1. Course Introduction and Overview Networked Life CSE 112 Spring 2006 Prof. Michael Kearns

2. Internet, Router Level A purely technological network? “Points” are physical machines “Links” are physical wires Interaction is electronic What more is there to say?

3. North American Power Grid Points: power stations Operated by companies Connections embody business relationships Food for thought: –2003 Northeast blackout

4. Gnutella Peers Points are still machines… but are associated with people Links are still physical… but may depend on preferences Interaction: content exchange Food for thought: “free riding”

5. Foreign Exchange Points: sovereign nations Links: exchange volume A purely virtual network

6. The Human Brain Purely biological network Links are physical Interaction is electrical Food for thought: –Do neurons cooperate or compete?

7. The Premise of Networked Life It makes sense to study these diverse networks together. The Commonalities: –Formation (distributed, bottom-up, “organic”,…) –Structure (individuals, groups, overall connectivity, robustness…) –Decentralization (control, administration, protection,…) –Strategic Behavior (economic, free riding, Tragedies of the Common) An Emerging Science: –Examining apparent similarities between many human and technological systems & organizations –Importance of network effects in such systems How things are connected matters greatly Details of interaction matter greatly The metaphor of viral spread Dynamics of economic and strategic interaction –Qualitative and quantitative; can be very subtle –A revolution of measurement, theory, and breadth of vision

8. Who’s Doing All This? Computer Scientists –Understand and design complex, distributed networks –View “competitive” decentralized systems as economies Social Scientists, Behavioral Psychologists, Economists –Understand human behavior in “simple” settings –Revised views of economic rationality in humans –Theories and measurement of social networks Physicists and Mathematicians –Interest and methods in complex systems –Theories of macroscopic behavior (phase transitions) All parties are interacting and collaborating

9. Course Mission A network-centric examination of a wide range of social, technological, biological, financial and political systems Examined via the tools and metaphors of: –computer science –economics –psychology and sociology –mathematics –physics Emphasize the common themes Develop a new way of examining the world

10. A Communal Experiment No similar undergraduate course No formal technical prerequisites –greatly aided by recent books –publications in Science, Nature, etc. –preliminary class demographics: ~37% freshmen/sophomore ~52% College/Wharton Extensive web visualizations and demos Extensive participatory in-class and out-of-class social experiments Exercises in data analysis Note: Networked Life is now approved to fulfill the College’s Quantitative Data Analysis Requirement Also counts as an SEAS engineering elective course

11. Course Outline

12. The Networked Nature of Society (~2 lectures) Networks as a collection of pairwise relations Examples of (un)familiar and important networks –social networks –content networks –technological networks –biological networks –economic networks The distinction between structure and dynamics A network-centric overview of modern society.

13. Contagion, Tipping and Networks (~2 lectures) Epidemic as metaphor The three laws of Gladwell: –Law of the Few (connectors in a network) –Stickiness (power of the message) –Power of Context The importance of psychology Perceptions of others Interdependence and tipping Paul Revere, Sesame Street, Broken Windows, the Appeal of Smoking, and Suicide Epidemics Informal case studies from social behavior and pop culture.

14. Introduction to Graph Theory (~1 lecture) Networks of vertices and edges Graph properties: –cliques, independent sets, connected components, cuts, spanning trees,… –social interpretations and significance Special graphs: –bipartite, planar, weighted, directed, regular,… Computational issues at a high level Beginning to quantify our ideas about networks.

15. Social Network Theory (~3 lectures) Metrics of social importance in a network: –degree, closeness, between-ness, clustering… Local and long-distance connections SNT “universals” –small diameter –clustering –heavy-tailed distributions Models of network formation –random graph models –preferential attachment –affiliation networks Examples from society, technology and fantasy A statistical application of graph theory to human organization.

16. The Web as Network (~2 lectures) Empirical web structure and components Web and blog communities Web search: –hubs and authorities –the PageRank algorithm The Main Streets and “dark alleys” of the web The algorithmic implications of network structure.

17. Towards Rationality: Emergence of Global from Local (~1 lecture) Beyond the dynamics of transmission Context, motivation and influence The madness/wisdom of crowds: –thresholds and cascades –mathematical models of tipping –the market for lemons –private preferences and global segregation Begin to connect to classical issues of human and societal behavior.

18. An Introduction to Game Theory (~2 lectures) Models of economic and strategic interaction Notions of equilibrium –Nash, correlated, cooperative, market, bargaining Multi-player games Evolutionary game theory –mimicking vs. optimizing Network effects Social choice theory Powerful mathematical models of what happens over links in competitive and cooperative settings.

19. Interdependent Security and Networks (~1 lecture) Security investment and Tragedies of the Commons Catastrophic events: you can only die once Fire detectors, airline security, Arthur Anderson,… Blending network, behavior and dynamics.

20. Network Economics (~2 lectures) Buying and selling on a network Modeling constraints on trading partners Local imbalances of supply and demand Preferential attachment, price variation, and the distribution of wealth The effects of network structure on economic outcomes.

21. Behavioral Economics (~1 lectures) What’s broken with economics and game theory? How should you split 20 dollars? Beauty contests and ultimatums Cultural and sociological effects The return of context Guilt, envy and altruism: improving the theory Controlled social psychology experiments examining how “rational” we really are(n’t).

22. Internet Basics (~1 lecture) IP addresses Routers Domain Name Servers ISPs Congestion control, load balancing The Web and URLs Security issues, network vulnerability Under the hood of the quintessential modern technological network.

23. Internet Economics (~2 lectures) Selfish routing The Price of Anarchy Peer-to-peer as competitive economy Paris Metro Pricing for QoS Economic views of network security The collision of network, economics, algorithms, content, and society.

24. Modern Financial Markets (~2 lectures) Stock market networks –correlation of returns Market microstructure –limit and market orders –order books and electronic crossing networks –network, connectivity and data issues Quantitative trading –VWAP trading, market making –limit order power laws Herd behavior in trading Economic theory and financial markets Behavioral economics and finance Impacts of the Internet on financial markets A study of the network that runs the world.

25. Course Mechanics Will make heavy use of course web page: –www.cis.upenn.edu/~mkearns/teaching/NetworkedLifewww.cis.upenn.edu/~mkearns/teaching/NetworkedLife –You will need good Internet access! No technical prerequisites!!! Lectures: –slides provided; emphasis on concepts –frequent demos, visualizations, and in-class experiments –please be on time to lectures! (12PM) No recitations Readings: mixture of general audience writings and articles from the scientific literature Three required texts: –“The Tipping Point”, Gladwell –“Six Degrees”, Watts –“Micromotives and Macrobehavior”, Schelling Assignments (~1/4 of grade) –data analysis: network construction project –computer/web exercises, short essays, quantitative problems –collaboration is not permitted Participatory social experiments (~1/4 of grade) –behavioral economics experiments –analysis of experimental results Midterm (~1/4 of grade) Final exam (~1/4 of grade)

26. First Assignment Due next lecture (Th 1/12) –Simple background questionnaire –Last-names exercise