Presentation on theme: "MIDDLE COLLEGE 2013 Why are you less popular than your friends?"— Presentation transcript:
MIDDLE COLLEGE 2013 Why are you less popular than your friends?
Today’s plan: to answer the question as to why you are less popular than average Generate 3 networks; 2 random and 1 preferential attachment Calculate the measures of degree distribution, clustering coefficient and path length With 10 people how many connections can there be in total?
Random Graph n = 5 p = ½ 12345 1X 2 X 3 X 4 X 5 X
Preferential Attachment Graph The rich get richer Red Die White123456 1 123456 2 789101112 3 131415161718 4 192021222324 5 252627282930 Start with dyad, each end labeled 1,2 Add node with 2 edges, one edge at a time, labeling ends sequentially Kite graph with 10 ends labeled Add 6 new nodes labeling the new ends as you add them Complete the Adjacency Matrix below and draw the network
2 types of networks Random Formed when links occur with probability p Hump degree distribution centred at np Preferential attachment Formed when ‘rich get richer’ Power law degree distribution You have two networks
Clustering Coefficient The probability that two randomly selected neighbors of a node are connected to each other. The proportion of the number of triangular subgraphs among neighbors to the possible number of triangular subgraphs.
Binomial Coin Flipping Each person flip a coin 10 times, listing the heads and tails HHTHTTHTHH How many different lists are there? How many H do I expect? How many lists have 0 H, 1H, 2H’s? How many of the 2 10 lists have 5 H’s?
Binomial Coin Flipping Say you did 4 coin flips. How many H do I expect? How many lists have 0 H, 1H, 2H, 3H, 4H’s? See connection with a random graph? If you flip 5 coins how many have 2H’s? Use your lists from 4 flips.
Combinations Say you have 3 books, Harry Potter, Lord of the Rings and Differential Equations, an Introduction How many ways can I choose 2 books? (1 book?) How many ways can I choose 2 of 4 things? How many ways can I choose 8 of 10 things?
Combinations How many ways can I order 3 things in a row? How many ways can I choose 3 of 10 things? How many ways can I choose r of n things? n! factorial
Proof by Induction We want to prove that Pascal’s triangle gives you the number of ways you can choose r from n items Steps: Show it’s true for the small numbers Assume it’s true for a row in the triangle Show it must be true for the next row. Proof that every number is interesting?
Plinko How many paths are there to each tube? Notice the Gaussian curve forming How much would you pay for the right to get $10 if the ball ended up in a tube greater than 8? What is the probability it ends up in tube greater than 8?
Stocks and Options What’s a stock? Stocks can go up or down See graph of real stock What’s a call option? Strike price Graph the value of a call at expiry How much should a call cost?
Pricing a call Selling something short. Eliminating risk Consider a portfolio with 1 call option and Δ units of shorted stock V = C – ΔS Today the stock is worth $100, tomorrow $104 or $92 with 50/50 chance
Binomial method of pricing Build the formula to price a call given u = 1+ a, d = 1- a The stock is at $100 now, the call expires in 3 days with an exercise price of $100. a = 0.05 Sketch the payout at the time of expiry. Price the call and then sketch the profit diagram