NETWORKS, CROWDS AND MARKETS

Term 7 2012-13
Homework #1

Vivek Sah (PGID: 61310325)

(Put your name above)

Total grade: _______ out of 50 points

General instructions: Answer all questions and/or follow all directions. Be complete and precise, but do not introduce extraneous discussion. Brevity will be considered a virtue. Attach the above cover sheets (printed as a double-sided sheet if possible) to your homework when you hand it in (you can just staple this whole document).
I) (10 points) In the network below, who has more social capital, A or B? Justify your answer by providing a definition of social capital, discussing the different forms of social capital that might be associated with each of As and Bs network positions, and specifying what additional assumptions you need to make to argue that A/B does in fact have a more advantageous network position. Aim to complete your answer in about half a page to a page of 11pt double-spaced text.

A B

Answer: Social Capital is the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit. Social capital thus comprises both the network and the assets that may be mobilized through that network. We will consider two forms of social capital here for discussion i.e. Closure and Brokerage. In the network, A definitely has more social capital of the brokerage type. Since A has the ability to broker interactions at the interface between different groups i.e. across structural holes A can cover a much wider array of people and hence the potential resources available to him are much greater. B, on the other hand has more social capital of the closure type. Node B's set of network neighbors have been subject to considerable triadic closure and as such B has a high clustering coefficient. Also, B is located as such that all the edges around it have significant embeddedness. Research clearly suggests that if two individuals are connected by an embedded edge, then this makes it easier for them to trust one another, and to have confidence in the integrity of the transactions. As such B will have more trustworthy relations within the network which it could potentially leverage for more involved transactions. Here we work under the assumption that for an advantageous position brokerage will be considered of higher value than closure. Very often in our endeavors all we need is a start or a helping hand in the right direction. As position in the network gives him that flexibility even though the strength of the relationship might not be that much. B on the other hand while has a set of more trustworthy friends, the range of options it has is limited. It is highly likely that as compared to A he might miss out on the potential opportunities or people around him might not be able to connect him to the right person.

II)

(25 points) Using the Web and your readings (starting with footnote 6 in Burt 2004) as a resource a. Write down and explain the mathematical formula for the network measure network constraint. (It is also referred to as Burts Constraint) b. Discuss what you believe the measure network constraint captures in a social or professional network, explaining your answer in a few sentences. You can construct a simple example if you wish, but this is not necessary. c. In the context of professional networks: do you believe that the emergence of LinkedIn will change (or has changed) what we consider a powerful network position? When answering this question, identify one or more specific features of LinkedIn that changes something about professional networks (for example, their visibility, number of connections and so on).

Ans a) The formula for measuring network constraint also known as Burts Constraint is

Where Ci is the network constraint of person i, pij is the proportion of time and energy that person i invested in person j (piq and pqj are defined analogously). Hence, Ci is the proportion of person is relationship that are invested in connection with person j. b) Lower values on this measure imply that the person occupies less constrained positions, thereby brokering more extensively in the network. Conceptually, constraint refers to how much room you have to negotiate or exploit potential structural holes in your network. The essence of the network constraint can be captured by the following example. The figure on the right hand side illustrates how the network constraint can be computed from a given collaboration network data. In this sub-network, there are four persons, A through D. During a five-year period, A has collaborated on one patent with B and C. During the same period, B and C have collaborated on two patents, one of which with A. B also has another patent collaborated with D. Applying the formula above, network constraints for A and B are computed as 1.257 and 0.627, respectively. Clearly, B is much less constrained than A and hence brokers more widely across the network.

c) LinkedIn has certainly revolutionized the world of professional networking and has changed to a great extent what we previously defined as a powerful networking position. Since the beginning of professional work culture in our society, brokers who connected and leveraged different segments of people within/across organizations have been considered the most powerful people within the organization/network. Their capability in terms of reaching out to new people and communicating information has been vital for the success of many organizations/societies. However, with the arrival and widespread usage of LinkedIn the dynamics is changing. LinkedIn has created transparency within the system and made it much easier for people to access and connect with others in the professional arena. For example, while previously many people relied on head hunters for job searches now more and more people themselves approach organization through their LinkedIn network for future job prospects. The power of head hunters who basically served as brokers is on the decline. LinkedIn enables users to expand their network. It provides a list of people you may know and would like to connect based on your current network. It also ranks them according to their distance from those who you are directly connected to. Such information is vital as users then can plan and connect with right people and leverage their contacts to get the information they need. The whole process has been much more streamlined due to LinkedIn presence and its innovative features. And while those links or ties might be weak they are suffice in most situations to get the required information such as a new job opening or a better role within the same firm. Similarly inside organization project managers were considered powerful as they connected many functional groups together. However, with the advent of LinkedIn organizations are much more connected from the inside and even in large organization employees across various divisions are familiar with one another which aids the working environment. Having said so, LinkedIn still has its limitations. Users have to be careful in how they use and maintain their numerous weak and distant ties. Deriving benefits from stronger relationship with a set of individuals is much easier. Therefore even though LinkedIn has changed the concept of powerful network position, making information easier to obtain, maintaining strong ties never hurts and is at times indispensable.

III)

(15 points) Complete Exercise 4 from Section 14.7, parts (a) and (b)

a) Yes, the assignment of numbers to the nodes in Figure 14.19 form an equilibrium set of Page Rank values for this network of Web pages. If we take the limiting Page Rank values and apply one step of the Basic Page Rank Update Rule, then the values at every node remain the same. In other words, the limiting Page Rank values regenerate themselves exactly when they are updated.

A Original New 3/10 3/10

B 1/10 1/10

C 2/10 2/10

D 1/10 1/10

E 3/10 3/10

Value at A: 3/10 (Gets all the value a E) Value at B: 1/3 of the value at A = 1/10 Value at C: 1/3 of A value + 1/2 of B value + 1/2 of D value = 1/20 + 1/10+ 1/20 = 2/10 Value at D: 1/3 of the value at A = 1/10 Value at E: A value + 1/2 of B value + 1/2 of D value = 2/10 + 1/20 + 1/20 = 3/10

b)

A Original New 1/4 1/2

B 1/8 1/8

C 1/8 1/8

D 1/8 1/16

E 1/4 1/8

G 1/8 1/16

Value at A: Value at D + Value at E + Value at G = 1/8+1/4+1/8 = 1/2 Value at B: 1/2 of value at A = 1/8 Value at C: 1/2 of value at A = 1/8 Value at D: 1/2 of the value at B = 1/16 Value at E: 1/2 of B value + 1/2 of C value = 1/16+1/16 = 1/8 Value at G: 1/2 of the value at C = 1/16 No, the assignment of numbers to the nodes in Figure do not form an equilibrium set of Page Rank values. If we take the limiting Page Rank values and apply one step of the Basic Page Rank Update Rule, then the values at every node changes. The equilibrium will be achieved only when the values remain the same.