Abstract

The rise of Internet-based markets and social networks has created an unprecedented opportunity to engineer socio-economic interactions at a large scale. In this talk, I will discuss my work on addressing the issues of trust and mistrust in designing these socio-economic systems.

I will first describe a model of networked trust that is an alternative to centralized reputation/virtual currency systems on the Internet. Informally, every node in the network acts as a bank and prints its own currency, which is then used to purchase services within the network. Transactions between untrusting agents proceed through exchange of IOUs along a chain of trust. Such “trust networks” are robust to infiltration, since any node only accepts currency printed by other nodes that it directly trusts. We will analyze the liquidity of this model, i.e., the number of transactions that such a network can support. We will show that in many interesting cases, the liquidity of these trust networks is comparable to centralized currency systems. We will also present results on the formation of credit networks by self-interested agents.

While social networks and the Internet have made it much easier to communicate, there is considerable anecdotal and research evidence that we are getting more polarized as a society. I will present an analysis of the dynamics of opinion polarization in a social network, and discuss its implications for the design of recommendation algorithms, as well as social systems that enable large scale collective decision making.