february 2004 daphne raban and sheizaf rafaeli infosoc 1 owenership and subjective value in the...

February 2004February 2004 Daphne Raban and Sheizaf RafaeliDaphne Raban and Sheizaf Rafaeli

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Owenership and Subjective Value Owenership and Subjective Value in the Trading of Information:in the Trading of Information:

Trading Expertise vs. Content, Trading Expertise vs. Content,

Copies vs. OriginalsCopies vs. Originals


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Value of InformationValue of Information

Value judgments about information and its value Value judgments about information and its value are vital for a vibrant, functioning information are vital for a vibrant, functioning information society society

Information is costly to produce but very cheap Information is costly to produce but very cheap to reproduce. to reproduce. It is therefore difficult to assess its value. It is therefore difficult to assess its value.


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Value of Information (2)Value of Information (2)

Theoretically, there are three ways to assess the Theoretically, there are three ways to assess the value of information value of information Normative, realistic, and Normative, realistic, and subjective.subjective.

Utility varies by person and circumstance.Utility varies by person and circumstance.

Information is an “experience good”, the value of Information is an “experience good”, the value of which is revealed only after use which is revealed only after use

The value of information is The value of information is subjectivesubjective..


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Value of Information (3)Value of Information (3)

The (subjective) value of information The (subjective) value of information is enigmatic, intriguing, and worth is enigmatic, intriguing, and worth studyingstudying

We use the “Endowment Effect” We use the “Endowment Effect” approach to examine the subjective approach to examine the subjective value of informationvalue of information


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The Endowment EffectThe Endowment Effect WTA – Willingness to Accept (sell)WTA – Willingness to Accept (sell)

WTP – Willingness to Purchase (buy)WTP – Willingness to Purchase (buy)

WTA/WTP WTA/WTP

Theoretically: WTA/WTP Theoretically: WTA/WTP 1 1

Research uncovers a disparity whereby Research uncovers a disparity whereby the ratio is between 3 (private goods) and the ratio is between 3 (private goods) and 10 (public goods).10 (public goods).


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The Endowment Effect (2) The Endowment Effect (2) The main The main psychologicalpsychological explanation of the explanation of the

WTA/WTP disparity is WTA/WTP disparity is loss aversionloss aversion which is based which is based on Prospect Theory on Prospect Theory

(Kahneman, Knetsch et al. 1990; Thaler 1991; (Kahneman, Knetsch et al. 1990; Thaler 1991; Bateman, Munro et al. 1997)Bateman, Munro et al. 1997)

The main The main economic economic explanations are the explanations are the substitution effectsubstitution effect

(Hanemann 1991; Shogren, Shin et al. 1994), the (Hanemann 1991; Shogren, Shin et al. 1994), the tradeoff between the price of information and the tradeoff between the price of information and the expected payoff (Kolstad and Guzman 1999) and expected payoff (Kolstad and Guzman 1999) and intrinsic value (Boyce, Brown et al. 1992). intrinsic value (Boyce, Brown et al. 1992).


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The Endowment Effect (3) The Endowment Effect (3)

Does it apply to information?Does it apply to information?

If so, how? Where is information If so, how? Where is information on the WTA/WTP continuum?on the WTA/WTP continuum?


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The ExperimentThe Experiment Buy or sell information by placing a bid for it in a Buy or sell information by placing a bid for it in a

business game: a Lemonade Standbusiness game: a Lemonade Stand

DVs: WTA and WTP DVs: WTA and WTP IVs: Source nature (2 levels) and IVs: Source nature (2 levels) and

source status (2 levels)source status (2 levels)

Design: 2X2X2Design: 2X2X2 294 students294 students

See game materials here: See game materials here:

http://http://ValueofInformation.rafaeli.netValueofInformation.rafaeli.net


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Results (1)Results (1)

The experiment yielded two WTA values and two The experiment yielded two WTA values and two WTP values of the weather information for each WTP values of the weather information for each participant. participant.

The present results reveal that the WTA/WTP ratio The present results reveal that the WTA/WTP ratio for weather information in the Lemonade for weather information in the Lemonade simulation is about simulation is about 33 and that there was a strong and that there was a strong preference to play with information. preference to play with information.


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Results (2)Results (2)

The WTA/WTP ratio diverges from unity more The WTA/WTP ratio diverges from unity more often and more pronouncedly for ORIGINAL (3) often and more pronouncedly for ORIGINAL (3) rather than COPIES (2).rather than COPIES (2).

Even for copies the ratio is still double. Even for copies the ratio is still double.

People are sensitive to originality not to the People are sensitive to originality not to the source. source.


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Mean Ratio

Std. Dev.

Test Value=1Test Value=3

tSig.tSig.

Orig. Cont.2.793.456.370.00-0.730.46

Orig. Expt.2.743.016.950.00-1.030.31

Copy Cont.2.042.764.600.00-4.270.00

Copy Expt.1.852.274.530.00-6.070.00

Table 1: Results for one-sample t-tests comparing the means of the ratios for original and copy content and expertise to values of 1 and of 3.


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Mean Ratio

Std. Dev.

tSig.

Original Content and

Expertise2.773.24

3.640.00

Copy Content and Expertise

1.952.53

Table 3: Results for a paired samples t-test comparing the means of the ratios for original and copy content and expertise.


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DiscussionDiscussion

A high (too high?) overall subjective value for A high (too high?) overall subjective value for information. information.

As predicted by the Endowment Effect theory, As predicted by the Endowment Effect theory, WTA for information was significantly larger than WTA for information was significantly larger than WTP for informationWTP for information

This predicts This predicts undertradingundertrading


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Discussion (2)Discussion (2)

Information is a commodity. Information is a commodity. Nevertheless, information is still easier to Nevertheless, information is still easier to duplicate, easy to share, and ownership of it duplicate, easy to share, and ownership of it proves more difficult to enforceproves more difficult to enforce

Society has not yet adjusted its information Society has not yet adjusted its information consumption patterns to the present situation of consumption patterns to the present situation of information abundance information abundance


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Further WorkFurther Work

We have just completed work on information We have just completed work on information sharing where we added an instant messaging sharing where we added an instant messaging application to the Lemonade Stand game.application to the Lemonade Stand game.

Ownership emerges as an important antecedent Ownership emerges as an important antecedent for sharing behavior as well.for sharing behavior as well.

Collaboration?Collaboration? We have run our simulations in We have run our simulations in various universities in Israel and abroad and are various universities in Israel and abroad and are glad to collaborate. If you’d like to spice up your glad to collaborate. If you’d like to spice up your classes with this simulation please call!classes with this simulation please call!


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Some related work…Some related work… Rafaeli, S. & Raban, D.R. (2003) The Subjective Value of Information : Rafaeli, S. & Raban, D.R. (2003) The Subjective Value of Information :

Trading expertise vs. content, copies vs. originals in E-Business, Trading expertise vs. content, copies vs. originals in E-Business, Proceedings of the The Third International Conference on Electronic Proceedings of the The Third International Conference on Electronic Business (ICEB 2003)Business (ICEB 2003), Singapore , Singapore

Rafaeli, S. & Raban D.R. (2003) Experimental Investigation of the Rafaeli, S. & Raban D.R. (2003) Experimental Investigation of the Subjective Value of Information in Trading, Subjective Value of Information in Trading, Journal of the Association for Journal of the Association for Information Systems (JAIS)Information Systems (JAIS), Vol. 4:5 pp. 119-139 , Vol. 4:5 pp. 119-139

SIMULATIONSSIMULATIONS Rafaeli, S., Raban, D. Ravid, G. and Noy, A. (2003) Online Rafaeli, S., Raban, D. Ravid, G. and Noy, A. (2003) Online

Simulations in Management Education about Information and its Simulations in Management Education about Information and its Uses, in Charles Wankel and Robert Defillipi Uses, in Charles Wankel and Robert Defillipi Educating Managers Educating Managers with Tomorrow's Technologieswith Tomorrow's Technologies Vol. 2 in: Research in Management Vol. 2 in: Research in Management Education and Development, Information Age Publishing, pp. 53-Education and Development, Information Age Publishing, pp. 53-80 80


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Some related work… (2)Some related work… (2)

COMMODIFICATION OF INFORMATIONCOMMODIFICATION OF INFORMATION Two Cheers for the Commodification of Information Journal of Intellectual Property Law, Special Two Cheers for the Commodification of Information Journal of Intellectual Property Law, Special

Issue, June 27, 2001 Issue, June 27, 2001

VALUE OF INFORMATIONVALUE OF INFORMATION Shapiro, C. and H. R. Varian (1999). Shapiro, C. and H. R. Varian (1999). Information Rules: A Strategic Guide to the Network EconomyInformation Rules: A Strategic Guide to the Network Economy. .

Boston, Harvard Business School Press.Boston, Harvard Business School Press.

DISINTERMEDIATIONDISINTERMEDIATION Rafaeli, S. & Ravid, G. (2003) Information sharing as enabler for the virtual team: an experimental Rafaeli, S. & Ravid, G. (2003) Information sharing as enabler for the virtual team: an experimental

approach to assessing the role of electronic mail in disintermediation. In approach to assessing the role of electronic mail in disintermediation. In Information Systems Information Systems JournalJournal, Vol. 13, pp. 191-206 , Vol. 13, pp. 191-206

KNOWLEDGE MANAGEMENT AND SHARINGKNOWLEDGE MANAGEMENT AND SHARING Rafaeli, S., Barak, M., Dan-Gur, Y. and Toch, E. (2004) QSIA - A Web-based environment for learning, Rafaeli, S., Barak, M., Dan-Gur, Y. and Toch, E. (2004) QSIA - A Web-based environment for learning,

assessing and knowledge sharing in communities, assessing and knowledge sharing in communities, Computers and EducationComputers and Education (in press). (in press).

Barak, M. & Rafaeli, S. (2004, in press) Online Question-Posing and Peer-Assessment as Means for Barak, M. & Rafaeli, S. (2004, in press) Online Question-Posing and Peer-Assessment as Means for Web-based Knowledge Sharing in Learning, Web-based Knowledge Sharing in Learning, International Journal of Human-Computer StudiesInternational Journal of Human-Computer Studies (in (in press )press )

SOCIAL FACILITATIONSOCIAL FACILITATION Rafaeli, S. & Noy, A. (2002), Online auctions, messaging, communication and social facilitation: a Rafaeli, S. & Noy, A. (2002), Online auctions, messaging, communication and social facilitation: a

simulation and experimental evidence, simulation and experimental evidence, European Journal of Information SystemsEuropean Journal of Information Systems, September 2002, vol. 11, no. 3, pp. 196-207. , September 2002, vol. 11, no. 3, pp. 196-207.


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Less related work… (3)Less related work… (3)

ONLINE COMMUNITIESONLINE COMMUNITIES Rafaeli, S. and Sudweeks, F.: 1998, Interactivity on the Net, in Rafaeli, S., Sudweeks, Rafaeli, S. and Sudweeks, F.: 1998, Interactivity on the Net, in Rafaeli, S., Sudweeks,

F. and McLaughlin (eds), F. and McLaughlin (eds), Network and Netplay: Virtual Groups on the Internet, Network and Netplay: Virtual Groups on the Internet, MIT MIT Press . (see also JCMC, Vol 2, 4 Press . (see also JCMC, Vol 2, 4 http://www.ascusc.org/jcmc/vol2/issue4/rafaeli.sudweeks.html ) http://www.ascusc.org/jcmc/vol2/issue4/rafaeli.sudweeks.html )

Jones, Q., Ravid, G., and Rafaeli S. (2001) Information Overload and Virtual Public Jones, Q., Ravid, G., and Rafaeli S. (2001) Information Overload and Virtual Public Discourse Boundaries. In: Hirose, M. (Ed.), INTERACT'01, Eighth IFIP TC.13 Conference Discourse Boundaries. In: Hirose, M. (Ed.), INTERACT'01, Eighth IFIP TC.13 Conference on Human-Computer Interaction, Tokyo, Japan: IOS Press, 2001 on Human-Computer Interaction, Tokyo, Japan: IOS Press, 2001

Gordon,M., Fan,W ., Rafaeli,S.,Wu,H.and Farag,N .(2003) The architecture of Gordon,M., Fan,W ., Rafaeli,S.,Wu,H.and Farag,N .(2003) The architecture of commKnowledge:combining link structure and user actions to support an online commKnowledge:combining link structure and user actions to support an online community', community', International Journal of Electronic BusinessInternational Journal of Electronic Business ,Vol.1, No.1, pp.69-82. ,Vol.1, No.1, pp.69-82.

Rafaeli, S., Ravid, G., & Soroka, V. (2004) De-lurking in virtual communities: a social Rafaeli, S., Ravid, G., & Soroka, V. (2004) De-lurking in virtual communities: a social communication network approach to measuring the effects of social and cultural communication network approach to measuring the effects of social and cultural capital, capital, Proceedings of the 2004 Hawaii International Conference on System Sciences Proceedings of the 2004 Hawaii International Conference on System Sciences (HICSS 37)(HICSS 37) Collaboration Systems and Technology Track. Copyright 2004 IEEE. Collaboration Systems and Technology Track. Copyright 2004 IEEE. Published in the Proceedings of the Hawai'i International Conference on System Published in the Proceedings of the Hawai'i International Conference on System Sciences, January 5 – 8, 2004, Big Island, Hawaii. Sciences, January 5 – 8, 2004, Big Island, Hawaii.

february 2004 daphne raban and sheizaf rafaeli infosoc 1 owenership and subjective value in the...

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