestuous enough to shatter his otherwise implacably calm demeanour. ‘I never saw him

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revealed less than a year before, looked amazingly primitive to my citified eyes, with muddy paths instead of sidewalks and open stairs leading up to second-floor apartments in flimsy wooden buildings.’44 Her father slept only three or four hours a night during the trip, Marina says, but miraculously they

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energy equivalent to about 10 megatons of TNT; about a thousand times more than Little Boy.47 The challenge was to recreate for a split second the temperatures and pressures, equivalent to those at the heart of the Sun and many millions of times that on Earth, needed to initiate and

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BRL (Ballistics Research Laboratory) in Aberdeen. Herman Goldstine was a mathematician at the University of Michigan before he enlisted in the US Army during the Second World War. He was about to be posted to the Pacific when Veblen, who was trying to recruit scientists for the BRL, stepped in with

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with the Moore School in Philadelphia and mentioned the project they were working on together: an electronic computer capable of more than 300 multiplications per second. At that, Goldstine says, ‘the whole atmosphere of our conversation changed from one of relaxed good humour to one more like the oral examination for

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BRL sent Lieutenant Goldstine to act as a liaison. By the end of 1942, the Moore School had one group operating the analyser and a second team of a hundred women working with desk calculators six days a week to calculate trajectories. Both teams were each completing a firing table in

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is first-order logic ‘complete’? This is exactly what the twenty-three-year-old Gödel had set out to prove in his thesis. On the second day of the Königsberg conference, Gödel gave a twenty-minute talk that outlined his proof, showing that first-order logic was, indeed, complete. Yet impressive

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Neumann quietly passed up the opportunity to stake a claim on the most remarkable result in mathematical history. The consequences of Gödel’s head-spinning second incompleteness theorem were even more staggering than his first. As von Neumann had indicated, building on Gödel’s earlier theorem, no system complex enough to

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Entscheidungsproblem.31 Under normal circumstances, Church’s paper would have rendered the younger logician’s work more or less unpublishable. There are rarely prizes for second place in mathematics. But Turing’s approach to the problem was so startlingly novel that Max Newman, his Cambridge mentor, recommended he press ahead with

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were sparse, and von Neumann later sent details of how programs might be recorded and read from magnetic tapes, to be included in a future second draft. Goldstine, however, was delighted with the incomplete report and quickly had it typed up. Without informing von Neumann, Mauchly or Eckert, he sent

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the Monte Carlo runs she and Metropolis had overseen. Klári returned to the BRL in October. Historians have recently recovered the complete program for this second Monet Carlo run: twenty-eight pages of code written in Klári’s hand.74 The calculations were completed on 7 November. ‘Klari survived the Aberdeen

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– she predicts her sibling will choose the bigger piece, so she wants to maximize the minimum amount of cake she’ll be left with. The second sibling’s minimax strategy is (in this elementary example) obvious: choose the bigger piece. In this game, the minimax and maximin coincide: the best

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a millionaire. Moreover, Theory of Games provides no method for calculating how much each player in a coalition should receive: what was a ‘fair’ settlement? Second, von Neumann and Morgenstern’s ‘stable-set’ solution for the n-person game proved contentious. Did all multi-player games have a cluster of coalitions

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of licences worth billions of dollars were at stake. Many past sell-offs had flopped.72 In New Zealand, a botched ‘second-price’ auction, in which the winner only pays the second-highest bid, resulted in a firm that bid NZ$7 million paying NZ$5,000; and a university student picking up a

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the founding father of the RAND Corporation, then that man would be Henry ‘Hap’ Arnold, the commanding general of the US Air Force during the Second World War. Arnold was an early believer in the importance of a powerful and independent air force and never stinted from hitting his enemy with

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Arizona in 1937, he started a PhD in astronomy at Princeton University but became so busy with war work that he never finished. During the Second World War, the AMP supported the new field of ‘operations research’, pioneered in Britain by the physicist Patrick Blackett. Operations research brought the methods

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Europe,’ he wrote to Klári, ‘because every corner reminds me … of the world which is gone, and the ruins of which is no solace. My second reason for disliking Europe is the memory of my total disillusionment in human decency between 1933 and September 1938.’45 Still, in Theory of Games

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paranoia of the early Cold War. And it would be Nash’s powerful solution to games that would for the first few decades after the Second World War take academia, economics and RAND by storm. In Santa Monica, RAND’s analysts had found themselves bumping up against the limits of

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time someone had noticed this dilemma, but two intellectual influences led Wohlstetter to give the issue more serious thought: the first was game theory, the second was his wife. Not only was game theory impossible to avoid in the Mathematics Division by 1951 but J. C. C. McKinsey, a good

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of instructions that describe how to build another like it – like Turing’s paper tape but made of the same ‘stuff’ as the machine itself. Second, the machine must have a construction unit that can build a new automaton by executing these instructions. Finally, the machine needs a unit that is

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computer scientist John Kemeny, who later developed the BASIC programming language (and was Einstein’s assistant at the IAS when Nash called on him). The second, which appeared in Galaxy Science Fiction later that year, was by the author Philip K. Dick, whose work would form the basis of films such

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NASA engineer Rodger Cliff and German rocket scientist Georg von Tiesenhausen. Tiesenhausen had worked with Wernher von Braun on the V-2 programme during the Second World War. Brought to the United States, he helped design the Lunar Roving Vehicle for the Apollo moon missions. The team’s ideas were

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. A drawback of this scheme is that a whole factory has to be built on the Moon before the automaton can replicate. The team’s second design, a ‘Growing Lunar Manufacturing Facility’ avoids this difficulty by requiring nothing more to start construction than a single 100 ton spherical ‘seed’ craft,

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each other until complementary chemical forces pull them together and make them stick. These soft biological machines will then serve as a stepping stone to second-generation nanomachines made of tougher stuff, such as ceramics, metals and diamond. Drexler had come across the transcript of a provocative talk entitled ‘There’s

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conclusions with a fairly elementary model. First, cities can become segregated along lines of race even if no one minds living in a mixed community. Second, only an active desire for diversity leads to diverse neighbourhoods. Indifference results in segregation. As agent-based models became more sophisticated, and computers more ubiquitous

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networks of artificial neurons. Funding dried up in the 1970s – the first ‘AI winter’ – and then renewed optimism in the 1980s gave way to a second AI winter, triggered in part by researchers who argued that progress required feedback from the senses (cameras and microphones) and interactions with the real world

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prominent position on the results page – and pays the third-highest bid, and so on. Designing and perfecting these ‘generalized second price’ auctions brought the first wave of game theorists into tech firms. For a brief history and review of such auctions, see one of the most cited

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economics papers of this century: Benjamin Edelman, Michael Ostrovsky and Michael Schwarz ‘Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars Worth of Keywords’, American Economic Review, 97(1) (2007), pp. 242–59. 81. W. D. Hamilton, 1996, Narrow Roads of Gene

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, 118 Gödel, Kurt ix, 111–18, 117, 278, 305n23, 305n24 Gödel numbers 114–15, 305n23 Gödel’s first incompleteness theorem 1121–167, 305n23 Gödel’s second incompleteness theorem 116–7 Goldbach’s conjecture 112–13 Goldstine, Adele 109, 131, 135 Goldstine, Herman 70, 105–6, 107, 108, 109, 110, 123,

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22 Euclid’s parallel postulate 17–18, 17 foundational crisis 15–25, 111–113, 113–115 Gödel’s first incompleteness theorem 112–167 Gödel’s second incompleteness theorem 116–7 hyperbolic geometry 18, 18 not complete 112–13 set theory 20–5, 26–8, 157 type theory 26–7 VNs contributions

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Is Life? 230, 231 Schrödinger’s cat 47–8, 58, 121 Schwarzschild, Martin 104 Scientific American (journal) 220, 231, 232, 240–1 Seaborg, Glenn 81 Second World War bombing of Hiroshima 94–5, 96 bombing of Nagasaki 95–6 bombing raids on Japan 185–6 decision to use bomb 93 firebombing

Empirical Market Microstructure: The Institutions, Economics and Econometrics of Securities Trading

by Joel Hasbrouck  · 4 Jan 2007  · 209pp  · 13,138 words

our most important markets—the (electronic) limit order book. Much of the material here can be perceived as an attempt to understand this mechanism. The second theme is asymmetric information, an economic term that refers to the varying quality of the information that traders bring to the market. It often establishes

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their next moves? To discourage waiting until the last instant, the Euronext markets employ random stopping times. Within a brief window (on the order of seconds), order acceptance may be terminated at any point. This introduces uncertainty into the lastinstant strategy and so discourages its use.6 The deadline may also

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security price dynamics, we shift focus from monthly or daily characteristics down to the features that come into play at horizons of a minute or second. Figure 3.1 illustrates this transition. For a randomly chosen stock (Premcor, symbol PCO, subsequently acquired), the figure depicts in panel A the sequence of

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accompanied by any increase in the calendar span of the sample. So do we gain or not? It depends. Merton (1980) shows that estimates of second moments (variances, covariances) are helped by more frequent sampling. Estimates of mean returns are not. For this reason, the expected return will often be dropped

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might have on subsequent decisions of others. A trader who revisits the market, however, must make such calculations, and they involve considerations of strategy. This second class of models is also sometimes described as continuous auction, but the continuity of the market is not really an essential feature. This line of

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of uninformed buying (u ≫ 0) drives the λ(u + x) + µ above v . The informed trader chooses x to maximize Eπ, yielding x = (v − µ)/2λ. The second-order condition is λ > 0. The MM conjectures that the informed trader’s demand is linear in v : x = α + βv . Knowing the optimization process

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is: E [yn |yn−1 ] = E [un + xn |yn−1 ] = E [βn (v − pn−1 )t|yn−1 ] = 0. The first equality is definitional; the second holds because the noise order flow has zero expectation. The third equality reflects the market efficiency condition that E[v |yn−1 ] = pn−1 . From

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from the univariate representation of a bivariate model the specification problems that almost certainly plague (but in a more subtle fashion) the multivariate analyses. A second consideration is that although we have good recent data on U.S. equity markets that allow us to infer qt , this is not universally the

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E ∗ [qt |εt , εt−1 , . . . ] = [(c + λ)/σε2 ]εt . Using this,   c+λ E ∗ [mt |pt , pt−1 , . . .] = pt − c εt = pt + θεt . σε2 The second equality follows from equating the first-order autocovariance implied by the structural model in (8.3) to that implied by the statistical model: −c(c

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on the structural identification and is easily computed as Var(pt − ft ) = Var(−θεt ) = θ2 σε2 . A GENERALIZED ROLL MODEL Now we turn to the second term, essentially seeking the structural identification for which it is minimized. Consider the reduced-form and structural models under the restriction σu2 = 0, or equivalently

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have increments, σw already determined this for one particular set, the case where st involves 73 74 EMPIRICAL MARKET MICROSTRUCTURE only terms in w t . Second, σs2 computed under this restriction is a lower bound. The chapter appendix develops these results in greater depth. Hasbrouck (1993) establishes the lower bound result

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) and εt = αwt . 2. Verify that φ(1)−2 σε2 = σw Exercise 8.3 For log price changes over five-minute intervals, we estimate a second-order moving average model: pt = εt − 0.3εt−1 + 0.1εt−2 , where σε2 = 0.00001. a. What is the random-walk standard deviation per

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MARKET MICROSTRUCTURE In the generalized Roll model, qt appears in two roles. First, it simply determines whether the trade occurs at the bid or ask. Second, it drives the revision in the efficient price due to inferred private information. Although the point was not emphasized in the discussion of the original

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(9.11) The first equality reflects our ability to recover the disturbances recursively from the VAR form of the model (using equation (9.3)). The second equality is a consequence of the fact that E[εt+k |εt , εt−1 , . . . ] = 0 for k ≥ 1. The price forecast is of particular interest

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.16) In this representation, it is natural to think of z1 as the ε1 factor. In turn, ε2 is driven by z1 and by a second residual ε2 factor, and so on. Essentially, we are taking ε1 as the first driver, projecting ε2 on ε1 , projecting ε3 on ε1 and ε2

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variance), and x2 as the product of z1 and a 83 84 EMPIRICAL MARKET MICROSTRUCTURE projection coefficient (σ12 /σ1 ), plus a multiple of z2 (a second factor that is uncorrelated with z1 ). Thus, x1 is placed first in the causal ordering. The causal ordering imposed by the decomposition is the same

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previous day, is likely to contribute little in a decomposition 2 . A more current (yet still widely disseminated) series, for examof σw ple, recent 10-second returns on the corresponding stock index futures contract, will almost certainly imply (and correctly so) a larger informational attribution. The estimated total informational contribution of

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in equations (9.26) is latent. The observed price is pt rounded to the nearest tick (in GH’s data, one-eighth of a dollar). Second, the GH data do not contain bid and ask quotes, so the qt are latent 91 92 EMPIRICAL MARKET MICROSTRUCTURE variables as well. GH base

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= mt−1 . There is one efficient price mt that is common to both prices. The first price is generated by the usual Roll mechanism. The second price has no bid-ask spread, but uses an efficient price that is one period stale. This model can be motivated as a description of

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trading in a primary market and a crossing market (discussed in section 2.6). The second price is the quote midpoint in the primary market, lagged to reflect transmission and processing delays. 10.2.2 The VMA Representation Both prices are

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% of σu2 . (Both prices are informative about mt . The first price is based on the current mt but impounds the bid/ask bounce error. The second price has no bid/ask bounce noise, but is based on mt−1 . As c gets large, the information share of the first market declines

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understate the true size if the price pair has been selected from a large number of candidates due to a history of “interesting” comovement. The second problem is that structural breaks can play havoc with the forecasts of cointegrated models. This is particularly true of breaks in the long-run means

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. If the specification is to be estimated in wall-clock time, what interval should be used? The precision of the time stamps (e.g., one second in TAQ data) sets a lower limit on the interval length. It is always possible to aggregate up to longer intervals, however, and analyses of

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has some apparent inconveniences. First, it is necessary to propagate prices past the time of their initial posting. For example, suppose that t indexes one-second intervals, a bid of 100 is posted at 10:00:15, and a bid of 101 is posted at 10:01:00. In the observation

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, however, that the prices are trade prices. A trade occurs at a particular time, and it cannot be suggested that the trade is repeated each second until a fresh transaction is recorded. Propagation of the trade price can still be justified, however, by interpreting the filled price series as a record

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streams and are in fact often displayed with no indication of the trade time. Last sale prices are also used for purposes of index computation. Second, a side effect of propagating price levels is that the series of price changes may contain many zero observations. This should not suggest model misspecification

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transmission, and the nominal reporting precision. Trading in some markets occurs are such a rapid pace that often multiple events are reported in the same second. When this happens, the sequencing of reporting is suspect. Beyond a certain point, precise determination of when an event like a trade actually occurred is

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quantities yields the price schedule. Figure 13.2 depicts P(q) for the indicated parameter values. As noted, this is the upper-tail expectation. The second line in the figure is the point expectation given the total size of the order. There are several features of interest. Both functions are nonlinear

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the right-hand side of equation (14.1) thus represents the cost of actual executions accomplished at actual trade prices rather than benchmark prices. The second term is driven by the divergence between actual and desired holdings and the change in benchmark prices. The implementation shortfall thus impounds the cost of

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particular position and the cost of divergence between that position and the one judged (by some other criteria) to be optimal. In other contexts, the second (opportunity) cost is known as the tracking error. When the order is executed at one time but at multiple prices, p is interpreted as the

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. If the limit order is not hit, however, it is most likely to be that the price has increased, leading to a positive opportunity cost. Second, assuming typical price dynamics, execution costs are likely to have low variance. Most limit orders are submitted near the quote midpoint. If there is no

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. The first is that orders vary in their degree of difficulty. A broker who is sent difficult orders will fare poorly in a VWAP evaluation. Second, if we account for a large proportion of a day’s volume, our weighted average execution price will approximate VWAP (they’re almost the same

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horizon that spans multiple days. Strategic choice involves quantities to be sent to the market at each time, but order choice is not modeled. The second problem involves purchase of a single unit over a shorter horizon, typically several hours. Strategic choice involves order type (market or limit), and (if a

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, it is reasonable to allow the initial impact to decay gradually over time. This can be incorporated into the analysis by the addition of a second state variable, t−1
At = θi st−i + θt A0 , (15.5) i=0 where θ is the geometric weight (0 ≤ θ < 1). The first

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term reflects our trades. The second term can be viewed as summarizing the delayed effect of others’ trades prior to the start of our own. For t > 1, At = st + θAt

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hit] × Pr (LT −1 not hit|pT −1 ). (15.13) The first equality follows from the martingale property of a zero-drift Weiner process; the second, from the definition of conditional expectations; and the third, from the fact that once a driftless random walk hits a barrier, the expectation of its

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is reasonable, in that when the horizon is effectively longer, there is a greater chance that a limit order strategy will at some point succeed. Second, the limit order price increases as we move closer to the terminal time. Thus, within the framework of this model, we have demonstrated that it

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is no time priority. In a crowd, it is relatively easy to keep track of who was first, but more difficult to remember who was second, third, and so on. • Trade reporting. The practice of public last-sale reporting and dissemination of bids and offers date from the floor phase of

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exercise considerable discretion in the display of customer limit orders. Presently, limit orders that better the existing quote must be executed or displayed within 30 seconds. A.2.5 Executions The NYSE has historically aggressively adopted technology to transmit orders and information but has been disinclined to automate the execution of

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rule”). Many markets (including the Euronext markets) have similar arrangements. A.2.6 Opening and Closing Procedures The opening procedure is effectively a single-price call auction. Brokers submit customer orders. The specialist tries to find a single price at which supply equals demand. To maintain a fair and orderly market, and

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as the initial shareholders. Demutualization had been accomplished by other exchanges, had earlier been considered by the NYSE, and was not a surprising suggestion. The second initiative, however, was more unexpected. This was a proposed merger between the NYSE and Archipelago, which operated a successful ECN. Both goals were accomplished. A

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quote comparison and tick test procedures. Among other things, they suggest that in working with NYSE data, trade prices be compared to midpoints prevailing five seconds previous (based on reported times). There have been many improvements in the reporting procedures however, and in more recent data signing based on reported times

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., The Handbook of Experimental Economics (Princeton University Press, Princeton, NJ). Roth, Alvin E., and Axel Ockenfels, 2002, Last-minute bidding and the rules for ending second-price auctions: Evidence from eBay and Amazon auctions on the internet, American Economic Review 92, 1093–103. Rubinstein, Ariel, 1982, Perfect equilibrium in a bargaining model, Econometrica

In the Plex: How Google Thinks, Works, and Shapes Our Lives

by Steven Levy  · 12 Apr 2011  · 666pp  · 181,495 words

tool that took advantage of the interconnected nature of the burgeoning World Wide Web, a tool that empowered people to locate even obscure information within seconds. This search engine transformed the way people worked, entertained themselves, and learned. Google made historic profits from that product by creating a new form

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set in stone. Search was a four-step process. First came a sweeping scan of all the world’s web pages, via a spider. Second was indexing the information drawn from the spider’s crawl and storing the data on racks of computers known as servers. The third step, triggered

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That result was known as search quality. The final step involved formatting and delivering the results to the user. Monier was most concerned with the second step, the time-consuming process of crawling through millions of documents and scooping up the data. “Crawling at that time was slow, because the other

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side would take on average four seconds to respond,” says Monier. One day, lying by a swimming pool, he realized that you could get everything in a timely fashion by parallelizing the

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toward the problem and then hope for the best. “The first problem is that relevance is in the eye of the beholder,” he said. The second problem, he continued, is making sense of the infuriatingly brief and cryptic queries typed into the AltaVista search field. He implied that the task was

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and dived right in to help shore up Google’s overwhelmed infrastructure. (By then Google had moved from Wojcicki’s Menlo Park house to a second-floor office over a bicycle shop in downtown Palo Alto.) Though Google had a hundred computers at that point—it was buying them as quickly

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“The in-memory index was, like, a factor of two or three cheaper, because it could just handle many, many more queries per machine per second,” says Dean. The system embodied Google’s approach to computer science. At one point, the cost of fixed memory (in chips as opposed to spinning

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would incorporate the rules and structure of each language so they could break down the original input and know how to recast it in the second tongue. “That’s very time-consuming and very hard, because natural language is so complex and diverse and there are so many nuances to

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it by billions of searchers who clicked long and those who clicked short, knew what he was talking about. Gomes hadn’t finished typing the second word before the page filled with links—and ads!—confidently assuming that he wanted information, and maybe a buying opportunity, involving “Vibram Five Fingers,

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majoring in biology, but then he decided he didn’t want to become a doctor or a scientist. Instead he took courses to get a second degree in economics. Drawing inspiration from his Silicon Valley surroundings, he wanted to start a company. His idea was to speed the transition in classified

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of course, drew up the business plan. Though hired as a part-timer, he went full-time two weeks later, dropping his pursuit of a second degree at Stanford. “It was ten times more exciting than what I was doing at school,” he says of Google. Kamangar sometimes thought the team

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would occupy. If it was in the most desirable position, the top ad on the right, the client would pay $15 per thousand exposures. The second position cost $12, the third $10. There was one feature built in to try to ensure that the most useful ads would appear: advertisers

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to explain how our auction works—it seems familiar to me.” She described it to him. “Oh yeah,” said Summers. “That’s a Vickery second-bid auction!” He explained that not only was this a technique used by the government to sell Federal Reserve bonds but the economist who had

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each of them. But Google simplified the auction. Instead of making eight bids for the eight positions, you made one single bid. The competition for second position will automatically raise the price for the first position. So the simplification thickens the market. The effect is that it guarantees that there’s

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prevent any from appearing in the first place. But AOL wanted a system guaranteed to ensure that no objectionable phrases would appear for even a second. “The only way to meet the policy was manually reviewing the ads,” says Sandberg. She was taken aback when Kordestani came by one day

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a self-service system that allowed it to accommodate hundreds of thousands of advertisers. Overture did implement some of Google’s innovations, such as the second-price auction. But by then AdWords had left Overture and Yahoo in the dust. (Bill Gross would later shrug off the fact that his ideas involving pay

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cow that would fund the next decade’s worth of projects, from brilliant to lunatic. In 2007, writing about the “spectacular commercial success” of the second-price auction model, economists at Stanford, Harvard, and the University of California at Berkeley described it as “the dominant transaction mechanism in a large and rapidly growing

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age of search. She considered the AdSense arrangement the best sales pitch in advertising history. “Here’s the deal,” she’d say. “You take ten seconds to put a little snippet of code on your website, and from that moment on, Google sends you a check every month.” It became evangelical

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they dealt with to place bids in an auction? “We thought it was a little half cocked,” says Jeff Levick. “If we let the auction set prices, we worried that we could actually lose a lot of money.” But the die was cast. Tim Armstrong, the executive in the New York office

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nobody will notice. But with advertising, the state is important, because advertisers are always updating their campaigns, and microtransactions are happening at ferocious rates per second, and all that has to be synchronized.” Compared to Google’s demands, the auction volume that Huber handled at eBay was like spitting in the

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a small lesson in improved coding. A typical “Testing on the Toilet” instructional dealt with the intricacies of load testing or C++ microbenchmarking. Not a second was wasted in fulfilling Google’s lofty—and work-intensive—mission. It’s almost as if Larry and Sergey were thinking of Maria Montessori’s

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at Google without computer science degrees—the people churning out tasks such as communications, billing, human resources, and even building facilities administration—weren’t exactly second-class citizens, but definitely a lower class of citizens. “There is an absolutely crystal-clear hierarchy at Google,” says Denise Griffin, who was hired

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financials, convincing Rosenberg that the job was the opportunity of a lifetime. But his first year was awful. Larry Page would sit in meetings and second-guess every move Rosenberg made. “I would come to the staff meeting with my structured agenda, the market research we needed to do, the one

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they found ads that seemed related to the content. It was as if Google were looking over their shoulder and snooping on their mail. A second, related complaint came from Google’s boast that with Gmail, you could keep your email forever. People were accustomed to having files of email on

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have a date again!” she wailed. But there were less frivolous complaints. When you did a search for Google executive Susan Wojcicki, for instance, the second result was a posting from the Silicon Valley gossip blog Valleywag, inaccurately charging her with stealing the credit for developing AdSense. Wojcicki knew why Valleywag

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count sometimes,” he says. “One one-thousand, two one-thousand. That tends to get people’s attention.” Actually, if your product could be measured in seconds, you’d already failed. Buchheit remembers one time when he was doing an early Gmail demo in Larry’s office. Page made a face and

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way too slow. Buchheit objected, but Page reiterated his complaint, charging that the reload took at least 600 milliseconds. (That’s six-tenths of a second.) Buchheit thought, You can’t know that, but when he got back to his own office he checked the server logs. Six hundred milliseconds. “He

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to future searches. The reduction in the number of searches was small but significant, and were measurable even with 100 milliseconds (one-tenth of a second) latency. What’s more, even after the delays were removed, the people exposed to the slower results would take a long time to resume their

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when results are delayed, users respond with their own latency, taking longer to click on links after a search is completed. Presumably, during the half second or more that the results are delayed, the users have begun to think about something else and have to refocus before they get around to

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the bandwidth provider that owned the fiber. “Networking was very expensive,” says Hölzle. “And our data push would take twenty hours at a gigabyte per second—that would cost us something like $250,000 a month.” To save money, Google devised a trick that exploited a loophole in the billing system

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call and mediated between Google and the Bonneville Power Administration. Then Google worked with the state to get fifteen years of tax relief, only the second time in Oregon history that a company had received a break of that length. On February 16, 2005, the commissioners approved the land sale to

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operating system, and it was almost unthinkable that anyone could challenge that. In any case, an operating system was far from Google’s mission. The second was Microsoft Office, its applications suite with components including Word, the Excel spreadsheet, and the PowerPoint presentation software. The threat to Microsoft was that Google

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evolution,” says Schmidt, apparently referring to Google’s accelerated plans to launch a device that behaved like an iPhone. “So at the end of my second year [as a board member] Steve and I agreed without discord that I would recuse myself from the phone [discussions].” When the iPhone came up

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valuable block of frequencies up for auction. One demanded that a phone made by any manufacturer should be able to run on the network. A second would dictate that any software developer could write applications that ran on the network. That meant that if, say, Verizon won the auction, it

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him. Larry Page, who at one point early in Google’s history argued that there should be no landlines in the company, agreed. He also seconded Arora’s notion that GrandCentral would cause too many troubles with carriers—he was worried about AT&T and Verizon. “Larry,” Chan recalls saying, “they

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who wanted to return to academia, soon went back to school and turned over the leadership to his partners.) They set up shop in a second-floor office over a pizzeria in San Mateo, halfway between San Francisco and Palo Alto. They made a few decisions early on that proved brilliant

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it required a separate download.) “It was important when you come to YouTube that within a few clicks you are watching video,” said Chen. The second decision was to include YouTube in a budding movement described as Web 2.0, where online activities were seen as participation in a self-defined

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1, 2006, Smith’s subcommittee held a hearing, but none of the offending Internet companies chose to attend. Smith and similarly indignant representatives scheduled a second hearing, this time with a more coercive approach. The title of the session was “The Internet in China: A Tool for Freedom or Suppression?” Besides

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required to work on search, ads, and other key projects. The restrictions limited what the engineers could do—and sent a message that they were second-class employees, that Google did not trust them. “China was the only country that had this,” says Boon-Lock Yeo, who headed engineering in

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state pension fund, which owned 2 million shares of Google, demanded a number of steps before the company engaged in activities that suppressed freedom. The second would force the board of directors to set up a committee focusing on human rights. Google officially opposed the proposals, and with a voting structure

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around. In addition, its business operations in China were doing well. Though it had far to go to unseat Baidu, Google was clearly in second place and more than holding its own. In maps and mobile Google was a leader. In the world’s biggest Internet market, Google was in

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television network, where content is carefully controlled by the government. Now he was hearing that the government demanded that Google remove Suggest. There was a second demand—to remove foreign websites from its indexes. Google refused. Though Lee would not say it, he had to have been thinking, I won’t

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popular ones were shown on a large flat-screen display. The top-ranked question was about whether legalizing marijuana would jump-start the economy. The second-ranked question involved … the legalization of marijuana. And the third question? Legalizing dope. The National Organization for the Reform of Marijuana Laws (NORML) had

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while you were on the Sports Illustrated site. (In a much less significant but even more drastic departure from original values, Google sponsored a thirty-second ad during the 2010 Super Bowl. Page later said that running the ad was a low-risk way to see whether Google’s distaste for

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plan was better than nothing. But he wouldn’t answer. The fate of the settlement rested in the hands of Judge Denny Chin of the Second Circuit’s Southern District in New York. After the DOJ brief, Judge Chin postponed a scheduled October 2009 hearing so that the parties could

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called her “one of the future leaders of the profession.” She had represented Google in a previous class-action lawsuit involving click fraud. Within ten seconds of addressing the court, her word choice raised eyebrows. MS. DURIE: Your Honor asked whether it would be permissible to release claims for future discrimination

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waiting,” she says. Orkut was also dominant in India, where it was the number one Google service—ahead of search and Gmail. “There is no second product in India—Orkut is dominant,” said Manu Rekhi, the Orkut India product manager, in 2007. “I’ve seen beggar kids who use their

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pronged strategy. One was making Google products more social—maybe Gmail and other applications could be opened up to people’s friends and contacts. The second was a more ambitious plan where Google would essentially create a scaffolding on the web to lubricate social activities. The system could duplicate some of

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and Twitter without having people visit those websites. Kraus even had a motto for it: “go fast alone, go far together.” He also had a second slogan for the approach that Google had to take when competing in the social world: “Ready, fire, aim.” It sounded like a postmortem for

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conference in New York City, April 25, 2009. 99 “the dominant transaction mechanism” Benjamin Edelman, Michael Ostrovsky, and Michael Schwarz, “Internet Advertising and the Generalized Second Price Auction: Selling Billions of Dollars Worth of Keywords,” American Economic Review, March 2007. 101 “many synergies” Amy Harmon, “Google Deal Ties Company to Weblogs,” The New

The Upside of Irrationality: The Unexpected Benefits of Defying Logic at Work and at Home

by Dan Ariely  · 31 May 2010  · 324pp  · 93,175 words

, which had recently been isolated and identified. As lousy as I felt, I greeted this as good news. First, I finally knew what I had; second, a promising new experimental drug called interferon looked as if it might be an effective treatment for hepatitis C. The doctor asked whether I’d

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understand both our beneficial and our disadvantageous quirks, because only by doing so can we begin to eliminate the bad and build on the good. Second, you will notice that this book is divided into two distinct parts. In the first part, we’ll look more closely at our behavior in

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-Invented-Here” bias have such a foothold in the workplace? Why do we react so strongly in the face of injustice and unfairness? In the second part, we’ll move beyond the world of work to investigate how we behave in our interpersonal relations. What is our relationship to our surroundings

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and I try to do our best to be as objective as possible in running and analyzing our experiments, much of this book (particularly the second part) draws on some of my difficult experiences as a burn patient. My injury, like all severe injuries, was very traumatic, but it also very

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meeting room, where they could set up shop and recruit participants for our experiment. One of the locations was a community center, where Ramesh, a second-year master’s student, got to work. The community center was not fully finished, with no tiles on the floors and unpainted walls, but it

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rupees (if he took four minutes, he could earn 200 rupees). As the clock ticked, Ramesh read out the remaining time every thirty seconds: “Ninety seconds! Sixty seconds! Thirty seconds!” Poor Anoopum tried to work faster and faster, applying more and more force to fit all nine of the wedges into the square, but

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utmost to focus on the task at hand. His first attempt with Simon resulted in a two-light sequence—not very promising. But, on the second try, he managed to recall a sequence of six. He beamed, because he knew that he had finally made at least 200 rupees, and he

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the buzzer sounds. Clutch players are paid much more than other players, and are presumed to perform especially brilliantly during the last few minutes or seconds of a game, when stress and pressure are highest. With the help of Duke University men’s basketball Coach Mike Krzyzewski (“Coach K”), we got

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your jobs right.” As you may have guessed, two things happened, or rather did not happen, after this speech. First, no one answered his questions; second, no standing ovation was given. But Frank’s point is important. After all, bonuses are paid with shareholders’ money, and the effectiveness of those expensive

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moment before giving his lesson. He offers Mark three tips: first, to observe the man he’s fighting and learn how he moves and thinks; second, to await the make-or-break moment in the match and go for it then. Up to that point, Mark smiles and nods happily, sure

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to), but it has two features that are new to you. The first is an automated food dispenser that releases food pellets every thirty seconds. Yum! The second is a bar that for some reason is covered with a tin shield. At first, the bar isn’t very interesting, but the food

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’s two dollars,” Sean said. “Would you like to build another one for a dollar eighty-nine?” Chad nodded enthusiastically and started working on his second robot, using the same organized approach. While Chad was putting together the first pieces of his next Bionicle (pay attention, because this is where the

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his cell phone for the time and thought for a moment. “Okay,” he said, “I’ll make one more.” Sean handed him the second Bionicle for the second time, and Chad set about rebuilding it. (All the participants in his condition built and rebuilt the same two Bionicles until they decided to

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work dramatically diminishes. From this you further conclude that if the factory wants to increase productivity, wages must be increased substantially. Next, you visit the second Bionicles factory, which is structured more similarly to the meaningful condition. Now imagine how your conclusions about the onerous nature of the task, the joy

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a sheet. We also told them about the payment scheme: they would be paid $0.55 for the first completed page, $0.50 for the second, and so on (for the twelfth page and thereafter, they would receive nothing). In the first condition (which we called acknowledged), we asked the students

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your creation? To find out, we compared the results of two different bidding procedures called first-price and second-price auctions. Without going too much into the technical differences,* if you were bidding using a second-price bidding procedure, you should carefully consider only how much you value your little paper creature.* In contrast

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creators realized that they were uniquely overimpressed with their own frogs and cranes, they would bid more when using the second-price auction (when only their value matters) than when using the first-price auction (when they should also take into account the values of others). In contrast, if the creators did not realize that

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did? We found that creators bid the same amount when they considered only their own evaluation for the product (second-price auction) as when they also considered what noncreators would bid for it (first-price auction). The lack of difference between the two bidding approaches suggested not only that we overvalue our own creations but

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(somewhat more complex) * * * After running this experiment for a while, we had three groups: one that got the easy instructions and completed their task; a second group that worked with the difficult instructions yet somehow managed to complete the task; and a third group faced with the difficult instructions that failed

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and left the other cage empty, the chimp pulled the table over, ate contentedly, and didn’t pull the rope. However, things changed when a second chimp was put in a neighboring cage. As long as both chimps shared the food, all was well; but if one happened to roll the

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possibility), but I’m not voting for a blank check for $700 billion for those mother fuckers. Nancy [Pelosi] said she wanted to include the second “stimulus” package that the Bush Administration and congressional Republicans have blocked. I don’t want to trade a $700 billion dollar giveaway to the most

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attitude on Wall Street. Customer Revenge: My Story, Part I When our son, Amit, was three years old and Sumi and I were expecting our second child, Neta, we decided to buy a new family car and ended up with a small Audi. It was not a minivan, but it was

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, we decided to have the experimenter pick up his cell phone in the middle of explaining a task, talk to someone else for a few seconds, hang up, and, without acknowledging the interruption, continue explaining the task to them from the place where he had left off. We figured that this

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say, “Pizza tonight at eight thirty. My place or yours?” Then he would end his call with “Later.” The whole fake conversation took about twelve seconds. After Daniel slipped the cell phone back into his pocket, he made no reference to the disruption and simply continued describing the task. From that

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change) or give it back. We particularly wanted to measure the extent to which people would keep the extra cash would increase following the twelve-second phone interruption—which would give us our measure of revenge. We also chose this approach because it was similar to the revenge opportunities people have

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extra cash even when they were not annoyed is a sad state of affairs, to be sure. But it was truly disturbing that a twelve-second phone call vastly decreased the likelihood that the participants would return the cash to the point where just a small minority of people made the

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1 lux). Even with the light of the stars (where luminance can be as low as 0.001 lux), we can function to some degree. Second, it takes a little bit of time for our eyes to adjust. When we first move from darkness to light, we are unable to open

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for much longer. As you may have guessed, this result suggests that those who suffered through the vacuum whooom for forty seconds got used to it and found the last five seconds of their experience to be not so bad. But what happened to those who experienced the short break? As it

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a pleasurable experience with and without a break Participants were exposed to either a three-minute massage (A) or an eighty-second massage, followed by a twenty-second break and another eighty-second massage (B). In all cases the participants were asked to evaluate their enjoyment of the whole experience. * * * Here is the

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it’s like the vacuum cleaner experiment. Intermittent exposure to others’ reactions to my looks may be the influence that prevents me from adapting. A second personal anecdote of failed adaptation concerns my dreams. Immediately after the accident, I appeared in my dreams with the same young, healthy, physically unscarred body

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, I don’t like her small, symmetrical nose” or “Blech, all that dark, lustrous hair.” Those of us who aren’t gorgeous might utilize a second approach to adaptation. We might not change our sense of beauty, but instead look for other qualities; we might search for, say, a sense of

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grapes theory, but it left two possibilities open. The first was that people adapt by learning to place greater importance on other attributes, and the second was that there is no adaptation to our own aesthetic level. * * * The three possible ways to deal with our own physical limitations (following the first

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limitations placed on us by our lack of beauty (or at least, that this is how we behave online). To do this, we used a second interesting feature of HOT or NOT called “Meet Me.” Assuming you are a man who sees a picture of a woman you’d like to

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gone to school, what their favorite books were, and so on. If they answered the questions to his satisfaction, he would advance them to the second step of a four-stage filtering process. In stage two, Scott sent another form letter containing more questions. Again, “correct” responses resulted in advancement to

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interactions a bit more like regular dating. She can try to engage her romantic prospects in conversations about things she likes to see and do. Second, she might go a step farther and create her own version of virtual dating by pointing the person she is chatting with to an interesting

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that provided food assistance. Before reading on, ask yourself, “If I were in a participant’s shoes, how much would I give, if anything?” The second group of participants, in what was called the identifiable condition, was presented with information about Rokia, a desperately poor seven-year-old girl from Mali

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we will be even less likely to give money to help someone whose home has been lost to an earthquake three thousand miles away. The second factor is what we call vividness. If I tell you that I’ve cut myself, you don’t get the full picture and you don

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the Western world: rising sea levels and pollution may affect people in Bangladesh, but not yet those living in the heartland of America or Europe. Second, the problem is not vivid or even observable—we generally cannot see the CO2 emissions around us or feel that the temperature is changing (except

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the actions we took in the heat of the moment? HERE’S A STORY of a time when I lost my own temper. During my second year as a lowly assistant professor at MIT, I taught a graduate class on decision making. The course was part of the Systems Designs and

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do three key things. First, we had to either irritate people or make them happy. This temporary emotional baggage would set the stage for the second part of our experiment, in which we would get our participants to make a decision while under the influence of that emotion. Then we would

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goes back to the experimenter, and both players get nothing. Before I describe our particular version of the ultimatum game, let’s stop for a second and think about what might happen if both players made perfectly rational decisions. Imagine that the experimenter has given the sender $20 and that you

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touchiness develops into a more general pattern of behavior (“Well, I wouldn’t have missed the turn if you’d given me more than five seconds to switch lanes!”), and the cycle continues. SINCE IT’S IMPOSSIBLE to avoid either relevant or irrelevant emotional influences altogether, is there anything we can

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a blunt, rusty garden hoe. The pain was unimaginable; it left me gasping. I thought I would die from it. Then it came again, a second time, starting at my elbow and moving downward to my wrist. I screamed and begged them to stop. “You’re killing me!” I cried. No

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long as possible, certain that the ten count would bring the end. I perceived the new, impending pain—which had seemed almost manageable a few seconds earlier—with full-blown terror. How could I survive this again? “Please, I will do anything. Just stop!” I begged, but I had no say

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was attached to it, while loss aversion made it difficult for me to give it up, even when doing so might have made sense. A second irrational influence is known as the status quo bias. Generally speaking, we tend to want to keep things as they are; change is difficult and

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you can probably guess, one of the things that worries me the most is the prospect of being hospitalized for a prolonged period of time.) Second, despite the fact that I understand and can analyze some of my decision biases, I still experience them. They never completely cease to influence me

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Competition on Price, Quality, and Distribution,” Marketing Science 19, no. 1 (2000): 83–103. Michael Norton, Joan DiMicco, Ron Caneel, and Dan Ariely, “AntiGroupWare and Second Messenger,” BT Technology Journal 22, no. 4 (2004): 83–88. Chapter 9: On Empathy and Emotion: Why We Respond to One Person Who Needs Help

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ideas, see Not-Invented-Here (NIH) bias to self-made goods, see IKEA effect attractiveness, assortative mating and, 191–212 see also assortative mating auctions, first-price vs. second-price, 98–99 Audi customer service, author’s experience with, 131–36, 137, 149, 153–54 experimental situation analogous to, 135–39 fictional case

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improve experience of, 232 Open Left, 128–29 Opposition, 154 origami experiments, 91–94, 97 with element of failure, 102–4 with first-price vs. second-price auctions, 98–99 outsourcing, 146 overvaluation: of one’s own ideas, see Not-Invented-Here (NIH) bias of self-made goods, see IKEA effect P Packing

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,” even animals prefer to eat food that they have worked for in one way or another. *The Becker-DeGroot-Marschak procedure is similar to a second-price auction played against a random distribution. *For some of the dangers of customization and the risks of overfalling in love with our own creations, see my

Reinventing the Bazaar: A Natural History of Markets

by John McMillan  · 1 Jan 2002  · 350pp  · 103,988 words

stores, bars, restaurants, bus services, hair-dressers, tailors, butchers, photographers, movie theaters, and pharmacies. Markets sprang up, similarly, in prisoner-of-war camps during the Second World War. The prisoners traded their Red Cross rations of food, cigarettes, and clothing, according to R. A. Radford, a Briton captured by the Germans

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first in the 1999 Fortune 500 list of the top global companies. Its profits were 18 percent of revenues, putting it far ahead of the second-place industry, diversified financial firms, whose profits were 11 percent of revenues; the other industries’ profits ranged all the way down to zero. These reported

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a brass urn as a souvenir. The many sellers of brassware cluster in their own area. You can walk from one merchant to another in seconds, so comparison shopping is easy. But not costless. You are in Marrakech for just a couple of days and there are other places to visit

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not bother to search for the lowest price. This seems a tenuous explanation, however, for most people would think it worthwhile to use a few seconds to save several dollars. It certainly cannot explain the continued existence of price dispersion on large-ticket items. How can price dispersion persist when information

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introduced the “warning” rule. After a bean ball is thrown, the umpire issues a warning; if another bean ball is thrown by either side, the second pitcher and his manager are ejected from the game. Old-timers’ wisdom has it that the warning rule has actually made it more likely that

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in a peculiar fishmongers’ form of Japanese. The buyers bid silently, using hand gestures. They instantly counter each other’s bids, so it takes just seconds to sell a tuna worth up to $15,000. The auctions are over by 7:00 A.M. Having sold perhaps $10 million worth of

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, and the additional one’s cost is $5,500, the price is driven down to $6,000. In general, the price under competition is the second-lowest cost, for that is where the competition stops. As the number of competitors increases, the gap between the lowest and

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second-lowest cost shrinks, so the price approaches the cost of the most efficient seller. More competition brings lower prices.2 Laboratory experiments have been used

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the most efficient seller. A seller unconstrained by competition can charge a markup above production cost. Competition between sellers drives the price down to the second-lowest production cost; when many sellers are competing, this production cost is close to that of the most efficient producer. Competition gets prices right, in

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winner only if you value the painting more than your rivals. The bidding stops at the price at which the second-last bidder drops out, so the price you pay is the second highest of the valuations. The competitive process reveals information. After the auction, the seller knows which of the bidders

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values the item the most, and the price gives an estimate of its value. It is an underestimate, since the price is the second-highest valuation. But if the number of bidders is reasonably large, the bidding competition drives the price up close to the winner’s valuation. The

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future supply and demand. In the Tsukiji auction, the fish catch varies in quantity and quality from day to day. In the Aalsmeer flower auction, the prices often rise or fall by 20 percent or more from week to week, reflecting the demand and supply vagaries of a perishable commodity. The essence

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sometimes disgraceful history. The ancient Greeks used them to sell slaves and wives. The growth of internet commerce has reinvigorated them. With their interactive price-setting, auctions are tailor-made for the internet, whose chief feature is its interactivity. The founders of the online auctioneer eBay set a simple, effective design for

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bid. Commercial real estate is sometimes sold this way. A variant is the second-price auction, in which there is a single round of bidding and the high bidder wins, but unlike first-price auctions, the price paid is the second-highest bid. Second-price auctions are used for selling stamps. eBay chose open auctions. Economic theory endorses this

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. Solving one problem, the fixed end time, brought a problem of its own, by creating a perverse incentive for bidders. Some wait until a few seconds before the end time, then submit a bid just above the current high bid, trying to leave the other bidders no time to respond. This

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could win, depending on the competition, at any price up to the level of the proxy bid. The price the proxy bidder pays is the second-highest bid plus a bid increment. eBay’s proxy bidding does not always succeed in eliminating sniping, however. Savvy bidders still often hold their bids

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to the last second, in the hope of preventing a bidding war. If they bid early, they may push others’ bids up. If they bid late, no bidding competition

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of rounds. In the first stage a bidder must be active on licenses that add up to one-third of its prespecified total; in the second stage, two-thirds; and in the final stage, all of its prespecified total. If a bidder ever falls short of the required activity level, the

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of research and then one of development. First is applied science: investigating whether a piece of pure scientific knowledge could lead to a workable medicine. Second is clinical testing on animal and then human subjects, to prove it works without dangerous side effects so that the government will license it. Third

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flouting government policy, the contracting of land to individual households was to be kept strictly secret; it was not to be divulged to any outsider. Second, they would continue to deliver the stipulated amount of rice taxes to the state. Third, if any of them were jailed, the others would raise

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prosecutor complained, “The main way the mafiya penetrates into the economy is through the bureaucrats. They are our main enemy. The mafiosi are only the second enemy.”3 One of the most elementary propositions in economics is that people will not invest if they cannot keep the fruits of their investment

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overcome. First, the conspirators need a way to divide the spoils. Squabbling over how to share the profits could cause the breakdown of the conspiracy. Second, an agreement is worthless without some way of enforcing it. Since contracts to fix prices are not enforced by the law, any collusive agreement must

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the job. Despite the efforts dango organizers make, negotiations will usually be less effective than bidding as a means of selecting the low-cost firm. Second, firms that sidestep the discipline of competition tend to produce inefficiently. They fail to search for cost-reducing innovations; they pay inflated wages and salaries

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the support of the state and even in the face of state harassment. It does not follow, however, that the state should stay away. The second proposition is that for the elaborate exchanges occurring in modern economies, the state is indispensable, providing goods and services that markets would undersupply and acting

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by its owner, private ownership can be enough by itself to ensure the firm is run well, but not in large corporations with many shareholders. Second-guessing the managers’ decisions is not easy: it is a costly, time-consuming exercise. To do it right, a lot of information is needed. For

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licenses, for there would be no one to trade them with; direct regulation is still required. Markets cannot be applied to every kind of pollution. Second, even where markets work, as with the control of sulfur dioxide pollution, the government must continue to take the lead, setting the overall ceiling on

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bids from highest to lowest, and the offers from lowest to highest. It then matches the highest bidder with the lowest offerer, the second-highest bidder with the second-lowest offerer, and so on, until the last buyer-seller pair for whom the bid exceeds the offer is reached. The prices paid

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at a different price. The firm bidding the highest pays the price it bid to the seller offering the lowest price; the second-highest bidder pays its bid to the second-lowest offerer, and so on. This pricing rule perhaps might look reasonable at first glance, but it induces perverse incentives. By

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powerful computers are needed to instantly compare the bids, compute the market-clearing price, and allocate the quantity orders to the buyers and sellers.) The auction prices rose higher and higher. “We are so far into the realm of extraordinary gouging we are orders of magnitude off the chart,” California Assembly Speaker

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growth together with unsustainable budgetary imbalances. From 1950 to 1980, New Zealand slipped from having the world’s third-highest income per capita to twenty-second. The reforms were needed, therefore, and most observers agree that moving rapidly was justified in the circumstances. But the reforms were slow to show a

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of inequality. In countries with low inequality, growth has a bigger impact on poverty than in very unequal countries. In the United States over the second half of the twentieth century, growth brought uneven gains. Inequality widened as the rich got richer, mainly from technological changes that increased the wages of

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Existing NPRM Algorithm.” www.economics.harvard.edu/~aroth/phase1.html. Roth, Alvin E., and Ockenfels, Axel. 2000. “Last Minute Bidding and the Rules for Ending Second-Price Auctions.” Unpublished, Harvard University, Cambridge. Roth, Alvin E., and Peranson, Elliot. 1999. “A Redesign of the Matching Market for American Physicians: Some Engineering Aspects of Economic

Radical Markets: Uprooting Capitalism and Democracy for a Just Society

by Eric Posner and E. Weyl  · 14 May 2018  · 463pp  · 105,197 words

—in the two ways highlighted by our epigraph. First, he dug deeply into the roots of economic organization and proposed theories that remain influential today. Second, he attacked the prevailing ideas and institutions of his day and presented a series of daring propositions and reforms. People regard these ideas as “conservative

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lest they come at a cost to the size of the total economic pie. This tradeoff fragmented the liberal coalition. Those who had led the second generation of reforms coalesced into the modern political Left, known as liberals in the United States and social democrats in Europe. They prioritized equality within

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from the working class. The ideological and military victories of World War II and the Cold War, accompanied by economic and political achievements of the second half of the twentieth century, thus bred arrogance, which led to complacency and internal division. The radical reformers of the nineteenth and early twentieth centuries

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mind that his idea is already used to assign the advertising slots of Web and Facebook pages all of us visit every day. Every few seconds, these slots are reallocated to the highest current bidder via an auction design proposed by Vickrey.29 Governments also use auctions. Coase persuaded the Federal

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use value is revealed and transferred to the public through the tax; the higher the tax, the greater the fraction of use value transferred.46 Second, and of far greater significance, consider the right to exclude. In the private property system, the owner keeps her property—which means keeping other people

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American political history. Racial, ethnic, and religious minorities who suffered various types of abuse could not obtain legislative relief because they were outvoted. In the second half of the twentieth century, federal courts stepped in to rectify the problem of conservative tyrannies by recognizing the rights of minorities to effective political

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my winning is denying the good to another bidder, so the highest bidder should win at the price equal to the losing bid of the second-place bidder. But, as Edward Clarke and Theodore Groves realized independently in the 1970s, a decade after Vickrey’s work, this principle also suggests a

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straightforwardly harms others by preventing them from consuming electricity for which they would be willing to pay the cost (to everyone other than Nils). But, second, he is requesting the elimination of increasingly beneficial pollution-generating economic activity. While the costs and benefits of a slight reduction below A are perfectly

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eliminated. This makes two important things possible. First, a passionate minority can outvote an indifferent majority, solving the problem of the tyranny of the majority. Second, the outcome of the vote should maximize the well-being of the entire group, not the well-being of one subset at the expense of

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individual preferences. The QV results are thus much more plausible as a representation of population preferences than is the artificial W shape from Likert.44 Second, while Likert conceals the range of intensity of preferences by grouping all, or nearly all, of the responses at the extremes, QV reveals these gradations

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, David Goldstein, & Ellen Konar, Quadratic Voting in the Wild: Real People, Real Votes, 172 Pub. Choice 283 (2017), p. 6. A nice illustration of this second point is figure 2.5, which shows the voting patterns for two different voters who expressed the most extreme preference on almost every issue under

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and one with income of $1,000. If we equalized income, the first person’s income would fall to $500,500, or nearly 50%. The second person’s income would rise to $500,500, an increase of 500 times, or 50,000%. Thus, equalizing incomes would cause a large average percentage

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more than 10% of global inequality in the 1820s, to being the dominant source of global inequality, accounting for two-thirds or more in the second half of the twentieth century and still today accounting for 60–70% depending on whose measurements you rely upon.9 This puts into quantitative perspective

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of ordinary people. No one benefited from moving from one country to another if he or she was a proletarian or landless peasant in both. Second, migration was relatively unrestricted across countries, and controls upon it were scarcely enforced since there was little demand to migrate and because the primitive, risky

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system. First, it ensures that a large share of the gains from migration accrue to ordinary people rather than businesses. Hence, it would advance equality. Second, and as a consequence, it would soften political opposition to migration. Third, the program would greatly reduce the role of government bureaucrats and instead harness

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(say, India) by obtaining a visa for the worker, which allows the worker to reside in the United States for three years, renewable for a second three-year period, subject to various restrictions (including the limited number of available visas). Family members can also sponsor visas under the Family Reunification policy

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welfare gains that the VIP would otherwise produce. However, all other worker protection rules—for example, those relating to workplace safety—would apply to them. Second, immigration enforcement would need to be strengthened. If Bishal disappears into the underground economy, there must be a reasonable likelihood that he will be caught

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it would begin to expose and soften a global system that keeps extreme poverty out of sight and mind for the people of wealthy countries. Second, this process of disruption through greater awareness and proximity of inequality will be greatly mitigated by the likely temporary nature of migration in the VIP

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a 6.4% stake. It is also the largest owner of Citgroup and U.S. Bank, and the second largest owner of Bank of America, Wells Fargo, and PNC Bank. Vanguard is the second largest owner of JP Morgan, Citigroup, and U.S. Bank, and the third largest owner of Bank of

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about 5–10% of the companies, but the same logic holds. Suppose Vanguard is the largest shareholder of GM and Ford, and BlackRock is the second largest shareholder. Vanguard owns 7% of each firm; BlackRock owns 6% of each firm. Each institutional investor wants GM and Ford to forgo price competition

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preserve nearly all of the gains from diversification for typical investors, even if investors chose to hold only the funds offered by a single institution. Second, there is no reason why our proposal need worsen diversification at all. If savers truly want that last bit of diversification, they can simply invest

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years and it seems capricious and unfair to bankrupt all institutional investors for behavior that is so standard to the industry, however egregious its harms. Second, the violations are so widespread and the theory around them so unsettled that courts, without external guidance, are unlikely to create a predictable legal environment

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services should be free, as embodied in entrepreneur and writer Chris Anderson’s 2009 best-selling book, Free: The Future of a Radical Price.12 Second, many of the services provided online were, at least initially, occasional and small, with the result that investment in the development of infrastructure that would

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were the central assets for technology giants became increasingly salient with the explosion of interest in “big data,” ML, and AI. Machine learning is a “second-generation” approach to building AI systems. The first generation, which largely died out during the 1980s, focused on building formal logical rules that represented intellectual

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activations tend to represent slightly more abstract and complex features of the image. To achieve greater abstraction, this hidden layer is then connected to a second hidden layer, with the same properties, and so on. Eventually the last of these hidden layers yields to a final “output layer” that determines the

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extremely large collection of labeled examples; in this case, this would be a large number of photos tagged as containing or not containing a face. Second, “computation.” Neural nets are usually run on large farms of servers. Last (and, as we will argue, least), “supervisors,” the programmers who set up the

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not the statistics of a given ML problem, but rather the distribution of complexity across different problems. Just as with classical statistics, there is a second critical question that determines the marginal value of data: how important it is to solve each of the problems data allow ML to tackle. If

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content addictive.35 Together these properties raise the power of siren servers to lock users into patterns that may not serve their long-term interests. Second, as highlighted by economist Roland Bénabou and Nobel Laureate Jean Tirole in their incisive 2003 and 2006 analyses of situations like the Tom Sawyer problem

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how to optimize the search for data (possibly at some cost) and offers a rich store of ideas to build on in answering these questions. Second, appropriate technological systems would have to be built for tracing and tracking the value created by individual users. These systems would have to balance a

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associated with a technologically integrated form of labor—like data input, which is constantly monitored by computers—would work, but it is hard to say. Second, a COST on human capital might be perceived as a kind of slavery—incorrectly in our view, at least if the COST were properly designed

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, Lange said, “Let us put the simultaneous equations (governing the market) on an electronic computer and we shall obtain the solution in less than a second.”8 The seed of truth in this claim had been identified just six months before Lange’s death in 1965 by technology entrepreneur Gordon Moore

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of property affects many people, as in the case of factory pollution. 29. See Benjamin Edelman, Michael Ostrovsky, & Michael Schwarz, Internet Advertising and the Generalized Second-Price Auction: Selling Billions of Dollars’ Worth of Keywords, 97 American Economic Review 242 (2007); Hal R. Varian, Position Auctions, 25 International Journal of Industrial Organization 1163

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Root 1. The most prominent recent exponents of the techno-optimist within economics have been Erik Brynjolfsson and Andrew McAfee in their 2014 book, The Second Machine Age: Work, Progress and Prosperity in a Time of Brilliant Technologies (W. W. Norton & Company). More broadly, the most prominent techno-optimist is Ray

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, 136; serfs and, 35, 48, 231–32, 236, 255; slavery and, xiv, 1, 19, 23, 37, 96, 136, 255, 260; slums and, xiii, xviii, 17; prices: auctions and, xv–xix, 49–51, 70–71, 97, 99, 147–49, 156–57, 300n34; common ownership self-assessed tax (COST) and, 62–63, 67–77

I'm Feeling Lucky: The Confessions of Google Employee Number 59

by Douglas Edwards  · 11 Jul 2011  · 496pp  · 154,363 words

co-founded with Sergey Brin. Whenever I found myself in a room with Larry, I felt an urgent need to do more, as though every second in which I wasn't communicating vital information was a waste of his bandwidth. One day in 2002, I ended up alone with Larry in

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entered the first floor of the building, there were arrows printed on copy paper pointing the way to the stairs, which I followed to the second floor. The curly-haired young receptionist smiled at me. I looked at her and recalled tales of secretaries walking off with millions from early stock

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group, known as operations or ops, took charge of building and maintaining all the machines running Google. Larry had given Jim a list on his second day, in priority order, of the top one hundred things he wanted done. Number one was "to make sure we had enough capacity to run

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.* It didn't help that Google sometimes started all of its machines at once, which blew circuit breakers left and right until Google instituted five-second delays to keep from burning down the house. Air-conditioning came standard, too. Again, Exodus based their calculations on a reasonability curve. No reasonable company

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drink, thinking, 'We're gonna crash and burn.'" Keeping It Clean "Our site is kind of a mess," Cindy said to Karen and me my second week on the job. "Can you work up some guidelines to clean it up?" We had no rules governing what went on Google.com. Something

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do it now? This mindset drove much of the urgency at Google. Engineers knew how to make things better, and every hour, every minute, every second we delayed improvements, users had to endure sub-optimal interactions with our site. That was unacceptable. I would discover, however, that data does lie. Sometimes

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it. It looked a little like a clown mouth, so I sketched a skull around it and added some Bozo hair on the sides. "The second half is how we determine which results are most relevant to the specific query we've received. Most of our competitors look at basic stuff

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the text," Marissa might jovially rejoin. "Can we fix this with margins or reducing cell padding or cell spacing?" "You missed a comma after the second item in the series," I'd toss out, just to keep the rollicking good times rolling and oxygen flowing to my frontal lobe. Mockup wars

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eventually broke the glowing neon Google sign while trying to see if he could kick a three-foot rubber ball all the way to the second floor from the lobby. "Why didn't they have a note on it saying, 'Don't kick balls around this'?" he groused afterwards. Sergey decided

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. The message should be positive. Improbable, but not obviously impossible. Hmm. What if Google were so good it delivered results before you even searched?" Thirty seconds later, I was typing a description of "Ante-Temporal search," a breakthrough development that anticipated user requests. The tone was heavily geekish, but Susan liked

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kitchen. The lack of a case made everything far easier to service. "There wasn't any part that I couldn't change in under thirty seconds," Whitted remarked about his implementation of Gerald's idea. "That allowed us to have far fewer data-center technicians. The average in the U.S

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things I could be doing better in both places that I started parsing my schedule into thirty-second segments and communicating in sentence fragments. "Adam! Out of bed, dressed, and ready to go in ninety seconds." Adam was eleven. "Nathaniel. Bathroom? Socks and shoes in the car. Pants too." Nathaniel was six

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themselves, set off an explosion of self-righteous rage about the value of engineering time, the role of women in the postfeminist workplace, and the second floor's desperate, heartbreaking, and absolute need for more flatware. That lasted almost as long as the discussion about the corrupted physics in Star Wars

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. "Get in here right away. We're melting down." Netscape's press release had hit the newswires at six a.m. West Coast time. Within seconds Google's traffic had increased not the expected one-point-seven times, but sevenfold. The servers couldn't handle the load. Sergey and Jim rushed

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back up. Jim spent the rest of Saturday night and Sunday morning writing a script to monitor Google. His script checked the site every five seconds to make sure it was operational and called a phone number if something went wrong. The next week everyone in operations got a pager. Google

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had gone dark for a second time, but no tempers flared and no heads rolled. "If Larry and Sergey were upset about anything," Jim told me, "it was, Why didn't

…

definitely seriously trying." The End of "The" So what did all this effort produce? "Mostly," Jeff said, "we wanted to get many more queries per second served out of these machines. One of the big things we did was completely change the index format to make it much more compact." In

…

, "but they said the implications for its revenues and profitability are mild ... That side of its business is a money loser that has increasingly played second fiddle to its exploding networking-services division. The search market in general, meanwhile, remains a low-margin, commodity business ... Dick Pierce, Inktomi's chief operating

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, and by the middle of September 2000 we were conducting a million searches an hour. Ninety days after that, it was a thousand searches per second. Claus added taller pieces of paper to the side of the graph as the volume of our traffic marched inexorably upward and to the right

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considered during their regular development cycle and would be incorporated only if they were beneficial for their other, more significant clients. So we looked at second-tier firms that offered stripped-down versions we could strip down even further. After evaluating a half dozen, we settled on a year-old company

…

and things would get better soon. On Monday, February 12, 2001, the old Deja.com went away and Google's interim site went live. Within seconds, outrage overflowed from clogged limbic systems across the network and flooded my inbox. User support began responding with the soothing language I had supplied, acknowledging

…

already in-house. The sales team had secured more than a million dollars in overall revenue commitments, putting the company on track for a great second quarter as well. The applause was instantaneous and prolonged. Our salespeople, I thought, were amazing. Three months later, Omid and his team beat their goal

…

Internet privacy. The "Yada Yada" wording I wrote for the Toolbar had been my first encounter with potential issues of user privacy. This was the second. The debate over user data was not one we had actively engaged internally or with our users, and I worried that it would escalate into

…

and the link, because when we do, people will say it means we no longer care." The natural flow of news would ebb after the second week, I thought. That was the nature of disasters and the public's attention span. Users would understand our return to business as usual. Besides

…

their ad programs, Eric led an effort to build one of the biggest machine-learning systems in the world—just to improve ad targeting. The second fix the new system needed was to correct a big problem that GoTo faced. GoTo displayed the price bid by each advertiser, and advertisers kept

…

the minimum amount necessary to win a position in the rankings. Eric had never heard of William Vickrey, the Nobel laureate who had created a "second-price auction" model; he worked out the idea himself. It just made sense to him that instead of charging as much as an advertiser was willing to

…

their bids, but they would have an incentive to raise them when the bids below theirs increased. At first, Salar resisted the idea of a second-price auction, because it would confuse advertisers. They would have to trust us to lower their bids, and Salar wasn't sure they would be willing to

…

a head start and was gaining momentum. A Friend Accepts an Enemy Overture Google's first great challenge had been gaining primacy in search. Its second would be winning the war for advertising revenue. Eric and Salar were preparing the company for that battle, but those of us not in the

…

" from the loss of Earthlink as a client. He also announced that the company had extended its relationship with Yahoo to the end of the second quarter of 2002. Overture's stock recovered over the next few days, in part buoyed by the rosy prognostications of the Wall Street analysts enamored

…

had gone painfully wrong. Still, I got a note from a product manager complaining that I couldn't be too busy to rewrite something a second time because he hadn't seen me in the office at two a.m. I wrote a scathing reply in which I pointed out I

…

casually mention that we did have our own, very discreet, very targeted, keyword-advertising program. Two marketing objectives satisfied simultaneously. Larry didn't like the second part. Most of the people seeing our homepage would never advertise with us and might not even know we ran ads. Why disillusion them if

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. The New York Times ran an article about our innovative approach and noted that publicity about Scientology's complaint had pushed xenu.net to the second-highest spot in the search results for "Scientology"—just below the church's official site. The xenu.net episode went a long way toward establishing

…

it with the dispassionate precision of an assassin stalking a high-profile target. In addition to Alan and Joan, Omid pulled in Miriam Rivera, the second lawyer to join our legal group. John Barabino, who would head the syndication effort once the AOL deal was completed, became part of the team

…

bought Pyra Labs, a small company offering tools for anyone who wanted to create and host a blog at its site Blogger.com.* Google's second billion-dollar idea had been much easier to implement than the first. For Paul, the experience confirmed the power of prototyping to give definitive answers

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be hard to be righteous when we were doing business with a scumware site. We'd have to terminate that relationship before going any further. Second, several engineers were reluctant to launch an arms race against an invisible enemy while we were a sitting target. Marissa proposed a compromise. We would

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you. You guys have done an incredible job building this company." The applause burst like a thunderclap from the seats, the aisles, the balcony. Within seconds, every employee was standing and cheering. Larry put his arm around Sergey's shoulder and beamed at the crowd. Sergey reciprocated. For two minutes, waves

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anything that might be perceived as promoting sales of our stock in the IPO. My first post was about recruiting for our European office. My second post was an apology for editing the first post after it had already gone up. I was still learning new things, like blogger etiquette. I

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what they mean. AdSense: Google CPC ads that appeared on other websites next to content other than search results and were content targeted. AdWords: The second Google advertising program, after Google Original Ads. AdWords gave advertisers the ability to create and manage their own CPM ad campaigns using an online tool

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