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01 Oct 08

FRB: Speech, Bernanke--The Financial Accelerator and the Credit Channel--June 15, 2007

www.federalreserve.gov/...Bernanke20070615a.htm - Preview

economy trust theory

I have taken you on a whirlwind tour of several decades of research on how variations in the financial condition of borrowers, whether arising from changes in monetary policy or from other forces, can affect short-term economic dynamics. The critical idea is that the cost of funds to borrowers depends inversely on their creditworthiness, as measured by indicators such as net worth and liquidity

23 Apr 08

Signals in Social Supernets

jcmc.indiana.edu/...donath.html - Preview

design gossip networking reputation signal social theory trust supernets

It shows how the costs associated with adding friends and evaluating profiles affect the reliability of users' self-presentation; examines strategies such as information fashion and risk-taking; and shows how these costs and strategies affect how the publicly-displayed social network aids the establishment of trust, identity, and cooperation—the essential foundations for an expanded social world.
It makes reputation possible—individuals benefit from the experience of others in determining who is nice, who does good work, and who should be shunned for their dishonest ways. Using language to maintain ties and manage trust, people can form and manage more complex and extensive social networks.¹
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- The argument begins with an introduction to signaling theory. The next section uses this theory to examine how the fundamental structure of SNSs can bring greater trust and reliability to online self-presentations, how specific site design decisions enhance or weaken their trust-conferring ability, and how seemingly pointless or irrational behaviors, such as online fashion and risk taking, actually signal social information. The final section examines the transformative possibilities of social supernets—not only whether SNSs may bring them about, but if so, in what ways they might change our society.
- An emphasis of this article is on ways of achieving reliable information about identity and affiliations. There are situations where ephemeral, hidden, or multiple identities are desirable. However, minimal online identity has been easy to create, while it is harder to establish more grounded identities in a fluid and nuanced way. A primary goal of this article is to understand how reliability is encouraged or enforced.
- Signaling theory, developed initially in economics (Spence, 1973a) and biology (Zahavi, 1975), models the relationship between signals and qualities, showing why certain signals are reliable and others are not. For a signal to be reliable, the costs of deceptively producing the signal must outweigh the benefits. The core of signaling theory is its analysis of the types of signals and situations that bring this about
- termed assessment signals
- conventional signals
- The self-descriptions in online profiles are mostly conventional signals—it is just as easy to type 24 or 62 as it is to enter one's actual age, or to put M rather than F as one's gender. Conventional signals are kept honest through the outside intervention of laws and social mores.
- However, costs may discourage deception but not be high enough to guarantee honesty. The SNS LinkedIn requires that users provide the email address of the person with whom they wish to connect; this makes deceptively claiming to know someone costlier, but it certainly does not prevent all contact by strangers, especially for those with published email addresses.
- Dunbar (1996) argued that while new communication technologies could increase the flow of information, they would be unable to change basic social structure and scale. He claimed that people would need to fall back on face-to-face interaction in order to establish trust, rather than relying on what he call the "mere ciphers" people encounter in the mediated domain (Dunbar, 1996, p. 204).
- SNS users represent themselves with a profile, which includes a self-description, comments from other users, and the technology's defining feature, a list of links to chosen other members. The self-description can include pictures, affiliations, career goals, and other personal details. Alone, these are conventional signals, easily faked; even references to favorite obscure books and other displays of esoteric knowledge may have simply been copied from another's page. Yet the links to other members implies that they have vetted this description as true—although it is important to note that "true" means "true to the mores of our community," which can range from strict adherence to known facts to highly imaginative role-playing (boyd & Heer, 2006; Donath & boyd, 2004; Lenhart & Madden, 2007b).
- Thus, one's display of connections signals one's trustworthiness (Donath & boyd, 2004). One of the most valuable contributions of SNSs is their potential to add trust to weak ties. Trusted weak ties are very useful sources of information, combining the heterogeneity that such ties generally have with the believability that comes with trust (Levin & Cross, 2004). Furthermore, SNSs can actually increase trustworthiness, by placing people within a context that can enforce social mores. SNSs make people aware that their friends and colleagues are looking at their self-presentation.
- When people indiscriminately add connections, others who trusted their judgment can suffer and will eventually cease trusting them as a source for useful vouching. Site design influences this: Sites designed to make adding connections as easy as possible, emphasizing indiscriminate network growth, create networks that do little to increase trust or trustworthiness.
- On sites with higher costs for creating a link, the observer has reason to believe that the links represent genuine relationships. Members of aSmallWorld are careful to request connections only with others whom they are sure wish to be linked to them, since they can be banished for having a few link requests declined (Price, 2006).
- The meaning of these links is also personally subjective. For some people, listing someone as a "friend" on a social network site is an indication of personal and positive acquaintance. Others are far more casual, willing to add friends indiscriminately (boyd, 2006). This has ramifications for the reliability of the profile itself. Viewers may trust the self-created content of a profile if they believe that its links are to people who know that user well, while links that they believe have only minimal connection add little credence.

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Levy Rivers's Library tagged theory → View Popular

FRB: Speech, Bernanke--The Financial Accelerator and the Credit Channel--June 15, 2007

Signals in Social Supernets

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