MIT Sloan 15.567 The Economics of Information 1 MIT SLOAN SCHOOL OF MANAGEMENT 15.567 THE ECONOMICS OF INFORMATION STRATEGY, STRUCTURE AND PRICING FALL 2009 Professor: Room: Phone: Email: Web: Erik Brynjolfsson E53-313 617-253-4319 [email protected] http://digital.mit.edu/erik Administrative Assistant: Room: Phone: Email: Yubettys Baez E53-316 617-253-2656 [email protected] Teaching Assistants: Email: Heekyung Kim [email protected] Allen Lamb [email protected] SCHEDULE OF SESSIONS September October November December Thur 9/10 The Economics of Information Thur 10/1 Wikipedia Due: 1 pager Tues 11/03 Information Analytics Tues 12/01 Student Presentations Tues 9/15 Rhapsody Due: 1 pager Tues 10/6 Targeted Advertising: Google Due: Project Topic and Team Thur 11/05 Open Source and Innovation Due: Debate Thur 12/03 Student Presentations Thur 9/17 Differential Pricing Thur 10/08 Reinventing Digital Publishing Due: SMR Business Plan Sketch Tues 11/10 Amazon Pricing Exercise has been cancelled Tues 12/8 Student Presentations Tues 9/22 Bundling and Aggregation Due: Bundling Exercise Thur 10/15 Enterprise 2.0 Due: Project Timetable Thur 11/12 Search and Competition Due: Draft Presentation Slides Thur 12/10 The Digital Organization and the Future of the Information Economy Due: Final Team Project Thur 9/24 Pricing at Zero Tues 10/20: Thur 10/22 SIP week Tues 11/17 The Long Tail Tues 9/29 Information Complements Tues 10/27 Experimentation, Replication and Innovation Thur 11/19 Emerging Electronic Markets Due: Draft Project Report Thur 10/29 MidTerm Exam Tues 11/24 Student Presentations Please check the class website before every class for announcements, assignments and schedule changes.MIT Sloan 15.567 The Economics of Information 2 CLASS INFORMATION Class Time: Tuesdays and Thursdays: 1-2:30 PM, E51-335 Class Web Sites: http://stellar.mit.edu/S/course/15/fa09/15.567/ for readings, and assignments http://www.economicsofinformation.com for a class blog and discussion area Office Hours: Tuesdays, 2:30-4pm and by appointment. COURSE PERSPECTIVE AND DESCRIPTION Information, especially digital information, is different in many ways from other goods and services. Yet, information is still subject to the laws of economics. The purpose of this course is to explore some of the economics of information and understand how they affect strategy, structure and pricing. We will use lectures, cases, class discussion, guest speakers, exercises and team projects to examine a variety of topics including: the pricing of information goods, bundling and other forms of aggregation, open source and innovation, search and competition, targeted advertising, information analytics, social networks and information worker productivity, business process replication and a variety of other topics. Fundamental economic principles will be illustrated using business case studies. At times, we will also discuss emerging digital technologies, business methods and industry structures. Rapid and radical changes inevitably create opportunities for great wealth creation – and destruction. Business leaders empowered with knowledge of the underlying economics, business and technological principles will be at an advantage in such an environment. COURSE NORMS AND EXPECTATIONS Students in the class are co-producers of class discussions and collective learning. For this to happen, class members need to listen carefully to one another and build on or critique prior comments. Discussions need to stay on track, and it is the responsibility of the faculty and students to collectively accomplish this. The discussion should be a conversation in which all participants recognize that they have an obligation to advance our understanding of the issue at hand. Your contributions to this learning process will be appraised in addition to the specific content that you contribute. Because this course relies heavily on class participation for its success, class norms and expectations regarding class behavior are very important: 1. Attendance at every class is required. Please schedule outside activities at times other than when 15.567 meets. Please arrive on time and stay from the beginning of class to the end. If you must miss a class, please advise both the TAs and me in advance. You are allowed up to two excused absences before missing class seriously affects your grade. For classes you must miss, it is your responsibility to find out from your classmates what materials were covered, what items were distributed in class, and what key points were collectively advanced. 2. Please come to class prepared to discuss the readings. I have created a reading guide for each session with questions that you should review in advance and be ready to answer In every class, I will "cold call" students whose hands are not raised. If something has prevented you from being prepared for class that day, you should let me know before the start of class. 3. Technology allows us to be connected almost anywhere and anytime. However, there are times when it is more productive not to be electronically connected. Class sessions are one such time. During class sessions, please turn off cell phones, beepers, laptops or other such equipment. 4. Please bring your name card to every class and for the first several weeks, please sit in the same seat each class. This will make it easier for me to get to know you and to make sure you get appropriate credit for your contributions. Students who are thoroughly prepared for each session will benefit the most from this class. What’s more, they also add to the learning of their classmates. Hence, if you don’t feel comfortable with these expectations, then this is not a good course for you to take this semester.MIT Sloan 15.567 The Economics of Information 3 ASSIGNMENTS AND GRADING This is a 9 unit course (3-0-6 H-level graduate credits). Grades will be assigned on the following basis: Class participation 35% Individual and Group Assignments 20% (One pagers and other exercises) Midterm Exam 10% Team project 35% In addition to the individual and group assignments, there is a Midterm Exam and a major Team Project. Detailed explanations of each assignment and the project will be posted on the class website. Note that most assignments are due via Stellar on the night before class. READINGS AND CLASS SCHEDULE Readings packets