Research
I am interested in information economics,the law and economics of information systems and policies, and experimental method. My specialties are open-content economics, and economic solutions to spam.
Dissertation
Title: “Essays in Information Economics.”
Chair: Jeffrey MacKie-Mason
Committee Members: Yan Chen, Michael Cohen, and Jessica Litman
Paper 1: Benjamin Chiao (2007), “Torts in Open Contents.” For submission to Journal of Law, Economics and Organization.
(Earlier versions presented at Academy of Management Conference 2006, and European Academy of Management Conference 2007.)
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Abstract: We extend traditional tort analyses by including value-adding resellers who do not need to pay the innovators (i.e. original sellers) for production. In some key open contents processes such as open source, downstream licensing is royalty-free but profits from other means derived from the software are allowed. Buyers, especially large vendors, can then become resellers to compete with the innovators. The innovators, however, can actually share the cost with the resellers to indemnify product and intellectual property infringement liabilities of the other downstream buyers and the innovators. Our theoretical results aim at establishing the optimal liabilities arrangements across agents.Together with some empirical tests, this research potentially paves a way to the question of who should use what licenses and instruments for what information goods. (Note: The empirical test using data on open content licenses is currently in progress.)
Paper 2: Benjamin Chiao (2007), “Experiments in Open Contents.” Under revision for resubmission to Management Science.
(Working Paper at the MIT Free/Open Source Research Community. Earlier versions presented at Economic Science Association’s Meetings at Tuscon 2004 and at Hong Kong 2006. Working paper at the MIT Free/Open Source Research Community. Awarded the Rackham Discretionary Fund.)
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Abstract: This paper presents the first experimental results on open contents. Examples of open contents include open source software, creative-commons and wikipedia-type works. Our data from human subjects show that non-modular payoff structure drives the convergence to a Nash equilibrium, in which commission price to helpers converge to zero but helpers will not stop solving problems for others. By non-modularity, we mean that the total production (or payoff) of a team is zero if either one of its members fails to produce at least at a certain level. In the experiment, subjects produce by solving a variant of a popular board game called MASTERMIND. Theoretically, free-riding leads to zero commission price. This removes a signaling function of price for the difficulty levels of work remaining. Empirically, however, it is not sufficient to cause the catastrophic outcome of zero payoff. This provides a basis for us to hypothesize that opening contents is a key explanation because it allows subjects to directly observe the history of work already done and potentially direct more resources to the more difficult tasks.
Paper 3: Benjamin Chiao and Jeffrey MacKie-Mason
(2007), “Using Uncensored Communication Channels to Divert Spam
Traffic”.
For submission to Management Science.
(Proceedings of the 34th
Research Conference on Communication, Information and Internet
Policy. Net Institute Working Paper No. 06-20. Awarded the NET Institute grant.)
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Abstract: We offer a microeconomic model of the two-sided market for the dominant form of spam: bulk, unsolicited, and commercial advertising email. We adopt an incentive-centered design approach to develop a simple, feasible improvement to the current email system using an uncensored (open) communication channel. Such a channel could be an email folder or account, to which properly tagged commercial solicitations are routed. We characterize the circumstances under which spammers would voluntarily move much of their spam into the open channel, leaving the traditional email channel dominated by person-to-person, non-spam mail. Our method follows from inferring that there is a real demand for unsolicited commercial email, so that everyone can be made better off if a channel is provided for spammers to meet spam-demanders. As a bonus, the absence of filtering in an open channel restores to advertisers the incentive to make messages truthful, rather than to disguise them to avoid filters. We show that under certain conditions all email recipients are better off when an open channel is introduced. Only recipients wanting spam will use the open channel enjoying the less disguised messages and cheaper sale prices, and for all recipients the dissatisfaction associated with both undesirable mail received and desirable mail filtered out decreases.
Other Publications
Journals
Benjamin Chiao, Josh Lerner, and Jean Tirole, "The Rules of Standard Setting Organizations: An Empirical Study". RAND Journal of Economics, Winter 2007. (Earlier versions appeared in: Harvard Negotiation, Organizations and Markets (NOM) Research Paper No 05-05. National Bureau of Economic Research Working Paper No 11156.)
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Abstract: This paper empirically explores the procedures employed by standard-setting organizations. Consistent with Lerner-Tirole (2004), we find (a) a negative relationship between the extent to which an SSO is oriented to technology sponsors and the concession level required of sponsors and (b) a positive correlation between the sponsor-friendliness of the selected SSO and the quality of the standard. We also develop and test two extensions of the earlier model: the presence of provisions mandating royalty-free licensing is negatively associated with disclosure requirements, and when there are only a limited number of SSOs, the relationship between concessions and user friendliness is weaker.
Conference Proceedings
Benjamin Chiao, "An Economic Theory of Free and Open Source Software: A Tour from Lighthouse to Chinese-Style Socialism", Proceedings of the International Conference on Open Source 2003. The latest version is distributed as a working paper at the MIT Free/Open Source Research Community.
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Abstract: The theory is that free and open source software is private property under the guise of common property. Such software is distributed mostly under the GNU General Public License. The intents in The GNU Manifesto suggest striking similarities between this license and communism. The resulting economic properties, however, are similar to those of Chinese-style socialism: both resulted from an increased separation of legal and economic ownership. The phenomenal growth of China in the last twenty five years and of such software in the past few years could be attributed to such separation.
Benjamin Chiao (2007). “Using Voluntary Delay in Communication Buffers to Curb Spam: An Experimental Study.”
Abstracts: Email communication is close to instantaneous but this is not entirely necessary. Without claiming to study its full technical implementability, we evaluate a theoretical mechanism that provides an option for senders to voluntarily delay delivery of their messages (or at least the copies of them). The delayed messages will be stored in a buffer, in which malicious messages could be tagged. Recipients, on receiving a mail message, will be notified about whether there is a tag on the message (or on its copy), and the time length in which the messages have been stored in the buffer without being tagged. Senders could also signal by choosing the time in which the messages will be stored in the buffer. Recipients could make use of such time information to tell whether a message is likely to be malicious or not. Senders could elect to receiving a notification when a message is received in the buffer with a name purported to be sent from them. Senders, being the most informative about the content of a message with their names and a key victim of the presence of the spam with their names, are then empowered to screen malicious messages.
Benjamin Chiao (2007). “Using Uncensored Communication Channels to Divert Spam: An Experimental Study.”
Benjamin Chiao (2007). “An Economic Analysis of the Copyright Opt-Out Mechanism in Google Book Search.”
Benjamin Chiao (2007). “An Experimental Study of Parallel Music Progression.”
Unpublished
Benjamin Chiao (1999). “The Monetary Rule of Hong Kong”. Class paper under the supervision of Professor Mick Devereux.