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On Michael Taylor's report

Friday, November 17, 2006

A few weeks ago I provide you with a link and analysis to Michael Taylor's paper criticizing FDA's institutional capability in supervising nano product. Recently, David Berube discuss this paper in his blog.

He considered these to be the primary question in Michael's paper. (1) 1. Should the FDA be given more responsibilities or is it time to break it into smaller entities to consider different issues? and (2) Should all nano-formulations (drugs) and sometimes drug/devices be treated as new for purposes of regulation? and (3) Should the burden to demonstrate safety be precautionary (in a strict sense)?

He provided the answers in his blog.

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Eye on Israel

Sunday, November 12, 2006

A business opportunity for you! Israeli nano centers receive 230 million USD of funding:
In addition to matching funds, the Israeli government will also provide over $8 million for nanotech-related equipment purchases and for advanced research projects in water treatment using nanotechnology.The triangle donation matching program will give preference to research in areas considered to have the strongest potential for Israeli breakthroughs: nanomaterials, nanobiotechnology, nanoelectronics, and nanotech for applications in water treatment and alternative energy.
You can download the complete press-release from the Israeli's National Nanotechnology Initiative here. The map of the Nano-biotech industry is provided by d&a hi-tech information here. A very complete compendium and links to Nano Industries and companies in Israel is available here.

(Thanks to d&a hi-tech information for providing me with preliminary insight via email)

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Be careful with what you put on your face

Saturday, November 11, 2006

There is an interesting news that the US FDA had so far banned only nine ingridients for cosmetic product, a sunking comparison with EU's one thousand. Is this the effect of a voluntary product testing regulation?
And seemingly more-straightforward labels calling items are “natural,” “organic” or “hypoallergenic” can be misleading. That’s because the FDA hasn’t established official definitions for these terms. “So companies can use them on cosmetic labels to mean anything or nothing at all,” according to the FDA’s Web site.Critics note that consumers use dozens of personal-care products daily and argue that potentially hazardous chemicals shouldn’t be used in the first place. The European Union has banned more than 1,000 ingredients considered unsafe for use in cosmetics. The FDA has banned nine.
And analogical interpretation of rules:
There also are concerns about the increased use of nanotechnology—compounds thousands of times smaller than the width of a human hair. Because of their size, there’s potential for these nano-sized ingredients to penetrate human cells and tissues. The technology is already being used in anti-aging creams and sunscreens—but the labels don’t have to specify its use. In the absence of stricter regulations, California lawmakers adopted the Safe Cosmetics Act of 2005. It requires cosmetic manufacturers to give the state a list of ingredients in their products that can cause cancer or reproductive harm. Washington has a program for reducing exposure to select hazardous chemicals, but nothing specific to safeguards for cosmetics.
The news further reported that chemicals used in cosmetics may be related to cancer and birth defect.

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The Law of online gaming

Monday, November 6, 2006

A news from MSNBC, one year ago:
BEIJING - A Shanghai online game player who stabbed a competitor to death for selling his cyber-sword has been given a suspended death sentence, which in effect means life imprisonment, state media said on Wednesday. The case had created a dilemma in China where no law exists for the ownership of virtual weapons. Qiu Chengwei, 41, stabbed competitor Zhu Caoyuan in the chest after he was told Zhu had sold his "dragon sabre", used in the popular online game, "Legend of Mir 3", the China Daily said.
Sounds crazy but, that's reality.... (or is it not?) Oh well, can't really tell the difference these days. This raises a question. People can be criminalized for killing, there's no debate on it. But what about stealing virtual things? Here's what actually happened in the case above:
Qiu and a friend jointly won their weapon last February, and lent it to Zhu who then sold it for 7,200 yuan (US$870), the newspaper said. Qiu went to the police to report the "theft" but was told the weapon was not real property protected by law. "Zhu promised to hand over the cash but an angry Qui lost patience and attacked Zhu at his home, stabbing him in the left chest with great force and killing him," the court was told.
Poor Qiu. He lost his sword and now he killed a man because of it. I bet he'll never play online games again for the rest of his life. Well, this is probably not the first time that games causes trouble. Gambling is a game too and it causes trouble. If you win a bet from me and I refuse to pay, there is no way that the law will grant your claim. Same case, if you cheat on poker game, or steal my card, I cannot accuse you of stealing.

So, do you think what the police has done is right, or wrong? Should a sword be 'not protected' because they are virtual?

I think the police is correct in their decision but is incorrect in their considerations. I am no fan of online gaming, but here's my reasoning: The player had allocated costs and time to obtain the virtual thing. This is where the value is. Essentially, law does not protect property. It protects economical value. The "sword" has an economical value. It is similar as anti-virus, mp3 software or even a collection of my tags in del.icio.us. They belong to me. Well, to a non gamer it may has no value at all. But take for example collecting hobbies: stamps, pins, postcards, paintings. Nobody will say that those products are value-less.

But, the police had made the right decision by refusing to acknowledge enforcing Qiu's claim. Online gaming is treated like gambling. If you cheat or steal my card, you cannot claim it to the court. Same way applies to virtual "swords". Those things has values, but you cannot claim its enforcement because of public ordre. If everyone gambles or play online games, there will be no actual value adding activity and this could jeoperdize the economy.

Another acquisition by Google...

Tuesday, October 31, 2006

I was rather surprised when a few minutes ago, JotSpot sent me this message:

We're writing to let you know that Google has acquired JotSpot. We believe this is great news for our users. More importantly, we want to reassure you that you'll continue to have uninterrupted access to your account. Both Google and JotSpot are committed to supporting our customers, and we understand that users have invested a lot in our products. In the near-term, we're focused on migrating JotSpot to Google's systems and datacenters. We'll work hard to make that move as seamless as possible so that customers won't be inconvenienced.
It seems that this keeps going and going. Undoubtedly, google has acquired a market-dominant position in search engine and internet services. Would Gogle finally break competition laws? Maybe we should re write the competition law. As promised, I will discuss this further in the next posts.

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Policy Proposal for filtering the Long Tail

Saturday, October 28, 2006

Now we have multiple choice in every areas of life, such as where, when and how we work. Even personal identity is a matter of choice–you can reinvent yourself in almost wide variety of ways. Paradoxically too much choice can be paralyzing, from buying jam and speed dating to mutual fund investing (too many fund choices, investment goes down). With all the choice peope may do better, but they will feel worse. It’s too easy to imaging the alternatives could have worked better–regret and anticipated regret kick in. As you enjoy what you choose, you imagine attractive features of what you passed up–the opportunity cost rising in consciousness can be completely debilitating.

Or, as the New Yorker puts it: Instead of calculating opportunity cost as the value of the single most attractive foregone alternative, we seem to assemble an idealistic composite of all the options foregone. A wider range of slightly inferior options, then, can make it harder to settle on one you’re happy with. Similarly, when people direct their wants toward “classes” of goals, they tend to figure they’ll get a better-than-average example of the class. When a person says, “I feel like a plate of spaghetti,” he envisions a particularly good plate of spaghetti. And, as the psychologists Daniel Gilbert, of Harvard, and Timothy Wilson, of the University of Virginia, have observed, “If it is difficult to know whether we will be happy fifteen minutes after eating a bite of spaghetti, it is all the more difficult to know whether we will be happy fifteen months after a divorce or fifteen years after a marriage.”

I am still talking about the Long Tail. Long Tail means more choice.

More choice = more freedom
More freedom = more welfare

# More choice = more welfare (False?)

Barry Schwartz, a psychologist at Swarthmore suggest that the syllogism above could be false. In his book, "The Paradox of Choice", he argued that more choices are essentially good as it reflects improvements, but, there are dark sides of having more choices:

1. Paralysis. We don't choose at all. Many people stays single, right? :)
2. Poor decisions and performance quality. We made bad choices.
3. Dissatisfaction, dissappointment. We are not happy despite our choices.
4. Opportunity costs. The cost in choosing stuff could even be greater than the stuff itself!
5. Time Pressure. Too many choice makes us feel like we are being rushed.
6. Escalation of expectation. When we spent lots of time in choosing, we expect that the stuff we finally choose is a good stuff. When we turned out wrong, we become dissapointed.
7. Self Blame. Good feelings gradually reduces. Bad feelings escalates and change forms.

More choices is better, only if it occurs in any of these two situations. First, Preference Articulation. If you really know hat you want, more choice is better. Most people never have this. Or, second, Alignable Option. If the options can be scaled down to the similar size. Most people never have this too.

For personal decisions, there is a good catch-a-phrase from Schwartz's presentation: "Seek for the Good Enough, don't seek for the best". For public policy, he then suggested "Libertarian paternalism", as prescribed by Cass Sunstein and Richard Thaler.

Sunstein-Thaler give an example. Consider two studies of savings behavior:
1. Hoping to increase savings by workers, several employers have adopted a simple strategy. Instead of asking workers to elect to participate in a 401(k) plan, workers will be assumed to want to participate in such a plan, and hence they will be automatically enrolled unless they specifically choose otherwise. This simple change in the default rule – from nonenrollment to enrollment -- has produced dramatic increases in enrollment.

2. Rather than changing the default rule, some employers have provided their employees with a novel option: Allocate a portion of their future wage increases to savings. Employees who choose this plan are free to opt out at any time. A large number of employees have agreed to try the plan, and only a few have opted out. The result has been to produce significant increases in savings rates.
Libertarian Paternalism is "an approach that preserves freedom of choice but that authorizes both private and public institutions to steer people in directions that will promote their welfare". So, they are paternalistic in the sense that people are being directed to choose a certain option, but libertarian in the sense that people can say no.

That means, if you are Amazon.com, you will not be confusing people with long lists of books, but refer them to your filtering, self-reviewed selections and in the same time still allowing people to look for more. If you are a supermarket, you will only put good, cheap and high quality stuffs in your shelves. If you are a restaurant, you will advise your customer not with abundant menu but with "today's special menu". But, how do we know that they are working their best in giving their reference? Well, we don't. This could arise the principal-agent problem. But, it may be better compared than not choosing.

Both Schwartz's and Sunstein-Thaler's theory indicates the importance of choice theory in the economics of abundance. Schwartz's theory will trigger behavioral approaches in economics. Meanwhile, Sunstein-Thaler's will produce a public policy formula for decision-makers, legislators and governments. Schwartz's video presentation in Google is available here. Sunstein's-Thaler paper is downloadable here.

Contentment is always better than riches.

Mova

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"Scarcity" and "Cost" in the economy of abundance

In corellation with our previous discussion on the economics of abundance, there is a review on the topic at Harvard Business School's blog. One of the commentator said:
This is easily observed from the prices of any number of e-books on the web. The most popular carry higher prices than the less popular, even though they all cost virtually nothing to reproduce. This emphasizes the point that prices are set by demand, not the constraints of supply. Of course, the price floor created by direct physical materials doesn't exist any more. But production costs never determined price: Demand always did.

The scarcity effect, therefore, has nothing to do with physical constraints. If there is a popular Stephen King novel that exists only in digital form, the price charged for it would be determined by how much the individual reader wants the book. It might cost one-hundredth of a cent to reproduce, but still cost $4.99 to download.

I think it can be true assuming the consumers does not share the book it has purchased through P2P softwares. Prices at the initial sales are determined by consumer demand. But once an information good is released to the market, it's becoming a public good. Any attempts to limit its movement would be artificial (through DRM and IPR), and not natural. So, will there be an adjusted "price"?

Scarcities and Costs

Another commentator said:
The cost of creation is increasing in every creative area such as games, Internet websites, and digital contents. It was possible to make a website with one or two developers five years ago, but it is impossible now if they want to make it attractive to consumers.
Besides creation, one element of cost that I can figure out is time-cost and opportunity cost. The time you spent searching for cheap products at e-bay could be more valuable if it is used in analyzing the ups and downs of the stock market. So, another form of business model could be in making search faster and more filtered. That's what user-review sites such as Digg is doing.

Of course we still need to diffrentiate between purchasing movies at netflix and buying a laptop from e-bay. Movies can be directly downloaded, there is a time cost there. But a laptop needs to be packaged and sent. Thus, there is a distribution costs plus time cost there. This triggers the improvement of two business models: (1) Delivery and (2) Direct Marketing. And where do the tax goes as the transaction is made on the internet? Good question. Then we might need to regulate the internet, but I rather hate the idea of regulating the net.

Walmart could be threatened and so as CBS. So, will market monopoly finally comes to an end? Not really. Where do you search the goods before ending up in netflix or you tube? Google. That's right. What kind of monopoly will the future have? Our next topic is "Competition in the economics of abundance".

Do leave me comments...